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Stocks In Focus (Shares Buyback, Guthire GTS, Marco Polo Marine) – 24/06/13
Sharp Fall In Stock Prices Fuel Buybacks
The Straits Times Index has taken a beating in recent weeks, coming off its high of 3,464.79 on 22 May 2013, to open at 3,104.28 today, representing a 10.4 percent decline. Buyback activity was high for the fifth consecutive week, as 17 companies made 42 repurchases worth $19.5 million, consistent with the previous four weeks’ averages of 15 firms, 48 trades and $17 million. Notably, DBS bought back 500,000 shares, its first purchase of shares since December 2011, at an average price of $15.67 per share. Its share price has fallen 13.7 percent, from $17.90, since 10 May 2013. Mapletree’s non-executive director, Hiew Yoon Khong, made purchases across the four real estate investment trusts offered by Mapletree to acquire 600,000 shares each, which were worth a combined value of $2.83 million. Aberdeen Asset Management moved to acquire 1.65 million shares of City Developments at $10.48 each, to increase its deemed holdings to 22.1 percent while Beas Glory Capital obtained 6.3 million units of Religare Health Trust, at $0.85 cents each, to increase its stake in the trust to 7 percent.
Significance: Several reasons underlying share buybacks include optimism about the firm’s future growth, providing a positive signal to the market and a discounted price for the shares. The recent drop in prices have prompted insiders to pick up shares at discounts to their heights witnessed a few weeks ago.
United SM Proposes Acquisition Of Guthrie
United SM (USM) intends to make a voluntary unconditional cash offer for all the issued and paid-up ordinary shares in the capital of Guthrie GTS at $0.88 each. USM intends to privatise Guthrie if it procures a combined stake in its holdings and related parties to above 90 percent. USM cited a low historical trading liquidity, compliance costs relating to the listing status and that Guthrie has not carried out any exercise to raise cash funding since 2006 as its rationale to privatise the firm. USM is a joint venture firm held by Hearty Gains and Activewatch, owned by Anthoni Salim and the non-executive chairman of Guthrie, Putra Masagung, respectively. Although USM does not hold any stake in Guthrie presently, Salim and Masagung holds a deemed interest of approximately 69.2 percent of the the total number of shares in Guthrie. Guthrie was first listed in July 1974, before being absorbed into Malaysian-listed Gamuda during the mid 1980s, and eventually divested and reborned as Guthrie GTS.
Significance: An offer of $0.88 per share represents a 21.4 percent premium over the last closing price of $0.725 on 19 June 2013 before the firm requested a trading halt pending an announcement.
MPM’s Subsidiary Purchases Mid-Sized AHTS Vessel
PT Pelayaran Nasional Buana Bina Raya TBK (PT BBR Tbk), a subsidiary of Marco Polo Marine (MPM), has acquired and taken delivery of a newly built 9,000 BHP Anchor Handling Tug Supply (AHTS) vessel from a third part shipbuilder. The vessel is presently undergoing a reflagging exercise to Indonesia flag. Upon completion of the reflagging exercise, the vessel is expected to be chartered to one of the leading oil companies in the region for deployment in Indonesia waters. Chief executive officer of MPM, Sean Lee Yun Feng, said: “With the offshore oil and gas exploration sector in Indonesia being at its nascent stage of development, demand for chartering services to be provided by AHTS vessels is expected to take off strongly in view of the promising growth of the sector.” The acquisition is in line with MPM’s strategic plans to expand its market share in the fleet management of Offshore Support Vessels (OSVs) in Indonesia and take advantage of the limited supply of such vessels in the Indonesian market. The purchase was funded largely through a vessel loan, with the balance from the proceeds of the initial public offering of PT BBR Tbk which was completed in early 2013.
Significance: Lee added that with the robust demand for OSVs and the gradual and consistent rise in daily charter rates experienced over the past few months, MPM expects its offshore business to continue to spearhead the growth of its overall chartering revenue.
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