Business Times - 11 Nov 2010
Morgan's China-play picks include Wilmar
By LYNETTE KHOO
INVESTORS hoping to get a slice of the China action should do so through multinational companies (MNCs) in the consumer, water treatment, energy resources and electronics space. These would include companies such as Apple, Pfizer, Suez, Infineon, Wilmar International and Samsung Electronics.
Morgan Stanley Hong Kong and China strategist Jerry Lou noted that these companies have long track records and offer transparency and consistent disclosure standards. They are also less vulnerable to policy and asset price cycles in China.
'If China's economy comes to represent 14 per cent of global GDP by 2020, MNCs need to think about how they can benefit strategically from China's advancement,' said Mr Lou in his presentation at the Morgan Stanley's 9th Annual Asia Pacific Summit 2010.
His top picks include Singapore-listed Wilmar International, which controls 25 per cent of the Chinese oilseed crushing market and 40 per cent of the branded cooking oil market, and which he believes will achieve mid-teens average earnings per share growth from 2011 to 2015.
Mr Lou also favours Apple, which will benefit from its brand recognition and major consumer upgrade; and Samsung Electronics, which is poised to tap China's growing LCD TV market.
He noted that consumption is becoming a compelling story in China, with the country expected to replace Japan as the largest luxury consumer market in the next few years.
'Companies that can make things cheap will not necessarily be the ultimate winners. The ultimate winners will be those that can offer a first-class consumer experience,' Mr Lou said. 'Do not underestimate Chinese consumers' appetite to upgrade, especially when the baby boomers become the mainstream consumers.'
Also among his top picks were Pfizer, the largest foreign pharmaceutical firm in China; Suez, the second largest drinking water private operator in China; and chipmaker Infineon, which is expected to benefit from car consumption and industrial capacity upgrade in China.
Qing Wang, Greater China chief economist at Morgan Stanley, noted that China's consumption growth is expected to outpace investment growth over the next 10 years.
According to him, China is at a similar stage of development as Japan 40 years ago and South Korea some 20 years ago. Mirroring the past trend of the two economies, China has seen growth deceleration and rising inflation since its inflexion point in 2007.
Morgan Stanley expects consumer price index growth to peak at 3.7-3.8 per cent year-on-year for the October to November period before falling below 3.5 per cent in December, with GDP estimated at 10.2 per cent for 2010 and to ease to 9.5 per cent in 2011.
In a bid to mop up excess liquidity following the US's second round of quantitative easing this month, China's central bank yesterday said that it was raising the required reserve ratio of its top lenders by 50 basis points from Nov 16, its fourth official increase this year. This followed an interest rate hike last month, which lifted the one-year deposit rate and one-year lending rate by 25 basis points to 2.5 per cent and 5.56 per cent respectively.
Dr Wang, however, does not expect China to embark on an interest rate hike cycle, saying that it is more likely to rely on tightening bank's reserve requirement ratios.
Given its capital and credit controls, Mr Lou said, China is unlikely to face a systemic risk arising from any sudden pull-back in liquidity.
Friday, November 12, 2010
Thursday, November 11, 2010
BT: Wilmar Q3 net profit plunges 60.3%
Published November 11, 2010
Wilmar Q3 net profit plunges 60.3%
Loss in oilseeds and grains unit; absence of big one-time gain
By FELDA CHAY
WILMAR International's third-quarter net profit plunged 60.3 per cent year-on-year due to the weaker performance of its oilseeds and grains division and the absence of a big one-time gain.
Net profit for the period ended Sept 30 was US$259.5 million, or 4.1 US cents a share. In the corresponding period last year, Wilmar registered US$652.9 million in earnings, partly buoyed by a net exceptional gain of US$167 million from the sale of new shares by its Wilmar China unit.
The latest poor showing took a heavy toll on Wilmar's share price yesterday. It touched a low of S$6.48 before recovering slightly to close 37 Singapore cents lower at S$6.51, a fall of 5.4 per cent. Some 37.3 million shares changed hands.
Despite the lacklustre results, the world's biggest listed palm oil plantation firm remained upbeat about its prospects.
Chairman and chief executive Kuok Khoon Hong said: 'Despite the weak Q3 performance, the group remains positive on its long-term prospects.'
'The outlook for Asian economies, especially China, India and Indonesia, remains positive. The group will continue to leverage on its well-established presence in these markets and invest in existing and new businesses for growth.'
For Q3, Wilmar's oilseeds and grains division recorded a pre-tax loss of US$37.1 million, despite a 28 per cent rise in sales volume. The loss was attributed to 'weaker margins and less timely purchases of raw materials'.
Revenue for the period rose 23.3 per cent to US$7.8 billion.
For the nine-month period, Wilmar's earnings dropped 30.2 per cent to US$1 billion, or 15.7 US cents per share. Sales were 25.5 per cent higher at US$21.3 billion.
At Sept 30, the company had cash and cash equivalents of US$596.3 million, compared with US$1.2 billion a year earlier.
摩通：工行盈利優於同業平均，升ＡＨ目標價１７％
11/11/2010 12:21
《外資精點》摩通：工行盈利優於同業平均，升ＡＨ目標價１７％
報告指，工行盈利可望優於同業，主要由於貸款定價能力改善、利率上調及強勁的服務費收入增長，有助其減沙依賴資本集中的業務，其充裕的流動資金，亦對其債券收益有幫助。
報告又指，由於工行的貸款減值準備對貸款比率已達到２﹒５％，即使人行上調有關需求，對其盈利亦不會構成影響，明年並無增加撥備的壓力。
該行又指，Ｈ股的大型銀行首選為工行，可受惠於加息及內地經濟增長強勁，由於工行估值高及股價波幅較低，因此股價表現一直落後於同業。不過，摩通料工行未來３至５年股本回報率逾２０％，工行Ａ股表現可能更佳。（ｏｓ）
First Reit Rights Issue: First REIT’s 2011 distribution yield expected to rise to 9.14% following acquisition of two Jakarta hospitals
First REIT’s 2011 distribution yield expected to increase to 9.14% following acquisition of two Jakarta hospitals
Wednesday, 10 November 2010 23:17
Bowsprit Capital Corporation, the manager of First Real Estate Investment Trust (First REIT), Singapore’s first healthcare real estate investment trust, announced today that First REIT’s distribution in projection year 2011 is expected to rise from 8.57%1 to 9.14% following the acquisition of two new healthcare properties in Indonesia – The Mochtar Riady Comprehensive Cancer Centre and Siloam Hospitals Lippo Cikarang.
