Saturday, July 16, 2011

AirAsia: The relocation of AirAsia’s operations in KK (MIDF)

15 July 2011
AirAsia Berhad
Maintain NEUTRAL
Target Price (TP): RM3.43
The relocation of AirAsia’s operations in KK
BACKGROUND

AirAsia Berhad
Maintain NEUTRAL
Target Price (TP): RM3.43
The relocation of AirAsia’s operations in KK

BACKGROUND
• AirAsia has to move its flight operations to Terminal 1 of the Kota Kinabalu International Airport (KKIA) from current Terminal 2 as the government plans to convert Terminal 2 for cargo handling. The relocation is expected to increase AirAsia’s operational cost but WILL NOT lead to reduction in the number of flights and 1m passenger annually as highlighted in the media.

• We spoke with AirAsia yesterday and was informed that the discussion between AirAsia and Ministry of Transport (MOT) is still ongoing. They have laid out their terms and apparently will ONLY move if the Ministry of Transport agreed to their request. There is no timeline indicated as to when the impasse will be cleared.

RATIONALE
• The shift could turn out to be advantageous to AirAsia:
a) Bigger capacity. Terminal 1 could accommodate up to 14m passengers per annum compared to 3m passengers in Terminal 2. Terminal 2 had far exceeded its design capacity of 2m passengers per annum. In 2010, there were 2.7m passengers, which resulted in total congestion and inconvenience to passengers such as inadequate toilets, congestion at check-in counters, security and Custom, Immigration and Quarantine counters. We think it will be good for AirAsia to relocate itself to Terminal 1 as in Terminal 1, AirAsia would have a dedicated island of 16 check-in counters compared to only 9 at Terminal 2. On top of that, we have double checked with AirAsia on the possible loss of 1m passengers if they were to move to Terminal 1. AirAsia reaffirm that the statement is
misleading.

b) More parking space for aircraft. Terminal 1 has 17 aircraft parking bays compared to 6 aircraft parking bays at Terminal 2.

c) Aerobridge. Terminal 1 has 9 aerobridges compared to non in Terminal 2. According to Sabah Tourism Board, there would be no aerobridge from Bay 9 to Bay 19, which means AirAsia will be able to maintain its ticket fares if it decide not to utilize the aerobridge. However, the use of aerobridge would only cost RM0.50 per pax. Therefore, we do not see any major impediment for AirAsia to utilize the aerobridge.

d) Better connectivity. We were gather that getting out from Terminal 1 is way convenient than Terminal 2. To travel from Terminal 2 to City Centre, passengers can either take a cab or a bus. The bus cost RM1.50 (same charges at Terminal 1) and goes to the Kota Kinabalu bus terminal, Terminal Wawasan. The bus only goes once an hour or so and the schedule is highly irregular, unlike the schedule from Terminal 1, which is regular. Hence, we think the move to Terminal 1 will benefit all parties, particularly the convenience of passengers and connectivity

STATUS
• We spoke to AirAsia and was informed that the discussion between AirAsia and Ministry of Transport (MOT) is still ongoing. AirAsia has laid out its terms and will only move if the MOT agreed to its requests. In our view, the move is win-win to all parties as it will not only help Airasia improve efficiency in operations, but will also result in better customer satisfaction and boost passenger traffic due to better connectivity.

IMPACT ON EARNINGS
• We are NOT imputing any impact of the move to Terminal 1 on AirAsia’s earnings in our forecasts.

RE-RATING CATALYSTS
• Future potential growth and re-rating catalysts: 1) higher ancillary income via new initiatives- loyalty programme, AirAsia Go/ Expedia JV, and Academy JV; 2) new airline start-ups via JVs in Vietnam; 3) expanding operations in Singapore; 3) higher than expected performance achieve by its associates ; 4) the launch of new LCCT, which will be serviced by an extension of the ERL, would open up new markets for AA; 5) the commencement of AirAsia Philippines in the 4Q11; and 6) the launch of more new destinations like US, Sydney, Europe, Middle East by AAX, which will serve as feeders for AA.

RECOMMENDATION
• Reiterate NEUTRAL with Target Price of RM3.43. There are excitig developments in AirAsia such as the proposed listings of its associates. However, concerns over high crude oil prices which affects all airlines is rather overwhelming as Jet fuel is currently at USD130/bbl. Thus, we retain our NEUTRAL recommendation with a target price of RM3.43, derived from a PER11 multiple of 9.5x, which is the mean PER of its regional peers.


Source/转贴/Extract/Excerpts: MIDF Research
Publish date:15/07/11

Expect growth to pick-up in 2H2011 (MIDF)

15 July 2011 | Singapore Economy
Expect growth to pick-up in 2H2011
Despite a weak 2Q2011 real GDP growth of 0.5%yoy, we are maintaining our 5.8% growth projection that falls within the government target of 5.0% to 7.0% after a record growth of 14.5% in 2010. Nonetheless, potential downside risk remains. Much will depend on the outcome of the ongoing debt crisis in Europe and the pace of US economic recovery. If uncertainties continue and worsen, we will have to slice our 2011 growth target. Meanwhile, the slower growth and inflation which is showing signs of peaking suggests MAS will have more breathing space not to tighten its monetary policy. This will avoid excessive strengthening of SGD dollar.

• Weak growth following uncertainties on the global front: 2Q2011 real GDP shrank for the 1st time since 3Q2010 by 7.8%qoq from +27.2%qoq in 1Q2011, while on an annual change, real GDP grew by a mere 0.5%yoy from 9.3%yoy in 1Q2011 that was below consensus estimates of 1.0% and ours of 0.6%. We attribute the weak performance to the adverse impact from euro debt crisis and slower US economic recovery which dragged the manufacturing sector into a slump.

• Sluggish manufacturing sector was impacted by supply chain disruption in Japan, weak demand from US & Europe & softening global demand for semiconductor chips: Manufacturing sector fell sharply by 5.5%yoy from +16.4%yoy in 1Q2011, the biggest contraction since 2Q2009. On annualized growth, manufacturing output fell significantly by 22.5%qoq in 2Q2011, a sharp reversal from the strong growth of 96.6% in 1Q2011. Sluggish performance was impacted by the supply chain disruption in Japan and slower external demand from markets like US and EU. Also, electronics output fell partly due to softening global demand for semiconductor chips, reflected by the easing PMI and electronics for 2nd consecutive months since May.

• Increasing construction activities in the industrial building segment boosted growth in this sector: Construction sector remained on the positive growth trajectory for the 2nd consecutive quarter, up 1.6%yoy in 2Q2011 from 2.4%yoy in 1Q2011. Similar positive trend was exhibited on annualized growth, up 13.8%qoq in 2Q2011 from 13.5%qoq in 1Q2011. The positive trend is being supported by increasing construction activities in the industrial building segment.

• Healthy growth trend from the tourism-related sectors was negated by the decline in wholesale & retail trade as well as financial sector: Services growth moderated in 2Q2011 to 3.3%yoy from 7.6%yoy in 1Q2011, while on annualized growth it fell 2.9% from +10.3% in 1Q2011. It is despite the healthy growth trend from the tourism-related sectors like hotels and restaurants that is benefitting from the strong visitor inflows. Upside growth for the services sector was negated by the declines in wholesale & retail trade that was hurt by weak trade flows as well as financial services sectors dragged by the sluggish stock trading activities.

• Expect the economic performance to pick-up in 2H2011 to around 6.5%yoy: Despite the weak 2Q2011 performance, we expect growth to pick-up in 2H2011 to around 6.6%yoy. Growth drivers in 2H2011 are from:
(1) expected recovery in electronic manufacturing sector on the back of better global demand for electronics;
(2) negative impact from Japan’s supply chain disruption would have eased in 2H2011;
(3) fear of China heading for hard landing has eased with the 9.5%yoy 2Q2011 real GDP; and (4) low base in 2H2010.

• Maintain our 5.8% growth for 2011 for now: We are maintaining our 5.8% 2011 growth forecast that falls within the government target of 5.0% to 7.0% after a record growth of 14.5% in 2010. Nonetheless, potential downside risk remains. Much will depend on the outcome of the ongoing debt crisis in Europe and the pace of US economic recovery. Should uncertainties continue and is worst-off than expected, we may have to slice 2011 growth.


Source/转贴/Extract/Excerpts: MIDF Research
Publish date:15/07/11

CRCT's Q2 DPU rises 3.9%; gross revenue up 10.9%

Business Times - 16 Jul 2011


CRCT's Q2 DPU rises 3.9%; gross revenue up 10.9%

Trust observing market, doesn't rule out pursuing a yuan-denominated dual listing

By EMILYN YAP

CONSUMERS in China are spending and CapitaRetail China Trust (CRCT) has ridden on that trend to post strong results for the second quarter ended June 30.

As more property groups eye yuan-denominated real estate investment trust (Reit) listings, CRCT does not rule out pursuing a yuan-denominated dual listing itself, although it is only watching the market for now, said chief executive officer of the trust's manager Tony Tan.

Mr Tan was speaking at a briefing yesterday.

In Q2, CRCT posted a 10.9 per cent increase in gross revenue over the year to 161 million yuan (S$30.4 million), as occupancies and tenant sales at its malls rose.

Net property income went up by 11.3 per cent to 108.1 million yuan. Income for distribution - converted to Singapore dollars - was $13.5 million, up 11.5 per cent from the previous year.

Distribution per unit (DPU) for the quarter rose 3.9 per cent to 2.15 Singapore cents, and the annualised DPU also climbed 3.9 per cent to 8.62 Singapore cents.

The annualised distribution yield, based on CRCT's closing unit price of $1.22 on June 30, was 7.1 per cent.

For the first half, CRCT's income for distribution rose 2.7 per cent over the year to $26.9 million.

DPU for the period increased by 2.1 per cent to 4.3 Singapore cents.

CRCT is positive about China's retail sector, notwithstanding talk of a hard landing in the country earlier.

It drew confidence from the rental reversion it has seen - of the 104 leases it renewed in Q2, the average rental increase over preceding rents was 17 per cent.

'It takes a while to get the tenant and the shopper to understand our malls. Once you get that traction - you always have this inflection point - then a lot of people would be interested,' Mr Tan said.

'I think we are just beginning to reach that point for some of the malls,' he added.

Of late, yuan-denominated Reit listings in Hong Kong have come under the spotlight.

Asked if CRCT would pursue a yuan-denominated dual listing, Mr Tan said that it is observing the market and has not ruled out this option.

Such a listing would make sense for CRCT because its cash flows are in yuan, he said.

But he added that careful consideration was needed.

One thing he noted: The performance of Hui Xian Reit - Hong Kong's first yuan-denominated IPO - has not matched the initial hype surrounding the listing.

CRCT closed unchanged on the stock market yesterday at $1.23.


Source/转贴/Extract/Excerpts: www.businesstimes.com.sg
Publish date:16/07/11

陈庆炎:债券价格 反映国家违约风险

陈庆炎:债券价格 反映国家违约风险

(2011-07-16)


“一个国家能不能违约?”陈庆炎博士认为,之前各国首脑和重要官员都认为是不可能的,但现在持有不同的看法。然而要是注意到今天的市场,市场如何为希腊债券定价,市场已经决定如果你今天买了希腊的债券,你就必须为希腊可能违约做好准备。

 李敏雯 报道

  一个国家能不能违约?还是它“大到不能倒”(too big to fail)?

