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Stocks In Focus SG (OCBC Bank, COSCO, See Hup Seng) – 13/09/13
OCBC The First Singapore Bank To Open China Headquarters
Oversea-Chinese Banking Corporation (OCBC), the second largest bank in Singapore based on asset value has opened its China headquarters in Shanghai, Pudong yesterday. The six-storey building named OCBC Tower cost Rmb1 billion ($206 million), provides 18,000 square meters of office space and will serve as the corporate headquarters of OCBC China, a wholly-owned subsidiary of OCBC. Inclusive of the latest investment, OCBC has invested a total of Rmb4.5 billion since its incorporation in 2007 in Greater China, in which six percent of its group earnings are accounted for. Following the investment, OCBC maintained positive views on the potential that Greater China would increase its contribution going forward. In addition, OCBC has seen in recent years that its customer base in the country increased by six-folds and its full year revenue in 2012 has also doubled, reaching Rmb1 billion as compared to 2008.
Significance: The timely investment comes in conjunction to the recent decision by the Chinese government to initiate reforms and liberalisation of the financial sector. This paves the way for OCBC to further expand their business and maintain a strong presence in China.
Cosco Secures Contracts In Aggregate Amount Of US$566m
COSCO Corporation (Singapore) announced that its shipyards, which are subsidiaries of the company’s 51 percent owned subsidiary, COSCO Shipyard Group, secured contracts totaling US$366 million and options declared effective valued at US$200 million. The new contracts are inked for COSCO (Guangdong) Shipyard, COSCO (Dalian) Shipyard and COSCO (Zhoushan) Shipyard. The shipyards received orders for four platform supply vessels (PSVs), two salvage lifting vessels and two module carrier with options for two additional orders, as well as four dry bulk carriers orders in the respective shipyards. The orders are scheduled for deliveries from second half of 2014 till 2015. Separately, Axis Offshore has exercised an option for a contract valued at more than US$200 million for a unit semi-submersible accommodation rig. The rig will be constructed at COSCO (Qidong) Offshore.
Significance: The contracts won will help to boost COSCO’s order book going forward. Given the consolidation of Chinese shipyards, the contracts won may prove to be vital for the ongoing survivability of the group.
See Hup Seng To Acquire Hetat Holdings For $42.4m
See Hup Seng (SeeHS) announced it has entered into a conditional sale and purchase agreement with Ng Han Kok to acquire the entire issued and paid-up share capital of Hetat Holdings for the consideration of $42.4 million. Hetat principally engages in the steel, aluminium and glass structures business as well as the supply of labour to fabricate and install modules for oil-rigs. It has a track record of 10 years in the construction industry, and is also currently undertaking projects in Singapore, Malaysia and Mongolia. As at 31 July 2013, Hetat has an order book of approximately $50 million. The net book value and net tangible assets of the company stood at approximately $7.1 million. $31.8 million of the consideration will be made in cash and the remaining $10.6 million by the issuance of 42,519,053 new ordinary shares in the capital of the company at $0.2493 per share. The vendor has also guaranteed that Hetat will generate at least $5.5 million in profit for FY13 secured by a $4 million cash guarantee.
Significance: The proposed acquisition represents a good opportunity for the SeeHS to diversify its existing operation and to expand its product offerings to its existing customers of the corrosive prevention business to include those relating to designing, engineering and construction of steel, aluminium and glass structures.
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