This is based on a forecast annualised distribution per Unit (DPU) of 6.40 cents for the full financial year ending 31 December 2011, in relation to its enlarged portfolio and financing through a combination of the underwritten renounceable rights issue of 345,664,382 new units at an issue price of $0.50 per rights unit and bank loan.
Apart from the upside in yield, the manager also expects to see an increase in annual gross rental income of 80%, from $30.3 million in forecast year 2010 to $54.5 million in projection year 2011 as a result of its enlarged portfolio. On the same basis, distributable income is also expected to increase by 89% from $21.3 million to $40.3 million.
Upon completion of the Acquisitions, First REIT’s aggregate leverage will also be lowered from 18.60% to 17.25% for the projection year 2011. Accordingly, First REIT’s statement of financial position will be strengthened, leaving sufficient capability for debt financing should the need for such financing arises in the future.
“Through these acquisitions, we will be able to deliver long-term value and returns to our unitholders by way of an improved distribution yield. This is testament to our sound acquisition strategies whereby we are constantly looking out for yield-accretive healthcare related properties, and we will continue to embark actively on such acquisitions whenever opportunities are available,” said Dr Ronnie Tan, CEO of Bowsprit.
Based on a proforma capitalisation of First REIT as at 31 December 2009, as if First REIT had purchased MRCCC and SHLC (the “Properties”) and completed the Rights Issue on 31 December 2009, First REIT’s total capitalisation would have stood at S$565.9 million as compared to its actual capitalisation of S$323.3 million.
The Acquisitions
MRCCC, which will begin operations in December 2010, is Indonesia’s first private comprehensive cancer treatment centre equipped with state of the art cancer treatment and diagnostic facilities. SHLC, which began operations in 2002, is a six-storey hospital (with a basement and a covered roof space) and will accommodate 75 beds by the end of 2010.
MRCCC will be acquired from Wincatch Limited, an unrelated third party, for S$170.5 million, and SHLC will be acquired from the sponsor of First REIT, PT Lippo Karawaci Tbk (“Lippo”), for S$35.0 million. The respective purchase prices of MRCCC and SHLC represent an attractive discount of 19.7% and 13.8% respectively to the average of the Properties’ latest independent valuations.
The Acquisitions will increase the value of First REIT’s portfolio by 74.3% to S$603.4 million. The total gross floor area of the enlarged portfolio will increase by 58.7% from 83,638.2 sqm to 132,696.2 sqm. The total number of hospital beds in relation to First REIT’s Indonesia portfolio will increase by 43.8% from 537 to 772.
On completion of the Acquisitions, the conditional master lease agreements entered into with Lippo in relation to the Properties will commence for a 15 year lease term (with an option to renew for a further term of 15 years, subject to the renewal of the Properties’ HGB4 titles).
Rental income of both Properties comprise a base rent component which is payable quarterly in advance, and subject to a stepped up increase every year thereafter at a rate equal to 2 times of the percentage increase of Singapore’s Consumer Price Index for the preceding calendar year; as well as a variable rent component5.
Key benefits of the Acquisitions
The Manager believes that the Acquisitions and the Rights Issue (collectively, the “Transactions”) will bring, among others, the following key benefits to the unitholders:
(i) opportunity to purchase attractive and high quality properties at prices below valuation;
(ii) increased income stability of First REIT through the MRCCC master lease agreement and the SHLC master lease agreement and increase in First REIT’s weighted average lease to expiry;
(iii) unique opportunity to acquire two quality hospitals in Jakarta, Indonesia;
(iv) increased absolute size of First REIT’s asset base which may raise the profile of First REIT among global investors and increased portfolio size enhances First REIT’s competitive positioning and ability to pursue future acquisitions;
(v) increased market capitalisation and potential increased liquidity through the Rights Issue;
(vi) yield accretive acquisitions with expected increase in distribution yield to unitholders for Projection Year 2011;
(vii) the Acquisitions would enable First REIT to grow through the acquisition of a portfolio of hospitals which enhances the diversification of First REIT’s portfolio across locations and medical specialisations; and
(viii) increase in attractiveness of the enlarged portfolio given the reduction in the weighted average age of the Properties in the enlarged portfolio after the completion of the Acquisitions.
The Rights Issue and Debt Financing
The acquisition of MRCCC and related transaction costs will be funded in cash through a combination of the net proceeds from the Rights Issue and partially through a new term loan facility of up to S$50.0 million from Oversea-Chinese Banking Corporation Limited. The acquisition of SHLC and related transaction costs will be fully financed in cash from the proceeds raised from the Rights Issue.
The Manager intends to raise approximately S$172.8 million in gross proceeds through the Rights Issue to eligible unitholders, on a pro rata basis of five (5) Rights Units for every four (4) existing Units, at the Issue Price of S$0.50 per Unit (fractional entitlements to be disregarded). Oversea-Chinese Banking Corporation Limited and Credit Suisse (Singapore) Limited are the joint lead managers and underwriters for the Rights Issue.
Moving Ahead
First REIT will be looking to achieve a portfolio size of S$1 billion in the next two to three years. The Manager will continue to look for other yield-accretive assets in Singapore and Indonesia, as well as the rest of the Asia Pacific region.
