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Stocks In Focus SG (Rotary Engineering, MapletreeGCC, SMRT Corp) – 31/07/13

Rotary Secures EPC Contracts Totalling $200m
Rotary Engineering, the mainboard listed leading integrated services provider to the oil and gas industry announced that it has been awarded $200 million worth of engineering, procurement, construction (EPC) contracts in Singapore and Saudi Arabia. The first contract is an EPC contract by a joint venture between three multinational oil companies to build a shared lubricant storage facility in Tuas South, Singapore. Beginning this July, the project will be carried out in phases and is expected to complete in 2015. In Saudi Arabia, three contracts were awarded by international EPC players for projects in Jubail Industrial City. Rotary’s chairman and managing director, Chia Kim Piow said: “These contracts in Saudi Arabia are an indication that the Middle East continues to offer many business opportunities for oil and gas infrastructure engineering.”

Significance: Year-to-date, Rotary has secured $600 million worth of contracts. When taken into account with its two other major projects worth a total US$550 million for the Fujairah Oil Terminal, United Arab Emirates, and expansion of oil terminal at Pulau Busing, Singapore, this could mark a reversal trend from its dismal FY12 financial performance.

MGCCT Beats Earnings Forecast By 8.3%
Mapletree Greater China Commercial Trust (MGCCT) announced its 1Q14 results with its distributable income at $46.1 million, 8.3 percent higher than forecasts. Gross revenue and net property income were $73.8 million and $59.7 million, coming in 3.4 percent and 7.4 percent higher than forecasts respectively, mainly due to the strong rental reversions achieved by Festival Walk and Gateway Plaza. Its balance sheet also remains healthy at the gearing ratio of 41.5 percent, or net gearing ratio of 36 percent. Notably, to mitigate interest rate risk, two-thirds of the total debts have been swapped to fixed-rate and MGCCT had hedged its income generated in Hong Kong dollars to ensure stability of its distributable income for the next two years in Singapore dollars.

Significance: MGCCT’s current portfolio has an occupancy rate of 98.3 percent as at 30 June. It is confident that its two properties will continue to benefit from the positive demand dynamics in Greater China, given the resilient domestic demand in Hong Kong and organic rental reversions taking place in the Beijing office sector.

SMRT’s 1Q14 PATMI Down By 55.2%
SMRT Corporation announced its 1Q14 results reporting that its profit after tax and minority interest (PATMI) fell by 55.2 percent to $16.3 million. In the report, SMRT highlighted the fall in PATMI was mainly due to lower other operating income and higher operating expenditure for the quarter ended. The other operating income declined by 30.9 percent to $9.5 million with the absence of $8 million insurance compensation for its rail asset. Also, the higher operating expenditure was high attributed to a 12.2 percent increase in depreciation net amortisation to $39.9 million, and staff cost rose by 23.4 percent to $112.7 million due to higher headcount and wage revision. In addition, finance costs more doubled to $2.6 million due to the interest payment for the $450 million bond issuance in October 2012. The net gearing ratio rose to 64 percent in 1Q14 from 8 percent in 1Q13.

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Significance: SMRT views FY14 as challenging in the absence of fare adjustment and continuing absorption of fare concessions. The group is in discussion with the government on a new rail financing framework, and is reviewing plans for more viable business model. In addition, SMRT is expecting Woodlands Xchange to add to more retail space and increase commercial contribution this year.



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