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Stocks In Focus SG (Lum Chang, Popular Holdings, Raffles Education) – 10/12/13
Lum Chang Proposed London Property Acquisition
Through its subsidiary, Pembridge Palace Propco (PPP), Lum Chang Holdings has proposed the purchase of a 30,099 square feet freehold property located in 52-57 Prince’s Square, London, United Kingdom for £26 million (approximately $52 million) with an additional £5.2 million in value added tax (VAT). Upon completion of the purchase, PPP will submit a claim for the VAT refund.
The property, located next to tourist attractions such as Hyde Park and Kensington Gardens, comprises of six intercommunicating buildings and is presently rented to a sole tenant which operates it as a hotel.
The proposed acquisition will be satisfied through external borrowings and Lum Chang’s internal cash resources.
Significance: Lum Chang’s proposed purchase is viewed as an investment, which is in the ordinary course of its business, and is expected to be completed by 13 January 2014.
Popular 2Q13 Sinks Into the Red
For the quarter ended 31 October 2013, Popular Holdings’ turnover rose 12.5 percent to $136.5 million, up from $121.3 million a year earlier, primarily driven by higher revenue achieved in its property and retail and distribution divisions.
With tight control over costs, Popular’s core gross profit margin held firm at 15.4 percent despite rising rental costs and manpower shortages across the regions.
However, larger distribution and selling expenses as well as administrative costs, due to an increased number of book fairs and expanded retail and publishing businesses, sank Popular’s bottom line into the red with $52,000 in losses.
Significance: Popular remains cautious of the global economic outlook which may soften consumer sentiment. Inflationary cost pressure on manpower and rental are expected to persist in the near term and the firm will continue to monitor operational efficiency.
Raffles Education To Dispose Land In Hebei, China
Hebei Oriental Zhuyun Property Development (Zhuyun), a subsidiary of Raffles Education Corporation, has proposed the sale of land use rights and properties, measuring 332,682 square metres, situated in Langfang Development Zone, Hebei Province, China, to Langfang He Ying Property Development (He Ying).
Zhuyun and He Ying will enter into a 70:30 joint venture (JV) company which Zhuyun will inject the land parcels and properties into. He Ying will pump in Rmb100 million as capital contribution into the JV firm.
Additionally, both parties will enter into an option agreement where Zhuyun may request He Ying to purchase its 70 percent stake in the JV company at an exercise price of Rmb700 million (approximately $143.8 million).
Significance: The proposed disposal of the land parcels and properties, expected to provide $27.4 million in excess net proceeds, will enable Raffles Education to reap returns on its investment and provide funds for its core education businesses.
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