Wednesday, 10 November 2010 23:17
Bowsprit Capital Corporation, the manager of First Real Estate Investment Trust (First REIT), Singapore’s first healthcare real estate investment trust, announced today that First REIT’s distribution in projection year 2011 is expected to rise from 8.57%1 to 9.14% following the acquisition of two new healthcare properties in Indonesia – The Mochtar Riady Comprehensive Cancer Centre and Siloam Hospitals Lippo Cikarang.
This is based on a forecast annualised distribution per Unit (DPU) of 6.40 cents for the full financial year ending 31 December 2011, in relation to its enlarged portfolio and financing through a combination of the underwritten renounceable rights issue of 345,664,382 new units at an issue price of $0.50 per rights unit and bank loan.
Apart from the upside in yield, the manager also expects to see an increase in annual gross rental income of 80%, from $30.3 million in forecast year 2010 to $54.5 million in projection year 2011 as a result of its enlarged portfolio. On the same basis, distributable income is also expected to increase by 89% from $21.3 million to $40.3 million.
Upon completion of the Acquisitions, First REIT’s aggregate leverage will also be lowered from 18.60% to 17.25% for the projection year 2011. Accordingly, First REIT’s statement of financial position will be strengthened, leaving sufficient capability for debt financing should the need for such financing arises in the future.
“Through these acquisitions, we will be able to deliver long-term value and returns to our unitholders by way of an improved distribution yield. This is testament to our sound acquisition strategies whereby we are constantly looking out for yield-accretive healthcare related properties, and we will continue to embark actively on such acquisitions whenever opportunities are available,” said Dr Ronnie Tan, CEO of Bowsprit.
Based on a proforma capitalisation of First REIT as at 31 December 2009, as if First REIT had purchased MRCCC and SHLC (the “Properties”) and completed the Rights Issue on 31 December 2009, First REIT’s total capitalisation would have stood at S$565.9 million as compared to its actual capitalisation of S$323.3 million.
The Acquisitions
MRCCC, which will begin operations in December 2010, is Indonesia’s first private comprehensive cancer treatment centre equipped with state of the art cancer treatment and diagnostic facilities. SHLC, which began operations in 2002, is a six-storey hospital (with a basement and a covered roof space) and will accommodate 75 beds by the end of 2010.
MRCCC will be acquired from Wincatch Limited, an unrelated third party, for S$170.5 million, and SHLC will be acquired from the sponsor of First REIT, PT Lippo Karawaci Tbk (“Lippo”), for S$35.0 million. The respective purchase prices of MRCCC and SHLC represent an attractive discount of 19.7% and 13.8% respectively to the average of the Properties’ latest independent valuations.
The Acquisitions will increase the value of First REIT’s portfolio by 74.3% to S$603.4 million. The total gross floor area of the enlarged portfolio will increase by 58.7% from 83,638.2 sqm to 132,696.2 sqm. The total number of hospital beds in relation to First REIT’s Indonesia portfolio will increase by 43.8% from 537 to 772.
On completion of the Acquisitions, the conditional master lease agreements entered into with Lippo in relation to the Properties will commence for a 15 year lease term (with an option to renew for a further term of 15 years, subject to the renewal of the Properties’ HGB4 titles).
Rental income of both Properties comprise a base rent component which is payable quarterly in advance, and subject to a stepped up increase every year thereafter at a rate equal to 2 times of the percentage increase of Singapore’s Consumer Price Index for the preceding calendar year; as well as a variable rent component5.
Key benefits of the Acquisitions
The Manager believes that the Acquisitions and the Rights Issue (collectively, the “Transactions”) will bring, among others, the following key benefits to the unitholders:
(i) opportunity to purchase attractive and high quality properties at prices below valuation;
(ii) increased income stability of First REIT through the MRCCC master lease agreement and the SHLC master lease agreement and increase in First REIT’s weighted average lease to expiry;
(iii) unique opportunity to acquire two quality hospitals in Jakarta, Indonesia;
(iv) increased absolute size of First REIT’s asset base which may raise the profile of First REIT among global investors and increased portfolio size enhances First REIT’s competitive positioning and ability to pursue future acquisitions;
(v) increased market capitalisation and potential increased liquidity through the Rights Issue;
(vi) yield accretive acquisitions with expected increase in distribution yield to unitholders for Projection Year 2011;
(vii) the Acquisitions would enable First REIT to grow through the acquisition of a portfolio of hospitals which enhances the diversification of First REIT’s portfolio across locations and medical specialisations; and
(viii) increase in attractiveness of the enlarged portfolio given the reduction in the weighted average age of the Properties in the enlarged portfolio after the completion of the Acquisitions.
The Rights Issue and Debt Financing
The acquisition of MRCCC and related transaction costs will be funded in cash through a combination of the net proceeds from the Rights Issue and partially through a new term loan facility of up to S$50.0 million from Oversea-Chinese Banking Corporation Limited. The acquisition of SHLC and related transaction costs will be fully financed in cash from the proceeds raised from the Rights Issue.
The Manager intends to raise approximately S$172.8 million in gross proceeds through the Rights Issue to eligible unitholders, on a pro rata basis of five (5) Rights Units for every four (4) existing Units, at the Issue Price of S$0.50 per Unit (fractional entitlements to be disregarded). Oversea-Chinese Banking Corporation Limited and Credit Suisse (Singapore) Limited are the joint lead managers and underwriters for the Rights Issue.
Moving Ahead
First REIT will be looking to achieve a portfolio size of S$1 billion in the next two to three years. The Manager will continue to look for other yield-accretive assets in Singapore and Indonesia, as well as the rest of the Asia Pacific region.
Wednesday, November 10, 2010
JES News release 9 Nov 10: Q310 Results
SGX-LISTED JES INTERNATIONAL 3Q2010 NET PROFIT SOARS TO RMB 22.5 MILLION from RMB1.6 MILLION; ORDERBOOK REACHES US$ 900 MILLION FOR DELIVERY UP TO FY2012
- Revenue rose 113.7% to RMB 641.0 million on contributions from new yard completed in mid-2010
- Total of 35 vessels for delivery up to FY2012
- FY2010 financial performance to exceed FY2009
*Based on weighted average number of ordinary shares of 1,166,028,000
**As at 31 Dec 2009
SINGAPORE, 9 November 2010 – JES International Holdings Limited (“JES” or the “Group”) (JES 国际控股有限公司), a major PRC shipbuilder, said today that its net attributable profit for the July- September 2010 (“3Q2010”) soared to RMB 22.5 million from RMB 1.6 million in 3Q2009.
