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Stocks In Focus SG (Yangzijiang Shipbuilding, Macquarie International Infrastructure Fund, OKH Global) – 26/09/13
Yangzijiang Launches First 10,000TEU Container Ship
Yangzijiang Shipbuilding Holdings announced that it has launched its first 10,000 TEU containership from its Jiangsu New Yangzi Shipbuilding Company, marking the first time a Chinese shipyard has built and launched such a containership. As the first Chinese yard to have secured orders for 10,000 TEU containerships, Yangzijiang has in total 11 of the 10,000 TEU vessels on its order book with options outstanding to get a further 14 more of such vessels. The orders were secured previously with Seaspan Corporation to build seven units worth US$0.7 billion with options for additional 18 units of the identical vessels. Seaspan exercised its options early this year to build additional four units, bringing the total contract value to US$0.36 billion. The vessels are scheduled for deliveries in 2014 and 2015.
Significance: DBS Group Research maintained “Buy” on Yangzijiang with a target price of $1.32, noting that its first batch of containership orders will likely yield better gross margins and could win a larger number of potential orders on the back of the sizeable US$2.87 billion worth of options that could be exercised in the coming quarters.
MIIF Closes Sale Of Changshu Xinghua Port For $112.2m
Macquarie International Infrastructure Fund (MIIF) announced it has reached a financial close on the sale of its 40 percent interest in Singapore Changshu Development Company, which in turn holds a 95 percent-stake in Changshu Xinghua Port Company to Pan-United Infrastructure. The sale price amounts to $112.2 million, representing a 5.3 percent premium over MIIF’s carrying value of $106 million as of March 2013. In line with its revised strategy, MIIF will be distributing the net proceeds from the sale to its shareholders as a return of capital in accordance with the capital reduction resolution. The return on capital comes up to $0.097 per share and MIIF will trade ex-entitlements on 9 October 2013. With the divestment, MIIF’s remaining operating asset is an 81 percent-stake in Hua Nan Expressway, currently carried in its books at $152 million, which the management hopes to divest and maximise proceeds for shareholders before winding up.
Significance: Notably, DMG & Partners highlighted that there is limited upside to its stock price, unless its remaining asset can be divested substantially above book value as selling Hua Nan Expressway at book value would yield approximately $780 million and the realisable net asset value per share is limited against current trading price.
OKH Global Proposes Placement To Raise $39.5m
OKH Global entered into a placement agreement with UOB Kay Hian as its placement agent to issue up to 60 million new shares at a placement price of $0.68 per share. The placement price represents a discount of approximately 8.36 percent to the weighted average price of $0.742 for trades done on 24 September 2013. On full subscription, the placement shares will represent about 9.54 percent of its enlarged share capital. Its net tangible asset per share will rise to $0.1265 and earnings per share to dilute to $0.0018 per share following the placement.
Significance: The placement will enable the company to raise $39.5 million, which it intends to allocate and utilise up to 80 percent to fund potential acquisitions, investments and business expansion plans with the balance for working capital requirements.
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