  前副总理陈庆炎博士认为,过去这被看作是不可能的事,现在看来,国家违约的风险其实已经反映在其债券的价格中。

  陈博士昨天在中华总商会举办的名人讲座系列之“环球经济走势、风险与机遇”的场合上,回答一名商界领袖的问题时作出上述看法。

  陈庆炎博士刚在7月1日卸下新加坡政府投资公司(GIC)副主席兼执行董事和新加坡报业控股(SPH)主席的职务,投身民选总统的战围中。

  他说:“之前他们(各国首脑和重要官员)都认为是不可能的,但现在持有不同的看法。然而要是注意到今天的市场,市场如何为希腊债券定价,市场已经决定如果你今天买了希腊的债券,你就必须为希腊可能违约做好准备。”

市场主宰一切

  他指出,经历了好几个经济周期的起落,其中一个应该吸取的教训是从不与市场对抗。“市场将最终决定结果,虽然这可能会让一些政府领袖感到不舒服,但最终市场主宰一切。”


他在这个名人讲座上发表讲话时也说,亚洲虽然崛起,但也必须注意到在新兴国家的经商风险已经加大。
  他认为,新兴市场需要让汇率升值,通过允许国内信贷周期建立起基础,来减少依赖传统出口。

  陈庆炎指出,两个长期的结构性趋势将重新打造全球中长期的投资和商业社区的面貌。

  首先在发达经济体,尤其是美国,尽管目前似乎在复苏中,但长期前景仍然不寻常地缺乏确定性,带有相当大的全球宏观金融和经济风险。

  第二个趋势则是经济活动中心从西方转移至亚洲。陈庆炎指出,一方面经济与地缘政治力量转变,将创造前所未有的商业和投资机会。但这也将产生更多的地缘政治,环境和政策的风险。

全球重新平衡与

去杠杆化不可避免

  因此企业和决策者将不得不考虑如何组织起来,以满足机遇的同时,也管理好这些新的风险。

  在谈到发达经济体,陈庆炎认为,全球重新平衡和去杠杆化是不可避免的,但没有人可以预知它将采取怎样的方式。

  但也不应低估美国经济的优势和主要新兴经济体,尤其是中国的前景。

陈庆炎说,未来几十年,由亚洲主导的全球新兴经济体和市场将出现前所未有的壮大。
  中国和印度不仅将分别在2030年和2050年超越美国的经济规模,在10年内,“八大增长新兴国家”——中国、印度、巴西、俄罗斯、墨西哥、韩国、土耳其和印度尼西亚以美元计算的国内生产总值(GDP)增长,将达到美国经济增长的四、五倍之多。

  但这也意味着需要加强能力在新兴市场尤其是中国、印度、中南半岛(Indo-China)和印尼等占主导地位的亚洲经济体在政治,体制和政策的风险预测和管理。

  昨天共有300多名商界领袖参加了这场午餐讲座。


Source/转贴/Extract/Excerpts: 联合早报
Publish date:16/07/11

Macquarie International Infrastructure Fund (MIIF) -DMG

Macquarie International Infrastructure Fund (MIIF)
UNRATED, S$0.56)
A$1b portfolio.
Macquarie International Infrastructure Fund (MIIF) was the first infrastructure fund to be listed on SGX, back in 2005. Following a series of asset sales over the past few years, the group made a full exit from its investments in Europe and North America, whilst at the same time increasing its exposure in Asia. Currently, the group has 3 key investments: 1) a 47.5% stake inTaiwan Broadband Communications (TBC), one of the 3 leading cable television operators in Taiwan providing integrated entertainment and communications to more than one million households; 2) a 81% stake in Hua Nan Expressway (HNE), a commuter toll road in Guangzhou; 3) a 37% stake in Changshu Port, a multi-purpose port dealing in steel, forestryrelated products and containers. Cash made up the remaining 14% of MIIF’s S$1b investment portfolio.

Lessons from the financial crisis.
Prior to the financial crisis, MIIF was invested in a wide mix of operating assets and listed funds in far-flung locations, from the UK to Canada to China.Debt was often piled high at the asset level as debt funding was cheap and abundant. The onset of the financial crisis resulted in a credit crunch and forced a number of its investments to focus on debt-reduction measures and even suspending dividend payments. MIIF’s distribution payout was affected as a result, leading to a downward spiral in the stock price. To strengthen its balance sheet, the group carried out a number of asset sales and moved to reduce gearing at individual asset levels. Today, MIIF is in a healthy financial position, while the streamlined portfolio is reporting strong operational performance, leading to higher distribution payouts that are more sustainable.

On the lookout for new investments.
With a stronger balance sheet, MIIF is on the lookout for new investments. Its criteria for new acquisitions are 1) the acquisition must be yield-accretive, 2) the acquisition should offer double-digits internal rate of return. MIIF is highly selective in the type of infrastructure assets it targets to acquire, preferring low-risk investments that have a dominant market position, sustainable or predictable cashflows and offering potential for long term capital growth. It currently has $140m of cash to deploy, and has conducted share buybacks to enhance per unit value.

Trading with the highest yield in the business trust sector.
For the 6 months ended June 2011, MIIF distributed a DPU of 2.75 cents. On an annualised basis, the payout of 5.5 cents would translate to a yield of 9.8%, among the highest for SGX-listed business trusts. On a P/B basis, the stock price has narrowed the discount to its NAV, from as much as 76% during the height of the global financial crisis, to the current 32%. We find MIIF interesting given its high and sustainable yield, which is higher than the sector average. The stock is misunderstood given its chequered past, and could potentially improve its ratings as underlying asset performance continues to improve.


Source/转贴/Extract/Excerpts: DMG Research
Publish date:14/07/11

The unending saga of Putra Place

The Star Online > Business
Saturday July 16, 2011

The unending saga of Putra Place

By ANGIE NG
angie@thestar.com.my

PUTRA Place, which includes The Mall shopping complex, was one of the most exciting commercial properties in Kuala Lumpur in the late 1980s. Opened around the same time as the Putra World Trade Centre and the Umno headquarters, the development spurred businesses in and around Chow Kit Road and brought more life to the neighbourhood which was just a stone's throw away.

But from the mid 1990s onwards The Mall lost its lustre as newer and bigger shopping malls mushroomed in Kuala Lumpur. Coupled with the financial trouble faced by its owner Metroplex Bhd after the Asian financial crisis broke out in 1997, Putra Place, which also houses the Legend Hotel and Putra Place office tower, became embroiled in a legal tussle that has lasted close to 10 years.

And just when it was thought that the long-drawn legal tussle over Putra Place had come to an end via a court-sanctioned auction that would have seen the entry of a new owner and the injection of money to refurbish the complex, there was another injunction.

Metroplex, which is owned by Lim Siew Kim, the daughter of the late gaming tycoon, Tan Sri Lim Goh Tong, obtained a court injunction on July 1 to stop Sunway Real Estate Investment Trust (Sunway REIT) from taking possession despite it having won the bid for Putra Place in the auction.

According to Sunway REIT, it had already paid in full the auction price of RM513.945mil to Commerce International Merchant Bankers Bhd (CIMB) which was the principal banker that had seized Putra Place from Metroplex because of debt default.

Sunway REIT had also registered the title to Putra Place under its name at the KL Land Registry and on June 30. Sunway Group boss Tan Sri Jeffrey Cheah and his top executives held a press conference to reveal its plan to rebrand and refurbish the complex. He says that Putra Place will be called Sunway Putra Place.

Cheah adds that Sunway REIT has plans to upgrade and refurbish the shopping mall and turn it into an iconic tourist and commercial hub.

But it was not to be, as Metroplex obtained the injunction the next day, just hours before it was required by another court order to hand over possession to the new owner.

Metroplex has alleged that the auction sale of Putra Place was not in order. But Sunway REIT's manager, Sunway REIT Management Sdn Bhd, and trustee, OSK Trustees Bhd, have maintained that they had followed the proper procedures in the public auction on March 30.

The Court of Appeal will be hearing the arguments of both sides when it meets soon. Meanwhile, Sunway REIT is unable to move in as the new owner or take over the management of Putra Place.

The saga Putra Place is embroiled in is principally due to Metroplex's debt. The long-drawn dispute between Metroplex and its creditors dates back to December 2000, when Metroplex announced that it had failed to redeem its 1995/2000 bonds and had defaulted on its loan facilities with various lenders.

Since November 2004, there had been several winding-up petitions served on Metroplex and its subsidiaries.

On Dec 22, 2006, Heng Ji Keng and Michael Joseph Monteiro of Ferrier Hodgson MH Sdn Bhd were appointed as the provisional liquidators of Metroplex was delisted from the Main Board of Bursa Malaysia on May 15, 2007.

According to its audited accounts for the financial year ended Jan 31, 2010, the parent company disclosed that Metroplex and certain of its subsidiaries had defaulted in the repayment of certain bank borrowings amounting to RM1.48bil. The Metroplex group had total borrowings of RM1.5bil as at Jan 31, 2010.

The March 30 auction of Putra Place was in fact the fourth attempted public auction of the property. In the first auction in April 2008, Putra Place was put up for auction at a reserve price of RM705mil, but no bids were received. A second auction was scheduled on April 16, 2009, and the price was then reduced by 10% to RM634.5mil. However, it did not take place after Metroplex had obtained an ex-parte restraining order (RO) restraining all legal actions against the Metroplex group of companies.

By the time the RO was set aside on April 3, there was insufficient time for Metroplex and its lenders to put up sufficient advertisements ahead of April 16. Advertisements had to be made twice before the auction.

CIMB then made an application to the court for the auction date to be set aside and the next auction date was subsequently fixed on August 20, 2009. The auction was also not successful.

In Jan 2010, CIMB applied for a third auction date to be fixed and it was set originally for May 27, 2010 with the reserve price being fixed at RM571.05mil (a reduction of 10% from the previous reserve price of RM634.5mil).

The third auction also did not work out and was subsequently postponed to June 28, 2010, to enable the parties to comply with the necessary advertisement requirements both in the country and abroad. Again, no buyer was found during the third auction.

Finally, at the fourth auction on March 30 this year, Sunway REIT's bid of RM513.945mil was accepted.

But the saga, as events in the last two weeks have shown, is not over yet. For Sunway REIT and Sunway Group, which have built a reputation as savvy mall developers and managers, this is a tussle which they are not accustomed to.

The outcome of this latest tussle for Putra Place will be watched with great interest, not just by developers and mall operators, but also by bankers and lawyers.


Source/转贴/Extract/Excerpts: The Star Online
Publish date:16/07/11

Firefly MD Eddy Leong answers your 10 questions

The Star Online > Business
Saturday July 16, 2011

Firefly MD Eddy Leong answers your 10 questions

Firefly is competing with AirAsia in many areas, including Johor. Soon Singapore Airlines (SIA) will launch its long-haul low-cost carrier. What will be the impact on the airline and its southern hub? Yusoff Hakimi, KL

Firefly's primary objective is to be the growth vehicle of the Malaysia Airlines (MAS) group, especially for the “value” market segment, which is experiencing a very high growth rate in this part of the world.

We believe the MAS-Firefly dual-brand strategy presents the best opportunity to position MAS as “Asia's Number One Airline” targeting the premium market segment and Firefly as “Your Community Airline” targeting the value market segment.

Our strategic intent for the southern hub based in Senai International Airport is to be the growth catalyst for Iskandar Malaysia, in support of one of the largest Government-led development projects in recent times.

From a MAS group perspective, it was decided that Firefly's product positioning and cost structure would be the ideal vehicle to lead this profitable growth.

SIA's intention to start a long-haul low-cost airline is definitely very welcome. Iskandar Malaysia's unique attraction is precisely because it is located next to Singapore, which is Asean's biggest financial and air travel hub.

All airlines currently operating in Senai International Airport and Changi Airport will definitely benefit from increased connectivity to each other whilst establishing certain niche respectively. A living example of this is Hong Kong and Shenzhen.

Why can't Firefly's B737 flights have the same services as the ATR72 flights, such as provision of refreshments and baggage allowance? William Tan, KL

The ATR72 flights are designed to maximise convenience, comfort and access for flights averaging one hour flight time. Passengers who have experienced our flights at Subang will certainly attest to that.

Our ATR72 operations are very popular with frequent commuters, whose number one concern is time criticality. Consequently we have designed our services to be totally hassle-free.

Tickets are available for purchase online, via call centre or from our airport ticketing offices. We have 30-minute check-in cut-off time, standard 20kg checked-in baggage allowance, complimentary in-flight refreshments, etc. The emphasis is to make travel as hassle-free as possible and this has worked very well for Firefly.

Our B737 flights, however, is designed to offer “choice”, whilst staying true to our pledge to deliver convenience, comfort and access for flights that are longer in flight time.

This is why Firefly chose to operate from the Kuala Lumpur International Airport, with world-class airport facilities such as aerobridge, train/bus/taxi services, extensive F&B and shopping outlets, etc.

It is our belief that low fares can come with excellent facilities and world-class services. Consequently we attract a very diverse range of customer segments ranging from backpacking super-value seekers who only want a seat in the aircraft, to top executives and VVIPs who want the full suite of services.

In a scenario like this, we believe it is preferable to put the power of choice back in the hands of our passengers. By separately listing out the ancillary items and pricing them outside the ticket price, our passengers can exercise their right to buy only the items they need for the travel and nothing else. I believe this is how the idea of charging for use of toilet onboard was mooted by the most popular low-cost carrier in Europe.

Rising oil prices are a concern for airlines. How much of your fuel is hedged and at what prices? Will you impose fuel surcharges if oil prices rise further? Mohamed, Johor

Firefly currently does not hedge our fuel requirements and we do not intend to impose a fuel surcharge in the foreseeable future.

We do not believe imposing the surcharge is a tenable method to offset escalating fuel prices. Fuel consumption is a direct result of aircraft type, and that is the key to fuel management.

With the ATR72-500, we've found the ideal aircraft that is high-performing, fuel-efficient and cost-effective. But we are not stopping here as we continue to work closely with ATR to further improve overall performance of the aircraft.

As for the narrow-body jet aircraft, we are closely following industry developments to ensure when we finally choose the long-term aircraft type, it will be one that will bring us all the way to 2030 and beyond, where the economy is driven by sustainability and not wasteful consumption.

You have steered Firefly to regional recognition, and there are accolades from passengers. As an accountant, who is often perceived as figures-centric, how do you become business-savvy? Huang, Singapore

I guess I have some similarity to the likes of Tengku Datuk Azmil Zahruddin (MAS CEO), Michael O'Leary (Ryan Air CEO), Tan Sri Tony Fernandes (AirAsia CEO), Gary C Kelly (Southwest Airlines CEO), etc.