Singapore Exchange Mainboard-listed JES, with capabilities to build a wide range of vessels, said profit surge was achieved on the back of a 113.7% increase in revenue to RMB 641.0 million in 3Q2010 from RMB 300.0 million in 3Q2009, mainly due to more RMB (Million) 3Q2010 3Q2009 Change (%) vessels in construction, with the increased capacities coming from the recently completed new yard facilities.
In 3Q2010, the Group delivered two 37,500 deadweight tonnes (“DWT”) bulk carriers and one 79,800 DWT bulk carrier, as compared to 3Q2009 where shipbuilding operations were affected by slower production progress and delays in vessel deliveries.
JES reported gross profit margin of approximately 9.0% in 3Q2010. Earnings per share rose to 1.93 RMB cents from 0.14 RMB cent for 3Q2009 (based on weighted average of 1,166,028,000 shares). Net asset value per share as at 30 September 2010 rose to 140.8 RMB cents from 138.6 RMB cents as at 31 December 2009.
For the nine months ended 30 September 2010 (“9M2010”), the Group recorded revenue and net attributable profit of RMB 1.5 billion and RMB 27.0 million, respectively, compared to RMB 980.1 million and a loss of RMB 43.9 million, respectively, in 9M2009.
JES’s Chairman and Chief Executive Officer Mr. Jin Xin said, “The completion of our new yard has increased JES’s capabilities and enhanced our reach to a wider market.
Our improved performance in 3Q2010 strengthens the reputation of JES as one of the PRC’s largest non-state-owned shipbuilders and underscores our sales and marketing efforts which led to securing business within a competitive business environment.”
The Group continues to maintain prudent financial policies to ensure sustainable growth.
As at 30 September 2010, the Group held cash and cash equivalents of approximately RMB 775.0 million, with short-term borrowings of RMB 256.1 million and no long-term borrowings.
Orderbook Updates To-date in FY2010, the Group has successfully contracted 24 new vessels, bringing its total orderbook as at 30 September 2010 to a total of 35 vessels valued at approximately US$900 million. These orders, which will be constructed at both the Group’s old and new yards, will be progressively delivered over the next 24 months.
Outlook
“In the near term we seek to secure new orders to fully utilize our expanded production facilities. With capabilities now that we have competed our new yard, we plan to expand our portfolio to include more sophisticated vessels such as Floating Oil Production, Storage and Offloading (“FPSO)” units and ocean engineering vessels. Over the medium to longer term we plan to penetrate the offshore equipment sector to produce oil rigs,” Mr Jin said.
The Group has commenced prospective discussions with potential business partners in this area and will announce any such development as it arises.
While economic conditions have improved significantly, the Group remains cautiously optimistic about the long-term operating outlook of the global economy and shipbuilding industry. As such, the Group will continue to actively monitor market developments to ensure the sustainability of its future earnings.
In view of the above factors and barring unforeseen circumstances, the Group remains confident that its financial performance for FY2010 will exceed FY2009.
~ Ends ~
Issued on behalf of JES International Holdings Limited by WeR1 Consultants Pte Ltd
About JES International Holdings Limited
JES is a major PRC shipbuilding group with production facilities capable of producing different types of vessels, including non-standard vessels. Its principal products include:
• Bulk Carriers
• Crude oil tankers
• Containerships
• Ocean engineering vessels
The Group’s customers include major shipowners based in Europe, Canada and Asia, including the PRC.
The Group’s shipyard is located at Shiwei Port, Jingjiang City in Jiangsu Province, PRC
and features a 1 km-long coastline with access to deep water and stable currents. The
facilities stretch over a gross land area of approximately 467,000 sq.m. The existing
yard facilities include two slipways equipped with gantry cranes, two outfitting wharfs, a
hull and section steel shop, a sub-assembly shop, a block assembly shop, a metal
treatment shop, two paint shops, a pipe shop and an electrical shop that cover every
stage of the shipbuilding process.
In 2010, the Group completed the construction of its new yard facility located on the land
adjacent to its existing yard. The new yard consists of a 400m by 140m wide dry dock, a
steel hull structure shop, one 1,200 tonne and two 400 tonne gantry cranes, auxiliary
facilities and other lifting equipment. With the addition of the new yard, JES is now
equipped with the additional capacity to concurrently construct three bulk carriers of up
to 176,000 DWT each or two crude oil tankers of up to 300,000 DWT each or very large
ocean engineering vessels and offshore equipment such as oil rigs.
- Revenue rose 113.7% to RMB 641.0 million on contributions from new yard completed in mid-2010
- Total of 35 vessels for delivery up to FY2012
- FY2010 financial performance to exceed FY2009
*Based on weighted average number of ordinary shares of 1,166,028,000
**As at 31 Dec 2009
SINGAPORE, 9 November 2010 – JES International Holdings Limited (“JES” or the “Group”) (JES 国际控股有限公司), a major PRC shipbuilder, said today that its net attributable profit for the July- September 2010 (“3Q2010”) soared to RMB 22.5 million from RMB 1.6 million in 3Q2009.
Singapore Exchange Mainboard-listed JES, with capabilities to build a wide range of vessels, said profit surge was achieved on the back of a 113.7% increase in revenue to RMB 641.0 million in 3Q2010 from RMB 300.0 million in 3Q2009, mainly due to more RMB (Million) 3Q2010 3Q2009 Change (%) vessels in construction, with the increased capacities coming from the recently completed new yard facilities.
In 3Q2010, the Group delivered two 37,500 deadweight tonnes (“DWT”) bulk carriers and one 79,800 DWT bulk carrier, as compared to 3Q2009 where shipbuilding operations were affected by slower production progress and delays in vessel deliveries.
