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Stocks In Focus SG (Nov Factory Output, Fraser & Neave, HLH Group) – 27/12/13
November’s Factory Output Grew 4% Y-O-Y
Singapore factory output grew 4 percent year-on-year (y-o-y) for the month of November, below October’s revised 8.3 percent rise and the 5.3 percent gain predicted by private-sector economists.
The biomedical and chemical manufacturing sectors, which dropped 2.1 percent and 2.7 percent respectively, were the key factors for the underperformance while the electronics and transport engineering segments held up growth.
Excluding the volatile biomedical sector, November’s factory output would have grown 5.5 percent.
Significance: Both United Overseas Bank’s economist, Alvin Liew, and Oversea-Chinese Banking Corporation’s Selena Ling remain hopeful that Singapore’s 2013 gross domestic product will remain within the 3.5 percent to 4 percent official growth forecast.
F&N Proposes $606.9m Payout
Fraser & Neave (F&N) has proposed a cash distribution of approximately $606.9 million, or $0.42 per share, to shareholders via a capital reduction exercise.
As at 30 September 2013, F&N holds $737.4 million from the net proceeds of share issuance to Seletar Investments, a subsidiary of Temasek Holdings, in January 2007, which are unutilised.
The management is of the view that the firm has excess capital and the exercise would allow F&N to achieve a more efficient capital structure.
Significance:F&N’s management has stressed that the capital reduction will not lead to a cancellation of shares or change in the number of shares.
HLH Enters Cultivation Agreement On Cambodia Plantation
HLH Group’s subsidiary, HLH Agriculture (Cambodia), has inked an agreement with Zhong Fu International Investment (Cambodia) to cultivate, process and produce cassava (maize and sugarcane) at the subsidiary’s 9,985 hectares of farmland plantation located in Cambodia.
HLH Agriculture will provide its existing buildings, staff accommodation facilities, machinery, equipment and vehicles on the plantation to Zhong Fu.
HLH Agriculture has received an US$1 million security deposit from Zhong Fu for the agreement, which will last for a five-year period from 1 January 2014 to 31 December 2018, with an option to extend for a further five-year term.
Significance: Zhong Fu will pay HLH Agriculture US$3 million for each of the first two years, US$4 million a year for the next three years and US$4 million per year for the following five years. However, if the first year’s harvest does not rake in a minimum of US$5 million in profit, HLH Agriculture has the right to terminate the agreement.
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