Your aircraft is maintained by the MAS engineering team. Do you have plans to set up your own engineering department? Azafzan, KL

For the ATR72, yes. This is because the ATR aircraft is significantly simpler compared to jet aircraft ranging from B737 to A380, and hence, more cost-effective and efficient to be maintained separately. As for our jet fleet, maintenance will continue to be outsourced to MAS's maintenance and repair organisation unit.

Is there cannibalisation of MAS routes when Firefly flies the same routes? Wouldn't it be more sensible to delineate distinctly, say, for MAS to concentrate on routes with more than three flight hours, while Firefly on shorter routes? Ambrose Lo

The MAS-Firefly dual-brand strategy is designed to maximise profitability and ensure sustainable growth of the MAS group. Decisions regarding our network development are closely coordinated to ensure we position the right brand, product, service level, price structure, cost base, etc, to match market demand, thereby resulting in the best profitability.

As a group, we view cannibalisation as a natural development and therefore, the appropriate response is to ensure we have a portfolio of products and services to continue to capture the changing demands.

Firefly's pricing for the Subang-Singapore route is stiff. You should lower it and not monopolise your position in that sector. Your thoughts? Victor Tan, Penang

Firefly probably has the least capacity serving the Kuala Lumpur-Singapore route compared to other carriers, which use jet planes.

Since liberalisation, this route has experienced tremendous capacity increment and I doubt we have any real monopoly over the route.

As explained in my reply to Question 2, what we offer for the Subang-Singapore route is a product and service designed for frequent commuters with emphasis on convenience, comfort and access.

We package into the air fare what other airlines would require you to purchase separately and frequently, more expensively. We believe we offer our passengers incredible values at low fares. That said, we continue to encourage our passengers to purchase their tickets well ahead of time to take advantage of our early bird discounts.

What are Firefly's expansion plans, and what are the new destinations that you are looking to fly to? Is Alor Star on the cards? Bernard KH Lim, Penang

Firefly will take delivery of two more ATR72-500 this October, intended to supplement our current network with more frequencies. I'm pleased to say that one of the routes earmarked for additional frequencies is Subang-Alor Star.

Firefly already has six B737-800s and one B737-400. We will have taken delivery of one more B737-400 by end July and another B737-800 by November. We will take another six B737-800 in 2012, seven in 2013, five in 2014 and five more in 2015, making it a total of 30 B737-800s by 2015.

Our network expansion in 2011 and early 2012 is primarily focused on domestic routes, especially flights to Sabah and Sarawak. From mid-2012 onwards, we plan to commence our international flights to major and secondary Asean cities.

Since starting our B737 operations, we have been receiving daily requests to operate into various locations. We believe our low fare with world-class service quality' approach has opened up a whole new dimension previously not believed to be possible. We are very encouraged by this show of support and will certainly do our best to serve our passengers better.

Firefly has not even placed an order for more aircraft. How are you going to compete with AirAsia, which has more planes and routes? Osman, Kuantan

We actually don't spend much time thinking about our competitors. Our focus has always been our customers what they want (or what we think they want) and what they are willing to pay for.

I believe this has served us very well and continues to be a source of inspiration to every single staff in Firefly. Each of us wakes up every day all geared up to serve our customers better because we know ultimately that means better profitability to the company. How dreadful it would be if we were to spend our lives worrying about what the competitors will do.

Regarding aircraft, as mentioned in my reply to Question 3, we are following closely the industry developments to ensure we put our money in aircraft that will propel us into the future of sustainable growth and increased environmental standards.

Size is not a major consideration as Firefly is leveraging on the critical mass already achieved by the MAS group. We prefer to grow organically and profitably.

Meanwhile, we continue to source our aircraft requirements in the leasing market. So far, we have been very successful in securing leases at favourable terms.

There are many Nepalis working in Malaysia but no airline from Malaysia flies to Kathmandu, Nepal. There are also many Malaysians who would like to visit Nepal. Would Firefly have a long-haul low-cost arm? James JL Foo, KL

Kuala Lumpur-Kathmandu is a route being considered favourably by the MAS group. We have not yet decided who will be operating the route and the timeline for it. Will Firefly have a long-haul low-cost arm? Well, never say never!


Source/转贴/Extract/Excerpts: The Star Online
Publish date:16/07/11

S&P warns of credit rating downgrade even if deal is reached

10:35 AM Jul 15, 2011
SYDNEY - Ratings agency Standard & Poor's has warned there is a one-in-two chance it could cut the United States' prized triple-A rating if a deal on raising the government's debt ceiling is not agreed soon.

Putting the US on negative watch, S&P warned that it could cut the rating as soon as this month if talks between the White House and Republicans remain stalemated. Any cut would be by one or more notches, it added.

"Today's CreditWatch placement signals our view that, owing to the dynamics of the political debate on the debt ceiling, there is at least a one-in-two likelihood that we could lower the long-term rating on the US within the next 90 days," the agency said in a statement.

The S&P warning comes just a day after Moody's Investors Service warned the US may lose its top-notch credit rating in the next few weeks if lawmakers fail to increase the country's legal borrowing limit and the government misses debt payments.

The deadline to raise the ceiling is on Aug 2.

"We have also placed our short-term rating on the US on CreditWatch negative, reflecting our view that the current situation presents such significant uncertainty to the US' creditworthiness," S&P said.

Republicans rejected a deal at a White House meeting yesterday that would have included a payroll tax-cut extension and a number of tax breaks for certain business sectors, a Democratic aide said.

President Barack Obama had offered a spending cut of US$2 billion (S$2.44 billion) for the coming fiscal year in White House budget talks, but that was far below the level sought by Republicans, Senate Republican Leader Mitch McConnell said yesterday.

So protracted has been the wrangling over the budget that S&P warned that even if there was a deal done on raising the ceiling, it might still cut the rating if it was not convinced it would stabilise the country's medium-term debt dynamics.

"If an agreement is reached, but we do not believe that it likely will stabilise the US' debt dynamics, we, again all other things unchanged, would expect to lower the long-term 'AAA' rating, affirm the 'A-1+' short-term rating, and assign a negative outlook on the long-term rating," said S&P.

The market reaction in Asia was strangely muted, perhaps because Moody's had already raised the possibility of a downgrade. Dealers said the market might also be hoping that the pressure from the agencies would jolt US lawmakers into doing a deal.

"It's eerily quiet so far," said a trader at a local bank in Sydney. "People are counting on sanity breaking out in the US - the idea of default is just too scary to contemplate."

Source/转贴/Extract/Excerpts: TODAYonline
Publish date:16/07/11

Citi earns S$4 billion profit in Q2

09:00 PM Jul 15, 2011
NEW YORK - Citigroup, the third-biggest US bank, said on Friday profit rose 24 per cent in the second quarter on higher investment-banking fees and fewer losses tied to troubled assets.

Second-quarter net income was US$3.34 billion (S$4.05 billion), or US$1.09 a share, compared with US$2.7 billion, or 90 US cents, in the corresponding period last year, New York-based Citigroup said. The average estimate of 23 analysts surveyed by Bloomberg was for earnings per share of 96 US cents.

A 61 per cent gain in investment-banking revenue at Citigroup, led by Chief Executive Officer Vikram Pandit, 54, mirrored the results JPMorgan Chase reported on Thursday. Losses fell at Citi Holdings, the unit that includes distressed assets Mr Pandit wants to sell. The results countered a decline in trading revenue from the first quarter and allowed Mr Pandit to post a sixth straight profitable quarter.

"The momentum has shifted away from losses and to small incremental gains," said Mr Michael Yoshikami, CEO and founder of YCMNet Advisors, which manages US$1.1 billion including Citigroup shares.

JPMorgan, the second-largest US bank by assets behind Bank of America Corp, had reported a US$5.43 billion profit, or US$1.27 a share, 6 US cents higher than the average estimate of analysts surveyed by Bloomberg. The firm's investment bank increased revenue 37 per cent to US$1.9 billion.

Citigroup's investment-banking unit advised on completed deals worth US$98.8 billion in the quarter, almost quadruple volume for the same period last year. Overall deal volume increased 45 per cent to US$579.3 billion, according to data compiled by Bloomberg. - BLOOMBERG

Source/转贴/Extract/Excerpts: TODAYonline
Publish date:16/07/11

CapitaRetail China Trust's Q2 property income up 11.3%

04:45 AM Jul 16, 2011
SINGAPORE - Mainboard-listed CapitaRetail China Trust (CRCT) announced yesterday net property income of 108.1 million yuan (S$20.6 million) for the second quarter, an increase of 11.3 per cent from the corresponding period last year.

But CRCT's performance in Singapore dollar terms was much lower, rising only 4.1 per cent as a result of the strength of the local unit versus its Chinese counterpart. Gross revenue was up 10.9 per cent in yuan terms at 160.95 million yuan, or up 3.8 per cent in Singapore dollar terms at S$30.68 million.

For the second quarter, the distribution per unit rose 3.9 per cent to 2.15 Singapore cents .

Mr Victor Liew, chairman of the trust manager, said: "In June 2011, CRCT successfully completed the yield-accretive acquisition of New Minzhong Leyuan Mall in Wuhan, expanding our presence in China."

CRCT, with a total asset size of S$1.4 billion, now has a portfolio of nine shopping malls across six Chinese cities.


Source/转贴/Extract/Excerpts: TODAYonline
Publish date:16/07/11

Sheng Siong seeks up to S$141m in IPO: Sources

04:45 AM Jul 16, 2011
SINGAPORE - Supermarket operator Sheng Siong Group aims to raise up to S$141 million via its initial public offering on the mainboard of the Singapore Exchange expected next month, people familiar with the deal told Dow Jones Newswires yesterday.

Sheng Siong is set to offer about 351 million shares at an indicative price range of S$0.36 to S$0.40 apiece, the sources said. The offer comprises about 201 million new shares and about 150 million vendor shares.

Sheng Siong last month filed a preliminary prospectus with the Monetary Authority of Singapore, but did not provide details about the size or timing of the offering.

The group, which operates 24 retail outlets throughout Singapore, reported revenue of S$628.4 million last year.

OCBC Bank is the issue manager, underwriter and the placement agent.

According to the draft prospectus, unaudited pro-forma net earnings per share of Sheng Siong for its 2011 financial year based on the pre-invitation share capital of 1,140 million shares is 3.74 Singapore cents.

Sheng Siong said in the draft prospectus it will use the proceeds mainly to repay debt, develop and expand its grocery business and operations in Singapore and overseas, and for working capital. Agencies

Source/转贴/Extract/Excerpts: TODAYonline
Publish date:16/07/11

Friday, July 15, 2011

CitySpring leans on Temasek in rightsissue plan as negative debt ratings loom

CitySpring leans on Temasek in rights issue plan as negative debt ratings loom
Beleaguered CitySpring Infrastructure Trust is raising cash with the backing of key sponsor, Temasek Holdings, to improve its financial position and attractiveness to investors amid a rebound of sorts in the popularity of yield-bearing financial structures and securitisation vehicles.

Listed in February 2007, during the heyday of securitisation deals, its IPO at 89 cents per unit was more than 48 times subscribed and eventually upsized by 20%, raising some $286 million. Its initial portfolio consisted of a 100% stake in City Gas Trust, the sole producer and retailer of town gas and the sole user of the low-pressure piped town gas network in Singapore; and 70% of the SingSpring Trust, the sole supplier of desalinated water to the Public Utilities Board (PUB) of Singapore, supplying 10% of its water needs.

Its managers lost no time in seizing the bull market by the horns. Just five months after its IPO, in July 2007, with its units trading at $1.26 each, it launched the acquisition of Basslink in Australia for A$1.175 billion ($1.544billion). Basslink is an electricity inter connector between Tasmania and mainland Australia.

Since then, CitySpring has struggled to get on top of its mountain of debt. As at end-March, the trust had a net debt position of $1.4 billion against equity of just $357 million. For the financial year to March 2011, it made a net loss of $28.5 million, bringing accumulated losses on its balance sheet to $259.6 million. Units in the trust have tumbled 12.3% this year to 50 cents, under performing the Straits Times Index’s 2.2% decline year-to-date

Tong Yew Heng, who was appointed acting CEO of the trust’s manager in April following the departure of Fai Au Yeong, is now helming a plan to haul it out of its rut. On June 30,CitySpring announced a renounceable 11-for-20 rights issue at 39 cents per unit to raise $210 million, its second rights issue in two years. “We will have raised $205 million net [of costs] and we have the flexibility to decide whether to reduce the loans at the corporate level or the Basslink level,” says Tong, who is also chief financial officer of the trust’s manager. “That will reduce the overall debt for the group and help us to enhance the ratings for Basslink."