JES reported gross profit margin of approximately 9.0% in 3Q2010. Earnings per share rose to 1.93 RMB cents from 0.14 RMB cent for 3Q2009 (based on weighted average of 1,166,028,000 shares). Net asset value per share as at 30 September 2010 rose to 140.8 RMB cents from 138.6 RMB cents as at 31 December 2009.
For the nine months ended 30 September 2010 (“9M2010”), the Group recorded revenue and net attributable profit of RMB 1.5 billion and RMB 27.0 million, respectively, compared to RMB 980.1 million and a loss of RMB 43.9 million, respectively, in 9M2009.
JES’s Chairman and Chief Executive Officer Mr. Jin Xin said, “The completion of our new yard has increased JES’s capabilities and enhanced our reach to a wider market.
Our improved performance in 3Q2010 strengthens the reputation of JES as one of the PRC’s largest non-state-owned shipbuilders and underscores our sales and marketing efforts which led to securing business within a competitive business environment.”
The Group continues to maintain prudent financial policies to ensure sustainable growth.
As at 30 September 2010, the Group held cash and cash equivalents of approximately RMB 775.0 million, with short-term borrowings of RMB 256.1 million and no long-term borrowings.
Orderbook Updates To-date in FY2010, the Group has successfully contracted 24 new vessels, bringing its total orderbook as at 30 September 2010 to a total of 35 vessels valued at approximately US$900 million. These orders, which will be constructed at both the Group’s old and new yards, will be progressively delivered over the next 24 months.
Outlook
“In the near term we seek to secure new orders to fully utilize our expanded production facilities. With capabilities now that we have competed our new yard, we plan to expand our portfolio to include more sophisticated vessels such as Floating Oil Production, Storage and Offloading (“FPSO)” units and ocean engineering vessels. Over the medium to longer term we plan to penetrate the offshore equipment sector to produce oil rigs,” Mr Jin said.
The Group has commenced prospective discussions with potential business partners in this area and will announce any such development as it arises.
While economic conditions have improved significantly, the Group remains cautiously optimistic about the long-term operating outlook of the global economy and shipbuilding industry. As such, the Group will continue to actively monitor market developments to ensure the sustainability of its future earnings.
In view of the above factors and barring unforeseen circumstances, the Group remains confident that its financial performance for FY2010 will exceed FY2009.
~ Ends ~
Issued on behalf of JES International Holdings Limited by WeR1 Consultants Pte Ltd
About JES International Holdings Limited
JES is a major PRC shipbuilding group with production facilities capable of producing different types of vessels, including non-standard vessels. Its principal products include:
• Bulk Carriers
• Crude oil tankers
• Containerships
• Ocean engineering vessels
The Group’s customers include major shipowners based in Europe, Canada and Asia, including the PRC.
The Group’s shipyard is located at Shiwei Port, Jingjiang City in Jiangsu Province, PRC
and features a 1 km-long coastline with access to deep water and stable currents. The
facilities stretch over a gross land area of approximately 467,000 sq.m. The existing
yard facilities include two slipways equipped with gantry cranes, two outfitting wharfs, a
hull and section steel shop, a sub-assembly shop, a block assembly shop, a metal
treatment shop, two paint shops, a pipe shop and an electrical shop that cover every
stage of the shipbuilding process.
In 2010, the Group completed the construction of its new yard facility located on the land
adjacent to its existing yard. The new yard consists of a 400m by 140m wide dry dock, a
steel hull structure shop, one 1,200 tonne and two 400 tonne gantry cranes, auxiliary
facilities and other lifting equipment. With the addition of the new yard, JES is now
equipped with the additional capacity to concurrently construct three bulk carriers of up
to 176,000 DWT each or two crude oil tankers of up to 300,000 DWT each or very large
ocean engineering vessels and offshore equipment such as oil rigs.
BT: ICBC eyes more S-E Asian acquisitions
Business Times - 04 Nov 2010
ICBC eyes more S-E Asian acquisitions
(BANGKOK) Industrial and Commercial Bank of China (ICBC), the world's most valuable lender, said yesterday it was looking for acquisitions in countries in South-east Asia where it currently has no presence.
'South-east Asia is where we also focus on as it offers growth potential,' ICBC chairman Jiang Jianqing told a news conference here. 'We are looking for opportunity in the region where ICBC has no operations.' ICBC, which has 194 overseas branches and subsidiaries in 22 countries, now operates in five countries in South-east Asia: Indonesia, Thailand, Malaysia, Singapore, and Vietnam.
In April, it completed the acquisition of a 97.24 per cent stake of Thailand's smallest lender, ACL Bank, for about US$550 million. The acquisition would be a platform for entering Thailand, Vietnam, and Cambodia, as ICBC expands its network in South-east Asia's fast-growing banking market, the bank said.
ICBC (Thai), which has about 71.5 billion baht (S$3.08 billion) in assets, expected to expand its assets by 20 per cent a year by focusing on retail businesses and expansion into Chinese firms in Thailand, ICBC (Thai) CEO Chen Youbin told reporters. 'We could be bigger than CIMB Thai over the next three to five years,' Mr Chen said, referring to the Thai unit of Malaysia's CIMB Group Holdings.
ICBC (Thai) also planned to increase the number of its branches to 30 over the next three years from 19, Mr Chen said. The bank planned to delist from Thailand's stock exchange as its free float did not meet the minimum 15 per cent requirement set by the stock exchange.
Asked if China's ICBC wanted to buy more assets in Thailand, Mr Jiang said: 'The first priority is to make ICBC successful.' - Reuters
ICBC eyes more S-E Asian acquisitions
(BANGKOK) Industrial and Commercial Bank of China (ICBC), the world's most valuable lender, said yesterday it was looking for acquisitions in countries in South-east Asia where it currently has no presence.
