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Stocks In Focus SG (SingTel, Global Logistic Properties, CNA Group) – 10/10/13
Fire At Singtel’s Facility Disrupts Connectivity Services
SingTel reported that a fire broke out at its Bukit Panjang Facility yesterday afternoon, which sparked disruptions of services in some areas for Singapore’s three telcos (SingTel, StarHub, M1). Two local banks also reported that because of this disruption, some of its services were affected. The fire damaged 33 fibre cables at SingTel’s Bukit Panjang Exchange. Disruptions to fixed lines, broadband and TV services were felt in Woodlands, Bukit Panjang, Chua Chu Kang, Upper Bukit Timah and Mandai. SingTel’s competitors, StarHub and M1 both expressed that their services have, as a result of the fire, been affected as well. ATM services of some of Overseas Chinese Banking Corp and DBS Bank were reported to be affected as well, which saw DBS extending the operating hours by all its branches by an hour yesterday.
Significance: The 33 fibre cables are expected to be fixed completely by 6am today. There will probably be a need to do a damage assessment, an impairment and also factor this into SingTel’s financial statement as a provision for fire damage under FRS 37, Provisions, Contingent Liabilities and Contingent Assets.
GLP To Grow Warehouse Space In China
Global Logistic Properties (GLP), China’s biggest modern warehouse operator, plans to increase space at new projects by 20 percent to 25 percent annually in the next two years as e-commerce grows and retail chains expand. Business Times reported in a Hong Kong interview with chief executive officer and co-founder Ming Mei, GLP is beginning construction of 2.5 million square metres (sqm) of warehouse space in China this year, compared with two million sqm a year earlier. The company has a portfolio of about eight million sqm in China. The new space will be split evenly between first-tier cities such as Beijing and Shanghai, and second-tier cities such as Chengdu. With a presence in China, Japan and Brazil, GLP has a proven track record of delivering growth seeing gross floor area from FY04 to 1Q14 jump by a compounded annual growth rate of 57 percent. Its low leverage and significant cash on hand of US$1.8 billion as at 30 June 2013 will enable it to tap on potential opportunities.
Significance: Warehouse rents in China will likely grow around 5 percent annually on average in the long run and while supply in first-tier cities would remain tight in the short term, some second-tier cities may see a “slight” oversupply in the next couple of years. Nonetheless, the logistics properties in China are poised for growth given the rise of e-commerce companies that fuels demand for storage space.
CNA Bags $18m Thailand Property Development
CNA Group signed a letter of award with WP Estate Company (a joint venture company by West East International), appointing CNA as the engineering, procurement and construction (EPC) contractor for a 38,316 sqm site situated at Sriracha, south of Bangkok, Thailand. The project, worth approximately $18 million, includes master planning and base design, infrastructure works including road and drainage works, building of commercial and residential buildings, and one unit of sales office as well as project management services. West East, which is CNA’s Thailand real estate partner, had agreed to jointly collaborate on property projects in Thailand and is steadily implementing Sriracha development phases.
Significance: This project win will lift CNA’s order book of $63.6 million as at 30 June 2013 to $92.2 million, inclusive of the Vietnam Airport project win announced earlier. It is also expected to complete by December 2014 and have a positive impact on its FY13 and FY14 financial performance.
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