Some A$866 million worth of bonds issued by Basslink are on credit watch “with negative implications” by the ratings agencies. That’s because of Basslink’s increased vulnerability to higher interest costs starting in 2015,as it begins to refinance its bonds"

In August 2007, the trust issued A$486 million floating-rate bonds due August 2015, and two tranches of A$190 million fixed-rate capital-indexed bonds due August 2017and August 2019 respectively, (or a total of A$866 million) to finance CitySpring’s acquisition of Basslink. The bonds are rated BBB- and Baa2 by Standard & Poor’s Australia and Moody’s Investors’ Service respectively. If their ratings fall to BB+/Ba1 or lower, Basslink may not make distributions to CitySpring. Over the last three financial years, Basslink has distributed an average of A$4.7 mil-lion per quarter to CitySpring

Tong says Basslink is still operationally sound, though. When it was first acquired, Basslink was expected to provide long-term, regular and predictable revenues from a 25-year contract with Hydro Tasmania, the electricity generating company wholly owned by the State of Tasmania. “It is basically a cable that is 400km long,” he says. “This is an electrical cable and bundled together were optical fibres. This is very common for transmission lines.”

The optical fibres in the cable were initially used for internal communications between Basslink’s two stations in Tasmania and Victoria, Tong adds. “But then, there were spare fibres, so we decided to start the Basslink telecoms business, which we launched in July 2009.” Previously, only Telstra provided the broadband connection between Tasmania and the rest of Australia. Now, Basslink’s customers include Internet service providers, other telcos and large corporates.

Temasek backs rights issue CitySpring’s rights issue plan to strengthen its balance sheet seems certain to succeed. Its largest investor, Temasek, has given its irrevocable undertaking to take up as much as 458.1 million rights units. That’s 85% of the rights units to be issued. The remaining 80.8 million, or 15%,of the rights units have been under-written by DBS Bank, Goldman Sachs and Morgan Stanley. Temasek currently owns 28.5% of CitySpring, but its stake could rise to almost 50% if it takes up the maximum 85% of the rights issue. CitySpring is seeking a “whitewash waiver” from its investors that will free Temasek from having to make a takeover offer if its interest crosses the 30% threshold.

This isn’t the first time since the financial crisis that CitySpring is tapping its investors for cash. In 2009, it did a renounceable one-for-one rights issue to raise gross proceeds of approximately $235.2 million. The net proceeds of $227.5 million were used to repay term loans and revolving credit from DBS. In that exercise, Temasek’s pro-portionate interest didn’t change much because “all the other unitholders took up their entitlement, more or less”, Tong notes.

Yet, that might have been because of the much steeper discount at which the 2009 rights issue was priced, compared with the current rights issue proposal. At 48 cents per unit, the 2009 rights was a 38.5% discount to CitySpring’s then market price of 78 cents, and 29.4% lower than its TERP (theoretical ex-rights price) of 68 cents. The current rights issue is priced at a discount of just 21% to its TERP of 48.5 cents.

Will investor appetite for the current rights issue match the 2009 exercise? Why would investors want top lough more cash into CitySpring now? Is there any upside to its units.

Improved balance sheet Tong says CitySpring is doing more than just asking investors for more cash. The trust manager has refinanced and extended the maturity of two loans — a $128 million loan at the City Gas Trust level, and the $142 million loan at the CitySpring level — to February and August 2014 respectively. “We’ve done the two refinancings recently and just signed the agreement to extend their maturity. These two are part of the package that will put us in a much better position,” Tong says.

In 4Q2011, City Gas Trust recorded cash earnings of $8.1 million compared with $8.5 million a year ago. Its cash earnings for the quarter were impacted by changes in the tariff in response to changes in fuel costs. However, the company benefitted from higher town gas volume demand. Average daily town gas dispatched in FY2011 was 824,000 cum compared with 788,000 cu m in the previous financial year, according to filings.

Meanwhile, desalinated water producer SingSpring Trust reported cash earnings of $4.2 million in4Q2011, unchanged from year-ago figures. During the period, the plant utilised 26% of its capacity for the production of desalinated water for PUB. Meanwhile, Basslink achieved A$4.7 million in cash earnings in 4Q2011 compared with A$10.8 million in 4Q2010.

“We have four businesses and we like these businesses,” Tong says, referring to the gas business in Singapore, the desalination business through SingSpring, and the power transmission and telecoms business operated through Basslink. “They have been performing to expectations so, we’re not looking at divestment.” In fact, Tong sees renewed interest in business trusts in Singapore, noting that Hutchison Ports Holdings Trust (HPH) came to market earlier this year. “In this space, we could see more. Investors will spend a lot more time with us and focus on this segment.”

HPH Trust raised US$5.4 billion at its IPO in March this year, the largest offering since Singapore Telecommunications in 1993. Yet, its unit price is now trading well underwater at 84 US cents versus its IPO price of US$1.01.

Whatever the case, analysts who still cover CitySpring are less than positive. Kim Eng Research says ina July 4 report that CitySpring’s proposed rights issue is a preemptive move intended to deflect the effect of a negative outlook on Basslink’s bonds rating and to ensure that its distributions to CitySpring will not be disrupted in the event of a rating downgrade. “The capital raising exercise is still viewed as a negative on the whole as there is no financing of any yield-accretive acquisition,” the report states.

Kim Eng notes that CitySpring’s capital structure will be improved following the rights issue. “With the partial buyback of the A$ Basslink bonds, the capital structure of CitySpring will be enhanced as group wide net gearing falls from 394% to336%.” Yet, it will also reduce its distributions per unit (DPU). “We cut our DPU forecasts from 4.2 cents to 3.3 cents and three cents for FY2012 and FY2013 respectively.” That would put its post-rights yield at 6.2% based on TERP.

Kim Eng says it is maintaining its “hold” rating, with a reduced price target of 46 cents, versus 54 cents before.

Source/转贴/Extract/Excerpts: www.theedgesingapore.com
Publish date:11/07/11

Analysts tout Hutchison Port HoldingsTrust after steep post-IPO slump

Analysts tout Hutchison Port Holdings Trust after steep post-IPO slump

Hong Kong billionaire Li Ka-shing has a reputation for selling assets and raising cash for himself at opportune moments. So it was with the IPO of Hutchison Port Holdings Trust. The book building was completed on March 10,the day before Japan was hit by a devastating earthquake and tsunami. Even as global markets swooned the day after, HPH Trust’s IPO was priced at US$1.01 a unit, the middle of its indicative range, raising a total of US$5.4 billion ($6.6 billion). Now, three months on, Li is looking more prescient than ever. Not only are units in HPH Trust trading deep under water at 84 US cents, analyst opinion on the outlook for its port assets is slowly souring.

For starters, Chinese stocks in general have suffered as investors worry about inflation and government measures that might lead to a hard landing for the Chinese economy. Ken He, an analyst at DBS Vickers, says port operators, in particular, have been battered by market worries about shrinking exports. China exports rose 19.4% in May from a year earlier, slowing from the 29.9% growth registered in April, according to Chinese customs statistics. On the other hand, import growth accelerated to 28.4% from 21.8% in April.

Indeed, HPH Trust is not the only port-related investment to have done badly in the last few months. Its Hong Kong-listed peers China Merchants Holdings, Cosco Pacific, Dalian Port(PDA) and Tianjin Port Development Holdings have all come under pressure. China Merchants is down 15.8% and Cosco Pacific is down 16.6% since March 11, when HPH Trust fixed its IPO price, while Dalian Portand Tianjin Port are down 9.7% and 23.9% respectively

Yet, HPH Trust also suffers from specific impediments to its future growth, analysts say. The key issue is that its port assets are concentrated in the Pearl River Delta, the principal waterway to China’s once fast-growing coastal manufacturing hub that is now quickly maturing. In fact, there are now growing fears that the relocation of factories farther inland to escape rising costs in the Pearl River Delta is slowly sapping the market for container traffic in the area. JP Morgan says the collective share of Pearl River Delta container ports to China’s throughput has been on a “swift” decline to 35% in 1Q2011, from 42% in 2005and 65% in 1996.

Meanwhile, shipping companies have been investing in their own terminals, adding to the competitive pressure faced by ports in the region, notably in Hong Kong. In April, Maersk began diverting 25% of its port calls at Modern Terminals in Hong Kong to Guangzhou’s Nansha port, where its affiliate APM Terminals has a joint-venture terminal.

“We still expect the near-term volume migration at the neighbouring Modern Terminals to weigh on the Hong Kong ports as a whole in 2H2011 and believe other Pearl River Delta ports in China will continue to capture a larger share over time,” says Michael Beer, an analyst at Citi. Citi has lowered its throughput growth projections for HPH Trust’s Yantian International Container Port (YICT) in Shenzhen to3.9% from 5%, while its Hutchison International Terminal (HIT) in Hong Kong will grow5.4%. For FY2012, it predicts 5% growth for YICT and 3.7% for HIT.

By comparison, most of HPH Trust’s Hong Kong-listed peers seem to be better positioned, with more diversified business exposure. Jon Windham, an analyst at Barclays Capital, says China Merchants derived 75% of its 2010 pre-tax profit from port operations, while less than half of Cosco Pacific’s 2010 pre-tax profit came from its container ports. China Merchants and Cosco Pacific also have ports beyond the Pearl River Delta, in the faster-growing Yangtse River Delta and Bohai Rim area.

According to data from Cosco Pacific, through-put in the January-to-May period was up 8.3% y-o-y at its ports in the Pearl River Delta, compared with 24.5% at its ports in the Yangtse River Delta and more than 32% at its facilities in the Bohai Rim area. HPH Trust does not release monthly statistics

Against this backdrop, Beer of Citi has a “sell” rating on HPH Trust with a price target of 78 US cents. Units in HPH Trust are not trading too far above his price target now. Even so, Beer points out that it is still trading at more than twice the average price-to-earnings multiples of Cosco Pacific and China Merchants.

Unlike these peers, however, HPH Trust is not a company but a trust that is designed to maximise its cash payouts rather than invest its cash flows and grow its business. Beer predicts a distribution rate of 77% of Ebitda (earnings before interest, tax, depreciation and amortisation) in 2011, which gives a yield of 7.3%.That is likely to be attractive for many yield-hungry investors, Beer says. He warns, however, that next year’s cash distribution levels could be weaker because of tough operating conditions.

Stability versus growth
Other analysts have turned more bullish with the decline in the market price of units in HPH Trust. Karen Li (no relation to Li Ka-shing),an analyst at JP Morgan, acknowledges concerns about flagging export volumes and growing competition in the Pearl River Delta. But, she sees this being offset by growing imports on the back of rising purchasing power of consumers located in Yantian’s catchment area.

Moreover, the Hutchison Whampoa group has shown itself to be a highly efficient port operator, and its future dividends are well supported by steady cash flows from its mature ports, with a substantial part of its growth capex already prefunded, she notes. “We believe the trust’s container ports could continue to deliver a resilient performance against rivals, enabled by its relative competitiveness as a natural deep-water facility and strengths in hinterland connectivity,” Li says in an April 25 research note. She has an “overweight” rating on HPH Trust, with a price target of US$1.15.

Paul Yong, an analyst at DBS Vickers, is just as upbeat. Yong predicts 7% to 8% through-put growth with a modest increase in rates to drive Ebitda growth in FY2011. He projects a maiden interim distribution per unit of 1.8 US cents when HPH Trust reports its 1HFY2011 results before mid-August. Yong expects continuing trade-volume growth in the Pearl River Delta region that would translate into an annual growth of “at least 10%” in distributions to unit holders up to 2013. He is maintaining a “buy” rating on HPH Trust with a price target of US$1.15.

Can investors really expect a superior return from HPH Trust, when its assets are already mature and face the risk of growing competition? Aren’t its high cash payouts just a reflection of a lack of investment in its future growth?

Yong says HPH Trust was specifically created to deliver a steady return through stable cash payouts. “Right from the start, they have made it clear that what they offer is a yield of 5% to 6% with organic growth,” he adds. Even if there are other listed port operators that are growing faster, their return profile is likely to be more volatile than HPH Trust. And, they may well need to constantly tap their shareholders for cash.

Dalian Port, for instance, raised some US$857 million through a dual listing on the Shanghai Stock Exchange for expansion last year. Yet, it still needed to raise a further RMB2.35 billion($446 million) this year through a bond issue, which it is using to reduce its bank borrowings. It is likely to need more cash to acquire an oil terminal that is being constructed by its parent company, and perhaps acquire other ports in Liaoning province, analysts say. Meanwhile, it is exposed to the ebb and flow of through-put like HPH Trust. In 1H2011, Dalian Port was hurt by a prolonged shutdown for maintenance at the two refineries that it serves.

Buy now?
None of this is likely to be of any comfort to investors who got into HPH Trust at its IPO. In fact, one reason for the recent weakness is that its units might have been distributed to relatively short-term investors during its IPO who have been selling to avoid further losses. “Quite a fair bit of the placement went to high-net-worth individuals who have no patience to wait,” says one source.

