Stocks In Focus SG (Singapore’s 1Q14 GDP, Wilmar Int’l, Cache Logistics Trust) – 14/04/14

• Singapore’s gross domestic product grew 5.1 percent year-on-year in 1Q14 according to advance estimates by the Ministry of Trade and Industry. The results are lower than the 5.5 percent year-on-year growth seen in 4Q13. The main caveat arose from slower growth in the service industry, which came in at 4.7 percent year-on-year versus 5.9 percent in the previous quarter. This was attributed to lesser growth registered in the wholesale, retail trade, finance and insurance sectors.

• Wilmar International inked a 55:45 joint venture (JV) agreement with Great Wall Food Stuff Industry Company, a Myanmar based company, to produce and sell sugar and its by-products. Under the agreement, the JV company, Great Wall – Wilmar Holdings, will acquire all the existing sugar-related business, mills and plants of Great Wall and its associates, which include two sugar mills, one bio-ethanol plant and an organic compound fertiliser plant.

• Cache Logistics Trust agreed to jointly develop and lease a build-to-suit warehouse with a net lettable area of 928,100 square feet located at Greenwich Drive, Tampines LogisPark, with its sponsor CWT. The facility with a total development cost of $105.1 million will be used as DHL’s new regional office, and is expected to provide a stable and recurring cash flow to the trust, given the tenant’s strong credit profile.

• Singapore Shipping Corporation proposed to dispose Nanyang Maritime (Singapore) (NMS) to ISK Singapore for a sale consideration of $1.3 million. The disposal is in view of the purchaser’s move to reform its inorganic business portfolios, given that NMS was primarily formed to undertake physical distribution services of the purchaser.

• Giken Sakata proposed to acquire 51 percent of issued share capital in Cepu Sakti Energy for a purchase consideration of $48 million. The latest acquisition offers a potential opportunity for the group to diversify its business operations into the oil and gas sector as well as a platform to expand its earnings base.

First Ship Lease Trust’s Trustee-Manager, FSL Trust Management (FSLTM), will be acquiring 2.7 million units in the former at $0.11 per unit to increase its stake to about 6.1 million units or 0.94 percent of the ordinary voting units in issue. Alan Hatton, chief executive officer of FSLTM says the added stake purchase ensures the congruence of unitholder and FSLTM. Separately, FSLTM has elected a new chairman, Tim Reid, and deputy chairman, Simon Davidson, to the board.

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