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Stocks In Focus SG (Q3 GDP Exceeds Expectations, Olam, SPH) – 14/10/13
Singapore Q3 GDP Exceeds Expectations
The Singapore economy exceeded gross domestic product (GDP) forecast expectations in Q3. In fact, the data that came in showed a significant better performance. Q3 GDP grew 5.1 percent when compared to a year ago, while beating market economists’ median forecast of 3.8 percent growth. Ministry of Trade and Industry (MTI) said that this comes after a revised surge of 16.9 percent in Q2 GDP, up from the quarter-on-quarter growth rate of 15.6 percent which was reported earlier. Thanks to the growth in the transport engineering and electronic clusters, manufacturing reported a growth of 4.5 percent year-on-year, up from 1.3 percent in Q2. The services sector grew 5.7 percent year-on-year, similar to the 5.6 percent growth in Q2. This growth was very much driven by healthy expansion in the finance and insurance and wholesale and retail trade sectors.
Significance: The better than expected GDP data meant that the economy shrank an annualised 1 percent quarter-on-quarter, a much smaller contraction than the expected annualised drop of 4.1 percent the market had been expecting.
Board Renewal Sees 2 Olam Directors Step Down
Olam International (Olam) has announced that immediately after its 19th annual general meeting (AGM), two of its board directors Tse Po Shing Andy and Sridhar Krishnan, would be stepping on 30 October, 2013, as part of its board renewal efforts. Sanjiv Misra, chairman of the Asia Pacific Advisory Board for Apollo Management and president of Phoenix Advisers, will replace Mr Tse and Mr Krishnan. Currently, Mr Tse is the non-executive and independent director at Olam, and chairman of the group’s risk committee and has served on the board for ten years and nine months as at 30 June, 2013. Mr Krishnan is an executive director and a member of both the risk and the corporate responsibility and sustainability committees, and has served 15 years and 2 months at the group. With effect from 1 November, 2013, Mr Misra will be appointed as a non-executive and independent director of Olam.
Significance: This is part of Olam’s board succession efforts to ensure the continuity and progress of the company. The board renewal plans include gradually retiring its longest – serving independent directors at each AGM over the next three years, appointing new independent directors to fill the vacancies of outgoing independent directors, with two office terms of three years each.
SPH Reports A Slip Of 25% In FY13
Singapore Press Holdings (SPH), has reported a 25 percent slip in its FY13 profits to $431 million. Lower contribution was seen from the Newspaper and Magazine business segment, which also includes an impairment charge for an overseas subsidiary. The lower revenue contribution by the Newspaper and Magazine business segment was attributable to declines in advertisement revenue and circulation revenue. Tony Mallek, chief financial officer of SPH said “If I am being direct, most of our indicators are down.” SPH is establishing a $100 million New Media Fund to reinvigorate its core business, which also includes hiring a strategy consultant and managing costs. Despite the challenging year, SPH noted that the rate of ad revenue decline has moderated in 4Q13, to 2.3 percent overall, which was compared to the 5.1 percent slowdown for the full 12 months. It did however expressed that the outlook for the year ahead remains fizzy. SPH is also declaring a final dividend of eight cents per share and a seven cent special dividend.
Significance: Although there wasn’t any specific details on what the new New Media Fund will look to invest in, it is notable that SPH is sitting on a hefty war chest of $1.7 billion in investible funds, and that this ammo will pan in very well for the expansion and growth in the digital media side of its business.
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