Yet, if HPH Trust manages to continue generating steady cash flows and deliver high yields, more buyers might soon emerge. Among the cornerstone investors at its IPO were Temasek Holdings, US hedge fund Paulson and Co, and Capital Research and Management. Temasek invested US$100 million, Paulson invested US$350 million and Capital invested US$634 million. Several insurance companies, such as Taiwan’s Cathay Life and Fubon Life, were also investors. Capital increased its stake to 10.06% from 9.48% between March 23 and May 23, but pared its holdings back to9.98% last week

As it is, HPH Trust’s yields compare favourably to other yield-focused investments in the market. Yong of DBS Vickers, whose parent DBS Bank was among the lead managers of the IPO, figures that the trust offers a yield of 7.1% for FY2011 and 8% for FY2012 at current levels. That compares to yields of 6% to 6.5% for locally listed real estate investment trusts (REITs). Compared with the larger-market-cap REITs with high-quality assets, such as CapitaMall Trust, CapitaCommercial Trust and K-REIT— which are trading at between 4.6% for FY2011 and 5.8% for FY2012 — the valuation gap is even wider.

HPH Trust also has higher yields than traditional high-yield stocks such as land-transport operator SMRT Corp’s 4.4% and property-cum-publishing giant Singapore Press Holdings’ 6.9%. “Given that operations seem to be on track with our projections, we feel this presents a good buying opportunity,” Yong says of HPH Trust.

Perhaps the ultimate buy signal that investors should watch out for is Li or his Hutchison Whampoa accumulating units in the trust.

Source/转贴/Extract/Excerpts: www.theedgesingapore.com
Publish date:04/07/11

Muhibbah slips to lowest since November

Muhibbah slips to lowest since November
Written by Joseph Chin of theedgemalaysia.com
Friday, 15 July 2011 14:04

KUALA LUMPUR: MUHIBBAH ENGINEERING (M) BHD []’s share price has slumped to the lowest since November 2010, hitting a low of RM1.25 on Friday, July 15 as recent gains were wiped out following concerns of its exposure to the Asia Petroleum Hub (APH), which was reported to be in receivership.

At the midday break, it was down two sen to RM1.25. There were 472,600 shares done at prices ranging from RM1.24 to RM1.28.

The FBM KLCI lost 4.59 points to 1,575.25. Turnover was 308.54 million shares valued at RM482.85 million. Declining stocks beat advancers 346 to 171 while 312 counters were unchanged.

CIMB Research has a technical Sell call on Muhibbah at RM1.27 at which it is trading at a FY12 price-to-earnings of 6.4 times and price-to-book value of 1.1 times.

The research house said Muhibbah violated its wedge support few days ago and this is a concern and “the breakdown suggests that prices failed to bounce back above its 200-day SMA”.

CIMB Research said as the MACD stays deep in the dungeon, “we doubt any rebound is sustainable”.

To recap, on June 28 Muhibbah managing director Mac Ngan Boon said he believed it will not have to write down the RM300 million in outstanding payments due from its major client APH

He then said APH was actively speaking to potential investors and hoped for a resolution "soonest".

"We do not believe there will be a write down. We believe there are other solutions," Mac assured shareholders after its AGM.

Recent news said APH was placed under receivership by CIMB Bank Bhd mainly because the former was unable to bring in other investors to help fund the development and to repay its borrowings.

APH is the developer and operator of the APH oil terminal in Johor and had awarded Muhibbah the marine piling and jetty works worth RM820 million.


Source/转贴/Extract/Excerpts: www.theedgemalaysia.com
Publish date:15/07/11

伯南克转口风 QE3前景迷离 美债风暴一触即发

伯南克转口风 QE3前景迷离 美债风暴一触即发
2011/07/15 5:55:14 PM
●南洋商报

(华盛顿15日讯)美国联储局主席伯南克周四在听证会上对第三轮量化宽松政策(QE3)态度发生改变,令市场对联储局未来是否推出QE3措施充满悬疑。

伯南克指出,联储局不会很快就执行QE3,QE3是联储局在经济情况必要时的备用政策选项之一。

他说,联储局在观望经济是否会出现反弹,并密切关注通胀水平。现在的经济情况比执行QE2时要复杂,通胀正在走高,接近联储局的预期。

标普警告下调信评

市场的焦点再度转向美国债务方面。美国政府与国会之间的谈判依旧陷入在僵局之中,在穆迪周三将美国主权评等放置负面观察名单中后,标准普尔周五也向美国主权评等发起炮轰。

受美国国会就提高债务上限谈判进展缓慢影响,国际评级机构标普公司周五指出,已将美国放入信贷观察名单,很可能在未来3个月内下调美国主权信贷评级。

标普宣布,将美国“AAA/A-1+”评级置于负面观察,并说至少有50%的几率调降美国评级。

标普在文告中指出,考量到关于美国负债上限的政治辩论情势,他们认为美国长期信评在接下来90天内,有一半的可能性遭调降;短期信评也列入负面观察名单,反映出当前情势,对美国信评构成多么庞大的不确定性。

标普甚至警告,就算美国朝野在下个月2日的期限之前,达成调高债限协议,他们仍有可能调降美国信评。

只要他们不相信这份协议,足以稳定美国中期债务形势,标普便会下调美国长期信评、维持短期信评,并将长期信评展望列入负面观察名单。

持有最多美国国债的中国周四敦促美国保障投资者的利益。

大陆外交部发言人洪磊在例行记者会上告诉记者:“我们希望美国政府切实採取负责任的政策措施,保障投资者的利益。”

根据美方资料,今年4月持有1.1530兆美元(3.46兆令吉)美债。

中国也因此对过去的投资表示忧心。

伯南克指出,短期内过快削减政府支出,将不利于美国经济复苏,并再次警告国会,美国一旦出现债务违约,将对金融系统造成严重破坏,会摧毁投资者的信心,结果会是灾难性,债息会被大幅扯高,美国以至全球经济都会受到沉重打击。



Source/转贴/Extract/Excerpts: 南洋商报
Publish date:15/07/11

2011-0712-57金錢爆(毆債火山爆發 龐貝城慘案重演)




Source/转贴/Extract/Excerpts: youtube
Publish date:12/07/11

M1: Pushing The NGNBN Boundaries (DMG)

M1: Pushing The NGNBN Boundaries
(BUY, S$2.57, TP S$2.85)

There were no surprises in M1’s 1HFY11 results with an expected interim DPS of 6.6cents/share declared (payable on 11 Aug). The main highlights from the results call were the doubling of NGNBN customers QoQ even as the protracted rollout issues continued and the change in sales mix of handsets which pulled down device cost sharply. We keep our forecast which assumes core profit growth of 8-10% for FY11/12, underpinned by relatively stable margins and progressively stronger NGNBN contribution from FY12. M1 remains a BUY on NGNBN and dividend upsides.

In line. M1’s core profit of S$81.5m, stripping-out forex gain of S$4m in 1HFY11 was in line with our/consensus, at 48% of full year forecasts. While service revenue grew 2.1% QoQ from the low base in the preceding quarter, overall revenue still fell 5% QoQ (+10% YoY) as handset sales slipped 22.3%. Consequently, the 13% sequential decline in handset cost (due to the change in the type of handsets sold and buyers leaning towards Android models) and stable A&P contributed to the steady EBITDA margin QoQ of 42%. M1 said it had limited stocks of the new iPad2, launched in May with the positive impact only felt from 3QFY11. In tandem with the higher wholesale cost for fixed services, fixed services revenue expanded 41% QoQ, making-up 4% of overall revenue.

LTE and NGN updates. We understand from management that the number of homes passed for NGNBN has reached 70% (target 95% by 2012) although the percentage of actual access to homes is merely 40% owing to operational and administrative impediments. M1’s NGNBN customer base has nonetheless doubled QoQ. While it was the first in South East Asia to launch LTE (see our note dated 21 June), M1 expects take-up to improve with at least 2 LTE devices set to be introduced by HTC and ZTE later this year and blanket coverage from 1Q2012. M1 targets to launch its own NGN Opco in 3QFY11 which it views as an avenue to strengthen its enterprise offering and allowing it to lower the cost of rollout.

Best of breed- dividend upside potential and a pure play on NGN. We make no change to our forecast noting that management expects the underlying revenue growth trend in 1HFY11 to continue and has reaffirmed its previous FY11 guidance (earnings to grow from FY10/capex of S$100m including LTE and 80% dividend payout). M1’s recurring dividend yield of 6% makes it a defensive bet under prevailing market conditions with stock re-rating catalysts coming from: (i) the higher take-up of NGNBN services; and (ii) potential for further capital management. Maintain BUY based on DCF derived fair value of S$2.85.


Source/转贴/Extract/Excerpts: DMG & Partners Research
Publish date:15/07/11

CCT: Slowdown in negative rental reversion impact (DMG)

CapitaCommercial Trust: Slowdown in negative rental reversion impact
(NEUTRAL, $1.46, TP S$1.38)

2Q11 DPU in line with expectations. CapitaCommercial Trust (CCT) reported lower 2Q11 DPU of 1.92S¢ (+4.3% QoQ; -2.5% YoY) due to 1) smaller portfolio size (sales of Robinson Point in Apr 2010 and Starhub Centre in Sep 2010), 2) negative rental reversion and lower occupancy at Six Battery Road. Rental reversion is likely to stay negative in 2011. However, the extent of negative reversion will decline as office rental rates are expected to rise further going forward, underpinned by expectations of a robust Singapore economy in 2011. We raised our FY11-FY12 DPU estimates by 1.1-0.9% respectively to account for slightly higher than expected interest expense savings from the recent loan financing at the RCS Trust level which has a cost of debt of ~3.03-3.09% (prev est: 3.3%). Coupled with the half-year rollover in our 10-year DDM valuation (COE: 8.7%; TGR: 3.0%), we raise our TP to S$1.38. Maintain NEUTRAL.

Signed JV agreement with CapitaLand (CapLand) and Mitsubishi Estate Asia (MEA) to redevelop Market Street Car Park (MSCP). As part of the JV agreement, MSCP was sold to MSO Trust which is jointly owned by CCT, CapLand and MEA in their respective 40%:50%:10% interest. Total redevelopment cost is S$1.4b (c. S$1,900psf based on net lettable area) and the project is expected to be completed in end 2014. Upon completion, the Grade A office tower is expected to have a stabilised annual rental yield of >6.0%. As MCSP has ceased operation in end Jun 2011, we expect the gross rental income to decline by ~S$2m/year, which represents only <1% of CCT’s total gross rental income.

Extent of negative rental reversion expected to decline in subsequent quarters. Average rent of CCT’s remaining leases expiring in 2011 is S$13.91 psf, which is higher than average Grade A office rent of S$10.60 psf (2Q11). We expect negative rental reversion to end in late 2011/early 2012, while strong positive rental reversion to occur only in 2013. Given CCT’s rich valuation with FY11-FY12 dividend yield spread at close to pre-crisis mean spread of 2.9%, we maintain NEUTRAL on this counter at this juncture.


Source/转贴/Extract/Excerpts: DMG & Partners Research
Publish date:15/07/11

Growth grinds to a near-standstill in Q2

Business Times - 15 Jul 2011


Growth grinds to a near-standstill in Q2

0.5% year-on-year growth lower than expected; global uncertainties casting a long shadow

By TEH SHI NING

(SINGAPORE) Flash estimates show a sharper- than-expected slowdown in Singapore's growth last quarter, prompting at least one economist to warn that full-year GDP may slip below the official 5-7 per cent growth range forecast.

While most economists still view the 0.5 per cent year-on-year growth in Q2 as a passing 'soft patch' and expect a pick-up this quarter, many were also quick to flag looming global uncertainties surrounding Europe's sovereign debt crisis and still tepid economic recovery in the US.

Dragged down by manufacturing, Singapore's marginal growth last quarter came in shy of the consensus one per cent forecast, and was a sharp deceleration from the 9.3 per cent growth in the first quarter.

The sequential decline was even starker. Overall GDP shrank an annualised 7.8 per cent quarter-on- quarter, after adjusting for seasonal factors, on the back of a 22.5 per cent contraction in manufacturing output and a 2.9 per cent decline in the services industry.

The Ministry of Trade and Industry (MTI), whose advance estimates are based largely on April and May's data, yesterday said this reflects 'a slowdown across many sectors'.

Manufacturing's 5.5 per cent year-on-year contraction was marked, coming after 16.4 per cent year-on- year growth in the first quarter.

Volatile pharmaceutical output was once again the main cause but electronics output fell too, 'partly due to an easing in global demand for semiconductor chips', MTI said.

Services, the economy's key growth driver this year, also saw year-on-year growth moderate to 3.3 per cent as weak trade flows hit wholesale and retail trade services and less stock trading activity pulled down financial services. The bright spots were in tourism-related sectors, which 'continued to register healthy growth due to strong visitor inflows', MTI said.

However, several economists noted that given industrial production's contraction in May, the Q2 manufacturing estimate implies a rebound in factory output in June, to be announced later this month. DBS economist Irvin Seah, for one, thinks the pharmaceutical industry may have ramped up production in June after two sluggish months.