'South-east Asia is where we also focus on as it offers growth potential,' ICBC chairman Jiang Jianqing told a news conference here. 'We are looking for opportunity in the region where ICBC has no operations.' ICBC, which has 194 overseas branches and subsidiaries in 22 countries, now operates in five countries in South-east Asia: Indonesia, Thailand, Malaysia, Singapore, and Vietnam.
In April, it completed the acquisition of a 97.24 per cent stake of Thailand's smallest lender, ACL Bank, for about US$550 million. The acquisition would be a platform for entering Thailand, Vietnam, and Cambodia, as ICBC expands its network in South-east Asia's fast-growing banking market, the bank said.
ICBC (Thai), which has about 71.5 billion baht (S$3.08 billion) in assets, expected to expand its assets by 20 per cent a year by focusing on retail businesses and expansion into Chinese firms in Thailand, ICBC (Thai) CEO Chen Youbin told reporters. 'We could be bigger than CIMB Thai over the next three to five years,' Mr Chen said, referring to the Thai unit of Malaysia's CIMB Group Holdings.
ICBC (Thai) also planned to increase the number of its branches to 30 over the next three years from 19, Mr Chen said. The bank planned to delist from Thailand's stock exchange as its free float did not meet the minimum 15 per cent requirement set by the stock exchange.
Asked if China's ICBC wanted to buy more assets in Thailand, Mr Jiang said: 'The first priority is to make ICBC successful.' - Reuters
CNA: JES Q310 results
SINGAPORE, 9 November 2010 – JES International Holdings Limited (“JES” or the“Group”) (JES 国际控股有限公司), a major PRC shipbuilder, said today that its net attributable profit for the July- September 2010 (“3Q2010”) soared to RMB 22.5 millionfrom RMB 1.6 million in 3Q2009.
Singapore Exchange Mainboard-listed JES, with capabilities to build a wide range ofvessels, said profit surge was achieved on the back of a 113.7% increase in revenue toRMB 641.0 million in 3Q2010 from RMB 300.0 million in 3Q2009, mainly due to more vessels in construction, with the increased capacities coming from the recentlycompleted new yard facilities.
In 3Q2010, the Group delivered two 37,500 deadweight tonnes (“DWT”) bulk carriers and one 79,800 DWT bulk carrier, as compared to 3Q2009 where shipbuilding operations were affected by slower production progress and delays in vessel deliveries.
JES reported gross profit margin of approximately 9.0% in 3Q2010.
Earnings per share rose to 1.93 RMB cents from 0.14 RMB cent for 3Q2009 (based on weighted average of 1,166,028,000 shares). Net asset value per share as at 30 September 2010 rose to 140.8 RMB cents from 138.6 RMB cents as at 31 December 2009.
For the nine months ended 30 September 2010 (“9M2010”), the Group recorded revenue and net attributable profit of RMB 1.5 billion and RMB 27.0 million, respectively, compared to RMB 980.1 million and a loss of RMB 43.9 million, respectively, in 9M2009
Singapore Exchange Mainboard-listed JES, with capabilities to build a wide range ofvessels, said profit surge was achieved on the back of a 113.7% increase in revenue toRMB 641.0 million in 3Q2010 from RMB 300.0 million in 3Q2009, mainly due to more vessels in construction, with the increased capacities coming from the recentlycompleted new yard facilities.
In 3Q2010, the Group delivered two 37,500 deadweight tonnes (“DWT”) bulk carriers and one 79,800 DWT bulk carrier, as compared to 3Q2009 where shipbuilding operations were affected by slower production progress and delays in vessel deliveries.
JES reported gross profit margin of approximately 9.0% in 3Q2010.
Earnings per share rose to 1.93 RMB cents from 0.14 RMB cent for 3Q2009 (based on weighted average of 1,166,028,000 shares). Net asset value per share as at 30 September 2010 rose to 140.8 RMB cents from 138.6 RMB cents as at 31 December 2009.
For the nine months ended 30 September 2010 (“9M2010”), the Group recorded revenue and net attributable profit of RMB 1.5 billion and RMB 27.0 million, respectively, compared to RMB 980.1 million and a loss of RMB 43.9 million, respectively, in 9M2009
AFP: ICBC expanding in Europe, Middle East
ICBC expanding in Europe, Middle East
Posted: 09 November 2010 1550 hrs
BEIJING : Industrial and Commercial Bank of China, the world's largest by market value, is accelerating its global expansion with new branches in Europe and the Middle East, a newspaper reported Tuesday.
The Beijing-based bank opened a branch in Abu Dhabi on Sunday and is planning others in Paris, Madrid, Milan, Brussels and Amsterdam as it follows a rising tide of Chinese firms going abroad, the Financial Times reported.
"ICBC anticipates some big developments in terms of Chinese companies doing more business in Europe and they want to be ready," the newspaper quoted an unnamed senior China-based European banker as saying.
Bank officials were not immediately available to comment on the report.
The bank is also looking at potential acquisitions in Europe and the Middle East and plans to expand in Canada after buying a small network of six branches from Hong Kong's Bank of East Asia this year, the report said.
ICBC has a subsidiary company in Qatar and is mulling opening branches in Kuwait and Saudi Arabia, the report said.
The bank already has branches in London, Frankfurt and Luxembourg, where it is planning to establish its European headquarters, the report said.
ICBC has been the most aggressive of China's "big four" banks in expanding overseas, as the country's lenders restart plans that were put on hold by the global financial crisis and seize upon new opportunities left in its wake.
- AFP /ls
Posted: 09 November 2010 1550 hrs
BEIJING : Industrial and Commercial Bank of China, the world's largest by market value, is accelerating its global expansion with new branches in Europe and the Middle East, a newspaper reported Tuesday.
The Beijing-based bank opened a branch in Abu Dhabi on Sunday and is planning others in Paris, Madrid, Milan, Brussels and Amsterdam as it follows a rising tide of Chinese firms going abroad, the Financial Times reported.
"ICBC anticipates some big developments in terms of Chinese companies doing more business in Europe and they want to be ready," the newspaper quoted an unnamed senior China-based European banker as saying.
