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Stocks In Focus SG (Singapore Airlines, Hiap Seng Engineering, Albedo) – 20/09/13
SIA And Tata Sons To Establish New Airline
Singapore Airlines (SIA), together with Tata Sons, one of the most established and respected names in India, have signed a memorandum of understanding to establish a new airline in India that will help further stimulate demand for air travel. Subject to the Foreign Investment Promotion Board (FIPB) and other regulatory approvals, the new airline will be based in New Delhi and will operate under the full-service model where Tata Sons will own 51 percent and SIA will own 49 percent. The total outlay for the venture will be US$100 million, which will be funded by both parties in proportion to their shareholdings. Tata Sons’ evaluated that civil aviation in India will offer sustainable growth potential and the venture will help to spur market demand as well as economic benefits in India.
Significance: The Indian aviation industry is projected to experience future high growth rates. With the recent government’s decision to allow foreign airlines to invest up to 49 percent in Indian carriers, SIA now has the opportunity to participate directly and ride on one of the fastest growing and largest aviation markets.
Hiap Seng Bags 2 Contracts Worth $57m
Specialist integrated engineering group for the oil and gas, petrochemical and pharmaceutical industries, Hiap Seng Engineering announced that it has been awarded two contracts worth approximately $57 million. The contracts are for the provision of piping and equipment installation works and the provision of mechanical, equipment erection and structural works in Singapore. Both contracts are expected to commence this month and scheduled for completion in the financial year ending 31 March 2015. In its last financial report, Hiap Seng reported having a robust order book of $235 million as at 13 August 2013.
Significance: While market uncertainties will have an impact on the company’s financial performance, Hiap Seng noted continued contributions from its businesses in Thailand and Malaysia and aims to enhance its business in Singapore and the region. The addition of the new contracts will help Hiap Seng to generate clearer earnings visibility going forward.
Albedo In $774.1m Reverse Takeover Offer
Catalist-listed Albedo has entered into a conditional sale and purchase agreement with Infinite Rewards Incorporated to buy its subsidiary, Reflections Oasis Incorporated (RO), which is majority owned by Malaysian tycoon Tan Sri Dato’ Danny Tan. The reverse takeover offer amounts to $774.14 million and Albedo will issue 34.55 billion new shares representing 95 percent of the enlarged capital of the company at around $0.0224 per share. Following the reverse takeover, Albedo will transform into a major property developer in Iskandar, with seven parcels of land in the area valued at RM2.7 billion, as well as two more parcels of land of about 233 acres under negotiations. The land parcels are earmarked for conversion into commercial, industrial and/or residential usage.
Significance: Albedo notes that the acquisition will provide an opportunity for it to participate in the growth of Iskandar Malaysia as well as to tap on the strong track record, business network and experience of Tan Sri Dato’ Danny Tan.
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