This, along with improved production data from regional economies, bodes well for third-quarter growth; so no technical recession is expected.

'The domestic growth drivers remain essentially intact,' said OCBC economist Selena Ling. Manufacturing will be bolstered by new chemical plant operations and biomedical inventory building, while lending and insurance activity should prop up financial services growth.

Most are thus keeping to full-year growth forecasts in line with the government's, though with the caveat that global uncertainties may prolong weakness and trigger downgrades.

In fact, at least one private sector economist has downgraded his full-year growth forecast to one below the official range. Bank of America Merrill Lynch (BofAML) economist Chua Hak Bin now expects full-year growth of just 4.8 per cent, after 2010's record growth of 14.5 per cent.

'Weak US growth and a possible blow-up of the European debt crisis are of larger concern,' he said, adding that BofAML's global financial stability index points to 'escalating risks for global contagion if European policymakers are unable to reassure markets in the near term'.

There is also the fact that monetary tightening in both China and India has slowed their domestic growth, dampening Singapore's exports outlook, Dr Chua added.

HSBC economist Leif Eskesen, too, sees the advance second-quarter GDP estimates as confirmation of how Singapore is 'vulnerable to the global economy's gyrations' and thinks that even with a rebound in pharmaceutical output, full-year growth could be lower than expected.

Weaker growth, coupled with concerns over the persistence of inflation, means most economists now expect the Monetary Authority of Singapore (MAS) to maintain its current exchange rate policy of gradual appreciation at its October review.


Source/转贴/Extract/Excerpts: www.businesstimes.com.sg
Publish date:15/07/11

Growth grinds to a near-standstill in Q2

Business Times - 15 Jul 2011


Growth grinds to a near-standstill in Q2

0.5% year-on-year growth lower than expected; global uncertainties casting a long shadow

By TEH SHI NING

(SINGAPORE) Flash estimates show a sharper- than-expected slowdown in Singapore's growth last quarter, prompting at least one economist to warn that full-year GDP may slip below the official 5-7 per cent growth range forecast.

While most economists still view the 0.5 per cent year-on-year growth in Q2 as a passing 'soft patch' and expect a pick-up this quarter, many were also quick to flag looming global uncertainties surrounding Europe's sovereign debt crisis and still tepid economic recovery in the US.

Dragged down by manufacturing, Singapore's marginal growth last quarter came in shy of the consensus one per cent forecast, and was a sharp deceleration from the 9.3 per cent growth in the first quarter.

The sequential decline was even starker. Overall GDP shrank an annualised 7.8 per cent quarter-on- quarter, after adjusting for seasonal factors, on the back of a 22.5 per cent contraction in manufacturing output and a 2.9 per cent decline in the services industry.

The Ministry of Trade and Industry (MTI), whose advance estimates are based largely on April and May's data, yesterday said this reflects 'a slowdown across many sectors'.

Manufacturing's 5.5 per cent year-on-year contraction was marked, coming after 16.4 per cent year-on- year growth in the first quarter.

Volatile pharmaceutical output was once again the main cause but electronics output fell too, 'partly due to an easing in global demand for semiconductor chips', MTI said.

Services, the economy's key growth driver this year, also saw year-on-year growth moderate to 3.3 per cent as weak trade flows hit wholesale and retail trade services and less stock trading activity pulled down financial services. The bright spots were in tourism-related sectors, which 'continued to register healthy growth due to strong visitor inflows', MTI said.

However, several economists noted that given industrial production's contraction in May, the Q2 manufacturing estimate implies a rebound in factory output in June, to be announced later this month. DBS economist Irvin Seah, for one, thinks the pharmaceutical industry may have ramped up production in June after two sluggish months.

This, along with improved production data from regional economies, bodes well for third-quarter growth; so no technical recession is expected.

'The domestic growth drivers remain essentially intact,' said OCBC economist Selena Ling. Manufacturing will be bolstered by new chemical plant operations and biomedical inventory building, while lending and insurance activity should prop up financial services growth.

Most are thus keeping to full-year growth forecasts in line with the government's, though with the caveat that global uncertainties may prolong weakness and trigger downgrades.

In fact, at least one private sector economist has downgraded his full-year growth forecast to one below the official range. Bank of America Merrill Lynch (BofAML) economist Chua Hak Bin now expects full-year growth of just 4.8 per cent, after 2010's record growth of 14.5 per cent.

'Weak US growth and a possible blow-up of the European debt crisis are of larger concern,' he said, adding that BofAML's global financial stability index points to 'escalating risks for global contagion if European policymakers are unable to reassure markets in the near term'.

There is also the fact that monetary tightening in both China and India has slowed their domestic growth, dampening Singapore's exports outlook, Dr Chua added.

HSBC economist Leif Eskesen, too, sees the advance second-quarter GDP estimates as confirmation of how Singapore is 'vulnerable to the global economy's gyrations' and thinks that even with a rebound in pharmaceutical output, full-year growth could be lower than expected.

Weaker growth, coupled with concerns over the persistence of inflation, means most economists now expect the Monetary Authority of Singapore (MAS) to maintain its current exchange rate policy of gradual appreciation at its October review.


Source/转贴/Extract/Excerpts: www.businesstimes.com.sg
Publish date:15/07/11

M1: Not much to talk about (CIMB)

M1 Limited
NEUTRAL Maintained
S$2.57 Target: S$2.63
Not much to talk about
• Within expectations. Annualised, M1’s 1H11 results are within expectations, at 2% below our forecast and 1% above consensus. M1 declared a 6.6ct DPS for 2Q11, in line with our forecast. Highlights were slower revenue qoq due to lower handset sales and a qoq recovery in margins. We make no changes to our earnings forecasts for FY11-13 or DCF-based target price of S$2.63 (WACC: 8.5%). Maintain NEUTRAL as M1 lacks re-rating catalysts though downside should be limited by its dividend yields of 6-7%.

• Operating trends. 2Q11 revenue dropped 5% qoq due entirely to lower handset sales (-22.4% qoq) from lower sales volume. Revenue rose 10% yoy as 2Q10 was hit by a supply constraint for iPhones which had slowed handset sales. Service revenue, however, increased 2% qoq and 3% yoy, led by postpaid and growing contributions from fixed lines, both driven by an expanding subscriber base.

EBITDA margins recovered by 2% pts qoq due primarily to lower handset costs and SACs but dropped 3.3% pts yoy due to higher handset costs from higher volumes.

• Fibre affected by low number of homes reached. M1 disclosed that NGNBN had passed 70% of homes but the number of homes reached was below 40%. The latter was attributed to the difficulty of obtaining access to condos and disagreements over who would bear the cost of pulling in fibre and lower awareness among heartlanders. M1’s fibre customer base doubled in 2Q from 1Q, to an estimated 10K from about 5K in 1Q. About 10k-12k subscribers come off contracts each month and it would take 1-2 years to address the entire base.

• Own OpCo. M1 will be launching its own corporate OpCo in 3Q11 to increase its competitiveness, offer customised solutions and lower its opex. Fixed margins should improve with the scale as it has to bear start-up costs now.

• Guidance kept. M1 has maintained its guidance of PAT growth for 2011. 1H11 growth of 7% yoy is fairly indicative of the full year and it is reasonable to assume the same run rates. We forecast yoy growth of 11% for 2011 PAT. M1 also keeps its 80% payout and would be monitoring the economy, its free cash flow, and gearing before deciding on any capital management.


Source/转贴/Extract/Excerpts: CIMB Research
Publish date:15/07/11

CCT: DPU uplift from MSCP to come later (CIMB)

Capitacommercial Trust
UNDERPERFORM Maintained
S$1.46 Target: S$1.46
DPU uplift from MSCP to come later
• Negative reversions for rest of 2011; maintain Underperform. 2Q11 results met expectations, at 25% of our FY11 forecast and consensus estimate. Despite a 15bp cap-rate compression for its Grade-A assets, operational indicators continued to decline with revenue down 9.2% yoy on negative rental reversions from 6BR and OGS. This trend is expected to persist in 2H11 with expiring leases locked in at peak levels in 2008. Plans for MSCP redevelopment have been finalised with CCT potentially gaining full stakes by 2015. However, the DPU uplift is also not expected until then. We raise our DDM-based target price by 7% to S$1.46 (8% discount rate) to account for this. Maintain Underperform on valuations (1x P/BV), with limited near-term catalysts in sight for organic growth in the next 6-12 months.

• Renewal rents in 2011 locked at peak levels. Cap rates for CCT’s Grade-A assets (Cap Tower and OGS) fell from 4.15% to 4%, resulting in a S$145m revaluation gain for 2Q11. Operationally though, gross revenue continued to trend down by 9.2% yoy, primarily from negative rental reversions for 6BR and OGS and lost rental income from earlier disposals. Debt headroom is ample for acquisition growth, but the likely lack of immediately DPU-accretive assets for purchase is evident given physical cap rates of 3-4%. 6BR which makes up 20% of CCT’s rental income, with average expiring rents this year locked in at a peak of S$15.4psf. We expect (so does CCT) negative rental reversions to persist in the remainder of 2011.

• Plans for MSCP redevelopment firmed, but uplift to come only in 2015. CCT has firmed up a 40:50:10 JV agreement with CapLand and Mitsubishi Estate Asia to redevelop MSCP into a Grade-A office tower. The development is expected to cost S$1.4bn (CCT’s share S$560m) and would be completed by 2015. CCT expects a yield on cost of 6% or S$12-14psf gross rents on completion, a level we think is achievable. More meaningful upside potentially could come from its call option to acquire the remaining stakes from its partners upon completion, at a minimum price that must yield a least a compounded return of 6.3% p.a. to the sellers. The option is valid for three years starting at the completion date, giving CCT the flexibility to optimise yield upside. For the MSCP redevelopment, execution will be its priority for now, with the DPU uplift coming much later in 2015.


Source/转贴/Extract/Excerpts: CIMB Research
Publish date:15/07/11

M1: 2Q11 results mostly in line

M1 Ltd’s 2Q11 results came in within our expectations. Revenue climbed 10.0% YoY to S$245.4m, or 0.2% ahead of our estimate; net profit climbed 5.0% YoY (+0.6% QoQ) to S$42.8m, or around 1.9% ahead of our forecast. M1 has also declared an interim dividend of S$0.066/share, up from S$0.063 for the same period last year. M1 continues to guide for earnings growth in 2011, buoyed by continued customer additions and increasing mobile data usage; it has also kept its S$100m capex guidance. Interestingly, M1 also revealed that it plans to set up its own corporate OpCo (Operating Company) for NBN in 3Q11. Given that the 1H11 results were in line with our expectations, we are leaving our FY11 estimates unchanged. We continue to like M1 for its defensive earnings and attractive dividend yield. Maintain BUY with an unchanged DCF-based fair value of S$2.79.

2Q11 results as expected. M1 Ltd’s 2Q11 results came in within our expectations. Revenue climbed 10.0% YoY to S$245.4m, or 0.2% ahead of our estimate; while it was down 4.7% QoQ, we note that it was mainly due to lower handset sales, although smartphone users now make up around 63% of postpaid base. Net profit climbed 5.0% YoY (+0.6% QoQ) to S$42.8m, or around 1.9% ahead of our forecast, as it managed to maintain its service EBITDA margin at around 42.0% (versus 42.2% in 1Q11). For 1H11, revenue rose 6.5% to S$503.0m, meeting 49.2% of our full-year forecast, while net profit added 6.6% to S$85.4m, or around 51.7% of our FY11 estimate. M1 has also declared an interim dividend of S$0.066/share, up from S$0.063 for the same period last year.

Maintains mobile market share. On its mobile business, M1 has added another 34k new customers as its overall subscriber base grew to 1968k, maintaining its overall market share at 26.2% (as of May 2011). The increase came mainly from the pre-paid segment (+21k); but due to still competition, monthly ARPU slipped slightly to S$13.4 from S$14.2 in 1Q11. On the post-paid side, monthly adjusted ARPU also edged lower to S$55.4 from S$56.1 in 1Q11; but acquisition cost was also lower at S$296 compared to S$330 in 1Q11 as more subscribers took up Android-based smartphones with lower subsidies. Monthly post-paid churn was unchanged at 1.2% in 2Q11 from 1Q11. Meanwhile, data as a percentage of ARPU has increased to 35.7%, up from 34.7% in 1Q11, driven by the increasing popularity of smartphones and tablets; although we note that monthly ARPU has remained unchanged at S$21.8 versus the previous quarter.

No change to 2011 guidance. M1 continues to guide for earnings growth in 2011, buoyed by continued customer additions and increasing mobile data usage; it has also kept its S$100m capex guidance, although it has separately spent S$21.7m to acquire additional spectrum for its LTE (Long-Term Evolution) expansion. Interestingly, M1 revealed that it plans to set up its own corporate OpCo (Operating Company) for NBN in 3Q11; this to supplement its corporate services, improve response time and lower operating expenses. However, given the still slow take-up of the NBN corporate customers (most are still on contracts), management believes that it may take 1-2 years before M1 can address the entire corporate base.