Bank officials were not immediately available to comment on the report.
The bank is also looking at potential acquisitions in Europe and the Middle East and plans to expand in Canada after buying a small network of six branches from Hong Kong's Bank of East Asia this year, the report said.
ICBC has a subsidiary company in Qatar and is mulling opening branches in Kuwait and Saudi Arabia, the report said.
The bank already has branches in London, Frankfurt and Luxembourg, where it is planning to establish its European headquarters, the report said.
ICBC has been the most aggressive of China's "big four" banks in expanding overseas, as the country's lenders restart plans that were put on hold by the global financial crisis and seize upon new opportunities left in its wake.
- AFP /ls
BT: Hock Lock Siew - The curious case of two shipbuilders
Business Times - 10 Nov 2010
Hock Lock Siew
The curious case of two shipbuilders
By LYNN KAN
DOES one march to the drumbeat of the market or heed the advice of research analysts when investing?
This dilemma is thrown into sharp relief when the two views diverge, as with the curious case of the two Chinese shipbuilders listed on the Singapore Exchange: Yangzijiang Shipbuilders and Cosco Corporation.
Consistently, Yangzijiang has been preferred by analysts covering both shipping companies. Yangzijiang has received higher target price (TP) guidances over Cosco. The 12-month analyst consensus TPs peg Yangzijiang at $2.14 over Cosco at $1.94.
However, those who look to the market behaviour would have to abandon these endorsements by analysts. Cosco has already exceeded these expectations. By yesterday, two market days after it announced a 137 per cent improvement in net profit of $55.1 million, Cosco shares have put on 22 cents to $2.16 - way past analysts' targets. Instead, YZJ is the laggard at $2.02.
The market has repeatedly taken Cosco's side, making it an expensive shipping stock compared to its peers. According to a report by DBS Vickers, Cosco's 2011 forward price-earnings are at 16.1 times versus YZJ's more modest 11.9 times.
The market could certainly be right right now, but analysts seem to be making convincing cases for Yangzijiang over Cosco in their reports.
For one thing, Yangzijiang - whose ambitions are to be an integrated shipping company - takes on new expertise through less risky acquisitions or joint venture undertakings. Case in point: It recently penned a memorandum of understanding with CSBC Corporation in Taiwan, which would likely see Yangzijiang learn from the large-capacity shipbuilder and allow it to venture into building larger ships than it is doing now. Cosco, on the other hand, has ventured into unfamiliar terrain such as offshore equipment building without such tie-ups. Though it delivered the Seven driller this year, the project led to a year's worth of delays and dented its profit margin severely in 2009.
Secondly, YZJ has had better margins because of better execution in the past. Yangzijiang maintained its shipbuilding margins at about 23-24 per cent this quarter and analysts are typically confident about its execution time.
Cosco has a rockier execution track record. It reported at its third-quarter briefing margins of 10 per cent for its bulk carrier segments. This isn't a cushy margin but is already an improvement from the time its margins were deeply compressed at 2.9 per cent.
Lastly, while Cosco's orders amounting to about $6.1 billion into 2012/2013 have recently pipped Yangzijiang's $5.3 billion, the quality of their order books differs greatly. Cosco is dogged by a delay/cancellation rate of about 50 per cent, compared with Yangzijiang's much healthier 9 per cent.
Yangzijiang also has helped reduce cancellations and delays from its clients because it helps clients liaise directly with banks to secure financing. Cosco doesn't have a similar mechanism, so risks of cancellations are much higher.
On paper, the case for Yangzijiang is a stronger one. But a glance at Cosco's skyrocketing price hits home a sobering fact: much of the good news from Yangzijiang is already priced in, while the rebound for Cosco isn't entirely.
What could explain the occurrence is what's slightly beyond the market's horizon: the risk of oversupply in the bulker market in 2011, which will trouble Cosco more than Yangzijiang next year.
Although Cosco's improving margins and larger order books are the causes of much exuberance, the company's shares might not fare so well in a few months because it's much more exposed to the building of bulk carriers than is Yangzijiang. According to a report by Credit Suisse released in July, Yangzijiang's order books are 64 per cent bulk carriers and 36 per cent containership. Cosco's order books are 93 per cent bulk carriers. Its most recent announcement last week of new order wins were also all bulk carriers, adding and not subtracting to its dependence on bulker newbuilds for revenue.
So, those scratching their heads over the Yangzijiang versus Cosco dilemma might want to bear in mind that there's more to a company's fortunes than current upward-trending price movements. Exuberance on a stock - especially in shipping - should include longer-term calculations, such as industry-wide systemic risks and sound business strategies.
Hock Lock Siew
The curious case of two shipbuilders
By LYNN KAN
DOES one march to the drumbeat of the market or heed the advice of research analysts when investing?
This dilemma is thrown into sharp relief when the two views diverge, as with the curious case of the two Chinese shipbuilders listed on the Singapore Exchange: Yangzijiang Shipbuilders and Cosco Corporation.
Consistently, Yangzijiang has been preferred by analysts covering both shipping companies. Yangzijiang has received higher target price (TP) guidances over Cosco. The 12-month analyst consensus TPs peg Yangzijiang at $2.14 over Cosco at $1.94.
However, those who look to the market behaviour would have to abandon these endorsements by analysts. Cosco has already exceeded these expectations. By yesterday, two market days after it announced a 137 per cent improvement in net profit of $55.1 million, Cosco shares have put on 22 cents to $2.16 - way past analysts' targets. Instead, YZJ is the laggard at $2.02.
The market has repeatedly taken Cosco's side, making it an expensive shipping stock compared to its peers. According to a report by DBS Vickers, Cosco's 2011 forward price-earnings are at 16.1 times versus YZJ's more modest 11.9 times.
The market could certainly be right right now, but analysts seem to be making convincing cases for Yangzijiang over Cosco in their reports.