Maintain BUY. Given that 1H11 results were in line with our expectations, we are leaving our FY11 estimates unchanged. We continue to like M1 for its defensive earnings and attractive dividend yield. Maintain BUY with an unchanged DCF-based fair value of S$2.79.



Source/转贴/Extract/Excerpts: OCBC Investment Research
Publish date:15/07/11

CCT: 2Q11 results above expectations (OCBC)

For 2Q11, CapitaCommercial Trust (CCT) reported a distributable income of S$54.4m or a DPU of 1.92 S cents, bringing the total DPU for 1H11 to 3.77 S cents. 1H11 gross revenue constituted 51% of our annual estimate while distributable income came in above expectations due to a sharper-than-expected dip in operating costs. Management refinanced S$964m of RCS debt with S$800m notes at 3.1% and a $164m term loan facility at 3.0%, versus an estimated cost around 4.2% previously. CCT also announced that it would take a 40% stake in the Market St office development with JV partners, CapitaLand (50%) and Mitsubishi Estate Asia (10%), with a call option to purchase the property within three years after TOP. We update our assumptions and increase our distribution forecast to reflect lower operating costs. As such, we also adjust our fair value upwards to $1.67 from $1.63 previously. Maintain BUY.

2Q11 DPU of 1.92 S cents above expectations. For 2Q11, CapitaCommercial Trust (CCT) reported a distributable income of S$54.4m (or an estimated DPU of 1.92 S cents), bringing the total distribution for 1H11 to 3.77 S cents. Given the current unit price of S$1.45, this translates to an annualized distribution yield of 5.2%. 1H11 gross revenue of S$182m constituted 51% of our annual estimates while distributable income came in above our expectations largely due to a sharper-than-expected dip in operating costs. Relative to 2Q10, we saw a 2.3% dip in distributable income in 2Q11 while gross revenue also fell 9.2% to S$91m. These dips were mainly due to the absence of contributions from Robinson Point and StarHub Centre which were divested in Apr and Sep last year, respectively. We also saw lower income from Six Battery Rd from negative rental reversion and lower occupancy rates due to continued asset enhancement works.

Enhancement at Six Battery Road lowered portfolio occupancy. As a result of enhancement at Six Battery Road, the overall portfolio occupancy rate fell to 97.7% in 2Q11 compared to the 98.2% level seen last quarter. Over 1H11, we also saw 264,400 sg ft of NLA (or 7.7% of total portfolio NLA) renewed or signed under new leases.

Refinanced S$964 RCS debt with improved terms. Management refinanced S$964m of RCS debt with S$800m notes at 3.1% and a $164m term loan facility at 3.0%. Pit against an estimated cost of 4.2% previously, the refinancing would reduce borrowing costs going out to 2015 and also lengthen the average debt maturity to 2.9 years versus 1.3 years in the previous quarter.

To develop Market St office with CL and MEA. CCT announced that it would take a 40% stake in the Market Street office development with JV partners CapitaLand (50%) and Mitsubishi Estate Asia (10%). The all-in development cost remains at S$1.4b, as disclosed earlier, and the building is expected to TOP by 2014, during which there is no known central office supply coming to market. CCT has been given a call option to purchase the property within three years after TOP with a minimum purchase price that translates to a compounded annual return of 6.3% on cost for its JV partners.

Maintain BUY with a revised fair value of $1.67. Looking forward, we continue to expect negative rental reversions to continue in FY11 with the trend reversing in FY12. We update assumptions and increase our distribution forecast to reflect lower operating costs. As such, we also adjust our fair value upwards to $1.67 from $1.63 previously. Maintain BUY on CCT.



Source/转贴/Extract/Excerpts: OCBC Investment Research
Publish date:15/07/11

MSC: Proxy to higher tin prices (HwangDBS)

Malaysia Smelting Corporation
NOT-RATED RM4.51
SGD1.79
Return *: 1
Risk: 2
Potential Target * : 12-Month RM 5.65 (25% upside)/ SGD2.30 (28%upside)
Proxy to higher tin prices
• World’s 2nd largest tin smelter with strong pedigree
• Higher tin prices will drive mining and smelting earnings
• RM5.65 (SGD2.30) fair value is based on SOP-blended

DCF valuation, offers 25% upside
World-class refined tin player. Malaysia Smelting Corporation (MSC) is a leading integrated tin mining and smelting group. Last year, it was the 2nd largest global supplier of refined tin metal based on 45,381 MT sales volume. The Group also owns tin mines in Malaysia and Indonesia with a combined production output of 7,860 MT in 2010. It is 55% owned by the established Singapore-listed Straits Trading Co.

Higher tin prices to drive performance. MSC is running at almost full capacity, meaning future earnings performance will be driven mainly by tin prices. After registering US$20,400/MT average last year, tin prices climbed to a high of US$32,308 in Feb 2011 before pulling back to approximately US$27,338 currently. We factored in average tin price of US$27,000 (for FY11), US$28,000 (FY12) and US$29,500 (FY13), underpinned by a persisting global tin supply deficit and steady tin consumption growth. This translates to a 3-year net profit CAGR of 17.9%.

Fair value of RM5.65 (SGD2.30). We arrived at this value based on SOP-blended DCF valuation with 8.4% WACC and 2.5% terminal growth rate. Our target price implies CY12 P/E of 5.7x, P/BV of 1.0x and EV/EBITDA of 6.4x, considerably cheaper than its peers Yunnan Tin and PT Timah. Further excitement in MSC – which is also traded in Singapore via a secondary listing – could come from new overseas ventures (e.g. Congo) and acquisition of existing tin mines (in Malaysia and Indonesia). Investment risks include falling tin prices, nonrenewal of mining rights in Indonesia and tin supply shortage.

The Business Model
Large-scale tin miner and smelter. Malaysia Smelting Corporation (MSC) – a 55%-owned subsidiary of Singaporelisted The Straits Trading Company Limited (STC) – has been operating since 1902. It is listed on the Bursa Malaysia Main Board (since 15 Dec 1994) and the Singapore Exchange (viasecondary listing since 26 Jan 2011), with a combined capital base of 100m issued shares (from 75m shares prior to the secondary listing).

The group’s integrated business covers: (a) tin mining and exploration; and (b) tin smelting and refining operations in Indonesia and Malaysia. MSC is the world’s 2nd largest tin metal supplier after China-based Yunnan Tin, producing 45,381 tonnes of refined tin metal in 2010. It operates one of the largest international custom tin smelters in the world. Mining operations in Indonesia and Malaysia. MSC is involved in alluvial tin mining operations in Bangka Island, Indonesia, via its Indonesian subsidiary, PT Koba Tin (75% stake). Alluvial mining generally does not involve drilling and blasting, but uses high pressure water jets (and gravel pumps) and earthmoving equipment to transport tin-in concentrates to processing facilities. PT Koba Tin currently has sole rights under a Contract-of-Work agreement with the Indonesian Government to mine in Bangka Island’s 41,700 hectare concession area until 2013 (39,433 MT reserves and resources). Upon expiry of the agreement, MSC would have the option to re-new its contract for another decade (till 2023).

In Malaysia, the group’s open-pit mining operations are conducted in Hulu Perak, Malaysia, through its wholly-owned subsidiary, Rahman Hydraulic Tin Sdn Bhd (RHT). This mining operation requires drilling and blasting to access tin-in concentrates. Mining leases for the 601-hectare concession area (19,479 tonnes reserves) are scheduled to expire in 2019. In 1H11, RHT constructed a six-lane palong and expanded the tailing retention areas at the mine to raise total tin production by 20%.

Owns two smelting facilities. They are located in Butterworth, Penang and Bangka Island, Indonesia, with annual installed smelting capacities of 35,000 and 25,000 MT of refined tin metal, respectively. Its Butterworth smelter is currently operating at full capacity, while the Indonesian plant is producing at only 30-40% utilisation rate as the facility is only allowed to take in tin-in concentrates from its own mine.

This is largely due to policies against accepting supply from unregulated tin mines outside its concession areas normally operated by small-scale miners. Unregulated mining has become more prevalent with the recent tin price rally.

The Group smelts all the tin ore that it extracts from its Malaysian and Indonesian mines (which totaled approximately 7,860 MT last year) and exports them under the MSC Straits and Koba Premium brands, differentiated by the tin purity levels (99.85% minimum).

Smelting income from external parties is a key revenue contributor. MSC also smelts tin concentrates sourced from third parties to maintain high throughput volume for the
smelting facility. We estimate smelting income from third party suppliers accounts for slightly under three-quarters of total revenue, while internal smelting operations contribute about one-fifth of turnover. The balance is from tolling contracts (a service to selected customers to smelt a given amount for a fixed fee; 3%) and tin warehousing.

Fortunes driven by cyclical global tin prices. The Group’s earnings dynamics are dependent on sales volume and tin prices. Between the two parameters, it is more sensitive to tin price fluctuations because: (i) mining profit margins (in absolute dollar terms) are driven by tin prices, with any price changes flowing directly to profits; and (ii) smelting earnings are derived based on a percentage (typically 3-5%) of the market value of tin concentrates using prevailing global tin prices. Figure 2 depicts tin price trends vs MSC’s historical net profit. There was a deviation in the trend in FY08 due to lower mining production contribution from PT Koba Tin as a result of uncertainty over Indonesia’s mining regulations.

Malaysia contributes more. MSC does not give a breakdown between its mining and smelting operations. Instead, it divides its business activity by geographical areas. Last year, Malaysia contributed RM47.3m core net profit on RM2,727m revenue, while Indonesia posted ex-exceptional earnings of RM5.7m on RM425.9m turnover. These numbers are before minority interest and inter-segment eliminations, as Indonesia sells all its refined tin metals to Malaysia, which is MSC’s hub for the delivery of refined tin metals to its network of customers around the world.

International customer base. MSC’s refined tin products are exported primarily in US$ under long-term supply agreements (normally priced on 12-month basis) to a diversified base of customers. They in turn sell their products to end-users (primarily electronic manufacturers in Japan, Korea and the PRC, such as Chemetall Gmbh (KL), Alpha Metals TW Inc and Toyota Tsusho Corporation). In addition, its refined tin products are sold to commodity brokers like Bache Commodities Limited and JP Morgan Metals Ltd, with excess stock traded on the London Metals Exchange (LME) and the Kuala Lumpur Tin Market (KLTM) at spot prices.

Competitive global industry. The tin mining and smelting industry is competitive in terms of securing tin-in concentrates and crude tin supplies from third parties, with large companies vying for access to these raw materials. MSC’s notable competitors include Thailand Smelting and Refining Co. Ltd. and Yunnan Tin Company Group Ltd. Refined tin metal, on the other hand, can be readily sold to end-user customers and manufacturing firms, or traded in commodities markets via the LME or KLTM.

Raw materials the largest cost item. The largest cost item in MSC’s cost of goods sold (COGS) is materials purchased from 3rd parties. It sources from various suppliers (e.g. Metal X Ltd, PT Prima Abadi Solder Pratama and PT Bilitin Makmur Lestari) in Australia, Indonesia and the Democratic Republic of Congo (DR Congo)). As a percentage of COGS, raw materials (tin-in concentrates and crude tin) constitute c.79%, while mining, site support and tin processing account for 18% with the remaining 3% being overheads.

Prices of raw materials depend on the amount and grade of tin metals in each tonne of tin-in concentrate/crude tin. There is a preliminary fee that is followed by full payment after its shipments have been analysed and inspected upon delivery.

Hedging practice. We understand MSC has no fixed hedging strategy. Depending on the circumstances, management may or may not enter into forward contracts to hedge against risks of price fluctuations particularly for its mining operations. But generally, relative to its turnover (FY10: RM2.74b; 1QFY11: RM737.9m), the Group has minimal outstanding exposure in derivative financial instruments comprising: (i) tin forward sales contracts (RM14.3m as of end-Mar 11); (ii) foreign currency forward contracts (RM68.3m as of end-Dec 10 and RM90.6m as of end-Mar 11); and (iii) interest rate swap on loans (RM57.1m as of end- Dec 10 and RM52m as of end-Mar 11).

Growth Prospects
Tin price on an uptrend. Tin prices have risen at 5-year CAGR of c. 22.7% over 2005-2010 to an average of US$29,910 per MT in 1Q11 (Jan-Mar 2011). This is a 74% increase over 1Q10 and 15% increase over 4Q10, attributed to persistent global shortages of refined tin as well as increased commodities trading activity by investment funds. We believe tin prices – after averaging US$29,365 in 1H11 against US$17,514 in 1H10 – will remain high in the near future.

Demand for tin products is projected to remain strong particularly in major tin consuming countries such as China, Europe and other Asian countries. According to the International Tin Research Institute (ITRI), annual tin consumption is expected to grow by 2-3% while the global tin market could face supply constraints over the same period.

Tinplates are generally used to make food cans, which account for 17% of global tin consumption, with solders for electronic and industrial uses accounting for 54%. New innovations in tin utilisation and robust markets for tin solders and tinplates should keep refined tin demand (and prices) high. New tin chemical uses such as energy technologies in lithium-ion battery electrodes, solar cells, fuel catalysts and fuel cells could further drive tin demand. Fire retardants, brake pads, stainless steel, water treatment and antimicrobial healthcare products have also seen increased use of tin in applications.

Scouting for new tin mining concessions / assets. We understand MSC is continuously pursuing extensive exploration and drilling activities to discover new tin resources in its concession areas. And the prevailingly high tin prices – which are more than sufficient to cover additional mining costs – will make it more feasible to venture into and extract crude tin from marginal fields. Any new findings will then increase its tin reserves and resources (39,433 MT in Indonesia and 19,479 MT in Malaysia). This will, in turn, stretch the life span of its existing tin mines, which are expected to last until 2017 in Indonesia and 2019 in Malaysia based on stable mining output of 6,548 MT and 2,123 MT, respectively.

More excitingly, MSC – with a budget of RM150-200m (partly from secondary listing proceeds) – is also looking to acquire more tin mining concessions and assets. We gather it is in talks to buy two mines (about 600 hectares each), one of which is located in Indonesia and the other in Malaysia. If successful, they will bolster the sustainability of MSC’s tin resource and reserve stockpile, as well as translate into better overall margins (from a larger mix of smelting internal tin concentrate versus 3rd party concentrate).

Potential JV in DR Congo. In addition, MSC has recently entered into a confidentiality agreement with the government of Democratic Republic of Congo with regards to entering a joint venture (JV) agreement to take over the assets of DR Congo’s state mining company Sakima in the Maniema, North Kivu and South Kivu provinces. Among the potential JV partners is Traxys, a Luxembourg-based global trading group. Successful implementation of this JV would mean an added income stream for MSC.

Divestment of non-core assets. Following the global financial crisis in 2008, MSC decided to focus on its core businesses of tin mining and smelting. In 2009, it started to divest its noncore assets including a gold and copper associate in Australia (BCD NL), a coal development project in Indonesia (Asiatic Coal), a polymetallic mine in the Phillipines (KM Resources) and an Australian-listed subsidiary (Australia Oriental Minerals NL). As of 1Q11, all its non-core assets had been divested except for KM Resources. Following the global commodity markets rally since 2009, MSC may be in a position to sell this asset at higher valuation than its c.RM47.2m book value.

Key Risks
Refined tin prices falling. MSC’s profitability is predominantly dictated by tin prices. Hence, earnings could be volatile as tin prices swing up and down. Our sensitivity analysis shows that every 1% increase/decrease in our base case tin price assumption would raise/cut FY11F net profit by c. 4.4%. Shortage of raw materials. The Group derives the bulk of its tin-in concentrate from third parties, of which about 75% are sourced from its top 10 suppliers. The loss of any of these key suppliers would severely retard MSC’s ability to produce refined tin and fulfil customer orders. However, we believe MSC’s track record as one of the largest refined tin producers in the world places it in good standing with its key suppliers. However, changes in climate or economic conditions could adversely affect the supply of tin concentrates from its sources.

Failure to renew concession lease with Indonesian
Government. PT Koba Tin’s Contract of Work agreement with the Indonesian Government is due to expire in 2013. We understand MSC has applied to renew the contract for another 10 years, the outcome expected out by end-2011. Although we are optimistic of a successful renewal given its track record, losing this concession would dampen MSC’s mining operations in Indonesia and heavily affect its turnover (and net profit). Its Indonesian operations contributed c. 15% of total sales in 2010.

Persistent weakness in USD. MSC sells its refined tin metal mainly in USD. As such, its earnings are fairly sensitive towards currency movements. According to our analysis, a 1% depreciation of the USD (vs MYR) would cut FY11 earnings by 4%. However, it has a natural hedge as the bulk of its raw material is also purchased in USD. In addition, a portion of MSC’s loans is denominated in USD, leading to some gains in terms of lower interest and loan payments if the greenback continues to weaken.

Management & Strategy
Management composition. The company became a 54.8%- owned subsidiary of STC in 2005 following an unconditional takeover exercise by Straits Trading Amalgamated Resources Sdn Bhd (a wholly-owned subsidiary of STC). STC has been involved in the metals and minerals operations since 1887. We note that the management team has considerable (over 30 years) industry experience as well as operations expertise. This will ensure optimum operational efficiencies while simultaneously fulfilling the group’s growth strategy.

Segmental Analysis
Malaysia is major earnings base. The bulk of MSC’s revenue will continue to come from its Butterworth smelter (c. 85%) over FY11F-13F. The remaining 15% of turnover (before consolidation adjustments) is expected to come from Indonesia, as all its refined tin metals are sold to Malaysia, which is its hub for delivery to customers around the world. At the bottom line, before inter-segment eliminations, we expect Malaysia to contribute 88% of net profit and Indonesia 12%.

Quarterly / Interim Performance
Back in the black in 1Q11. 1QFY11 was a favourable quarter for MSC as it turned around from RM29m net loss in 1Q10 to a net profit of RM28m. This was attributed to better operating margins of 6.4% (vs. -3.4% in 1Q10), higher turnover led by higher refined tin prices of US$29,910/MT (+15% q-o-q and +74% y-o-y), and higher sales volume of 9,473 MT (+0.6% y-o-y), including 2,870MT (30%) under the tolling arrangement.

Expect a profitable 2Q11. We expect 2Q11 to be profitable led by both higher revenue and a healthy bottom line, given that tin prices have averaged US$28,872/MT in the quarter.

Financials – Income Statement
Volatile historical earnings. FY09 saw revenue fall 19% to RM1,852m after prices of refined tin plunged from US$18,434/MT to US$13,341. But in FY10, turnover rebounded to RM2,739m (+48%) in tandem with the recovery in refined tin prices to US$20,400. Gross profit margins historically ranged between 7% and 10% with the exception of FY08 (6.1%), which was skewed because of hiccups in its Indonesian operations.

Exceptional items in FY09-10. MSC’s financial performance had been further distorted by exceptional items. It booked RM65m exceptional gain in FY09 arising from the restatement of the carrying amount of its investments in associates. Otherwise, FY09 ex-EI net profit was RM7m, a minor improvement from FY08’s RM46m loss (ex-EI). And in FY10, MSC booked a RM154m exceptional loss arising from the disposal of investments in BCD and impairment provisions for non-tin assets, resulting in RM80m net loss that year (or ex-EI net profit of RM74m).

FY11-13F earnings growth to be led by higher tin prices. We expect revenue to expand at 9.4% CAGR from RM2,739m in FY10 to RM3,590m in FY13F. This would be driven by a mild 4.4% increase in smelting volume in line with higher mining output, and rising tin prices. We assumed average tin price of US$27,000/MT for FY11F, US$28,000 for FY12F, and US$29,500 for FY13F, versus US$20,400 in FY10 and US$29,365 in 1H11.

And on the back of better operational efficiencies, gross margins are projected to come in at c.8% for FY11-13F. After factoring in an average RM/US$ exchange rate of RM2.96 (FY11), RM2.83 (FY12) and RM2.83 (FY13), our FY11-13F core net earnings works out to RM109m (+47% yo- y), RM100m (-12% y-o-y) and RM122m (+24% y-o-y).

Financials – Balance Sheet
High debt level due to short-term instruments. Gross debt stood at RM726.8m as of end-Mar 11, with the bulk being short-term debt, comprising banker’s acceptances (RM521m) and short-term trade financing (RM93m), used mainly to finance the purchase of raw materials from third party suppliers. Reflecting this, its inventory level (which includes raw materials, work-in-progress, and finished goods) was correspondingly high at RM420m as of end-Mar 11.

Taking into consideration its RM198m cash pile, net gearing stood at 1.22x as at end 1Q11. This is expected to drop to 0.6-1.2x over FY11F-FY13F. We assume the group would become increasingly cash rich given expectations of higher prices for refined tin, minimal capital expenditure, and relatively stable production output over FY12-13F.

Financials – Cash Flow
High working capital requirements. Due to the nature of MSC’s tin smelting business, the group requires large amounts of working capital to purchase raw materials (mainly tin concentrates) from third-party suppliers for processing and refining. This is reflected in its consistent cash outflows in changes in working capital. FY08 saw a positive change in working capital (RM58m) because MSC was running down its inventory amid the global economic downturn. We forecast FY11F free cash flow to be negative on account of the RM150m needed to acquire two new mines. The balance of funds for the assumed capex should come from its SGX listing proceeds (assumed 150m for the mines and 45m for maintenance).

Financials – ROE Drivers
ROAE expected to soar. We forecast return on average equity will rise to c. 30% in FY11F, driven by a growing profit base. However, ROAE will drop to 19% in FY12-13F due to lower financial leverage (-11.4% 2-year CAGR over FY11F-13F) and declining asset turnover. Operating margins should see a general increase (+17.3% CAGR over FY10A-FY13F) due to greater operational efficiencies at MSC’s smelting and mining businesses, such as the new 6-lane Palong that is scheduled to commence operation in mid-2011, RHT increasing tin production by 20%, as well as higher revenues.

Valuation
DCF-derived RM5.65 (SGD2.30) TP. Our DCF model is based on 8.4% WACC and 2.5% terminal growth rate from FY21 onwards. Our fair value – which implies 5.7x CY12 P/E – translates into 25% potential upside from its current share price of RM4.51. We assumed MSC would successfully renew its CoW agreement with the Indonesian government in 2013. We also factored in 6 years mine life (production ceases in FY18F) for PT Koba Tin based on output of 6,548MT p.a. and 9 years for RHT (ceasing in FY20F) based on output of 2,123MT p.a. We have assumed that Koba Tin continues its smelting operations by sourcing from 3rd party suppliers after its mining reserves are exhausted. The smelting operation is expected to meet any shortfall of tin concentrate supply from its own mines by sourcing from third parties. Our DCF calculation also excludes contributions from new mine acquisitions.

Few direct peers. MSC has two closest comparable peers - Yunnan Tin (listed in China) and PT Timah (listed in Indonesia). They are currently trading at substantial premiums over MSC in terms of P/E, P/BV and EV/EBITDA (see Fig 12). By market cap, MSC (US$150m) is considerably smaller than Yunnan Tin (US$4,534m) and PT Timah (US$1,519m).

Proxy to tin prices. MSC’s share price performance has historically moved in tandem with refined tin prices. Fig 10 shows the positive correlation between MSC’s 14-year
historical share price record and the LME 3-Month Futures prices (which drive MSC’s profitability).

MSC is traded in Malaysia and Singapore, and its shares are freely tradable between the two stock exchanges. Fig 11 depicts its relative share price performance in these two countries since the dual listing exercise (which involved an offer of 25m new shares at S$1.75 each in Jan this year).

Risk Assessment
Earnings volatility. There is a high risk of profit revisions going forward because its earnings are sensitive to tin price movements.

Financials. MSC’s high gearing levels – skewed by financing requirements for working capital purposes – are manageable given the nature of its business.

Shareholdings. MSC has been operating since 1902, and has established itself as one of the largest tin producers in the world. Its parent, The Straits Trading Company Ltd., is also an established entity and one of the first companies to be listed on the SGX.

Source/转贴/Extract/Excerpts: HWANGDBS Vickers Research
Publish date:15/07/11
Warren E. Buffett(沃伦•巴菲特)
Be fearful when others are greedy, and be greedy when others are fearful
别人贪婪时我恐惧, 别人恐惧时我贪婪
投资只需学好两门课: 一,是如何给企业估值,二,是如何看待股市波动
吉姆·罗杰斯(Jim Rogers)
“错过时机”胜于“搞错对象”:不会全军覆没!”
做自己熟悉的事,等到发现大好机会才投钱下去

乔治·索罗斯(George Soros)

“犯错误并没有什么好羞耻的,只有知错不改才是耻辱。”

如果操作过量,即使对市场判断正确,仍会一败涂地。

李驰(中国巴菲特)
高估期间, 卖对, 不卖也对, 买是错的。
低估期间, 买对, 不买也是对, 卖是错的。

Tan Teng Boo


There’s no such thing as defensive stocks.Every stock can be defensive depending on what price you pay for it and what value you get,
冷眼(冯时能)投资概念
“买股票就是买公司的股份,买股份就是与陌生人合股做生意”。
合股做生意,则公司股份的业绩高于一切,而股票的价值决定于盈利。
价值是本,价格是末,故公司比股市重要百倍。
曹仁超-香港股神/港股明灯
1.有智慧,不如趁势
2.止损不止盈
成功者所以成功,是因为不怕失败!失败者所以失败,是失败后不再尝试!
曾淵滄-散户明灯
每逢灾难就是机会,而是在灾难发生时贱价买股票,然后放在一边,耐性地等灾难结束
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