For one thing, Yangzijiang - whose ambitions are to be an integrated shipping company - takes on new expertise through less risky acquisitions or joint venture undertakings. Case in point: It recently penned a memorandum of understanding with CSBC Corporation in Taiwan, which would likely see Yangzijiang learn from the large-capacity shipbuilder and allow it to venture into building larger ships than it is doing now. Cosco, on the other hand, has ventured into unfamiliar terrain such as offshore equipment building without such tie-ups. Though it delivered the Seven driller this year, the project led to a year's worth of delays and dented its profit margin severely in 2009.
Secondly, YZJ has had better margins because of better execution in the past. Yangzijiang maintained its shipbuilding margins at about 23-24 per cent this quarter and analysts are typically confident about its execution time.
Cosco has a rockier execution track record. It reported at its third-quarter briefing margins of 10 per cent for its bulk carrier segments. This isn't a cushy margin but is already an improvement from the time its margins were deeply compressed at 2.9 per cent.
Lastly, while Cosco's orders amounting to about $6.1 billion into 2012/2013 have recently pipped Yangzijiang's $5.3 billion, the quality of their order books differs greatly. Cosco is dogged by a delay/cancellation rate of about 50 per cent, compared with Yangzijiang's much healthier 9 per cent.
Yangzijiang also has helped reduce cancellations and delays from its clients because it helps clients liaise directly with banks to secure financing. Cosco doesn't have a similar mechanism, so risks of cancellations are much higher.
On paper, the case for Yangzijiang is a stronger one. But a glance at Cosco's skyrocketing price hits home a sobering fact: much of the good news from Yangzijiang is already priced in, while the rebound for Cosco isn't entirely.
What could explain the occurrence is what's slightly beyond the market's horizon: the risk of oversupply in the bulker market in 2011, which will trouble Cosco more than Yangzijiang next year.
Although Cosco's improving margins and larger order books are the causes of much exuberance, the company's shares might not fare so well in a few months because it's much more exposed to the building of bulk carriers than is Yangzijiang. According to a report by Credit Suisse released in July, Yangzijiang's order books are 64 per cent bulk carriers and 36 per cent containership. Cosco's order books are 93 per cent bulk carriers. Its most recent announcement last week of new order wins were also all bulk carriers, adding and not subtracting to its dependence on bulker newbuilds for revenue.
So, those scratching their heads over the Yangzijiang versus Cosco dilemma might want to bear in mind that there's more to a company's fortunes than current upward-trending price movements. Exuberance on a stock - especially in shipping - should include longer-term calculations, such as industry-wide systemic risks and sound business strategies.
BT: Shipping to recover in 3-5 years: Cosco chief
Business Times - 10 Nov 2010
Shipping to recover in 3-5 years: Cosco chief
(GUANGZHOU) The global shipping market will recover in 3-5 years, led by the container industry, which has already started to return to profit, a top executive said yesterday.
The shipping industry is seen to be returning to pre-crisis levels with the help of soaring consumer consumption in China, said Wei Jiafu, head of China Ocean Shipping Company (Cosco), the world's largest dry bulk firm.
'China's internal demand is huge, external demand is also growing and we will see another spring in 3-5 years' time,' he told reporters at an industry conference in China's southern port hub of Guangzhou.
Mr Wei forecast that the Baltic Dry Index would average 3,500 points in 2011, up from Monday's close of 2,482 points.
A flood of new dry bulk and oil tanker vessels may weigh on the freight market in 2011, slowing the industry's recovery from the global financial crisis two years ago.
Signs of a recovery were already becoming evident in the container industry, a sector closely linked to world economic growth, since it does not face the same oversupply problems as dry bulk and tankers.
Mr Wei urged the freight industry to avoid 'irrational fleet expansion' that could threaten to burden the market for years.
The global fleet of dry bulk carriers is expected to outpace economic demand in 2011, a result of the industry's buying spree two years ago before the financial crisis slashed sea trade.
'We should pursue a more rational growth model, restricting irrational fleet expansion and staying on the right course,' he said. 'This is our only choice to sustain growth in this highly volatile market.'
Outstanding bulk cargo ship orders represent more than half of the existing capacity, according to Clarkson Research.
Dry bulk freight supplies were expected to increase to 616 million deadweight tonnes next year, a 15 per cent rise from this year's 537 million dwt, analysts said.
That would surpass a 5 per cent rise in expected demand growth in seaborne trade to 413 million dwt from 395 million dwt\. \-- Reuters
Shipping to recover in 3-5 years: Cosco chief
(GUANGZHOU) The global shipping market will recover in 3-5 years, led by the container industry, which has already started to return to profit, a top executive said yesterday.
The shipping industry is seen to be returning to pre-crisis levels with the help of soaring consumer consumption in China, said Wei Jiafu, head of China Ocean Shipping Company (Cosco), the world's largest dry bulk firm.
'China's internal demand is huge, external demand is also growing and we will see another spring in 3-5 years' time,' he told reporters at an industry conference in China's southern port hub of Guangzhou.
Mr Wei forecast that the Baltic Dry Index would average 3,500 points in 2011, up from Monday's close of 2,482 points.
A flood of new dry bulk and oil tanker vessels may weigh on the freight market in 2011, slowing the industry's recovery from the global financial crisis two years ago.
Signs of a recovery were already becoming evident in the container industry, a sector closely linked to world economic growth, since it does not face the same oversupply problems as dry bulk and tankers.
Mr Wei urged the freight industry to avoid 'irrational fleet expansion' that could threaten to burden the market for years.
The global fleet of dry bulk carriers is expected to outpace economic demand in 2011, a result of the industry's buying spree two years ago before the financial crisis slashed sea trade.
'We should pursue a more rational growth model, restricting irrational fleet expansion and staying on the right course,' he said. 'This is our only choice to sustain growth in this highly volatile market.'
Outstanding bulk cargo ship orders represent more than half of the existing capacity, according to Clarkson Research.
Dry bulk freight supplies were expected to increase to 616 million deadweight tonnes next year, a 15 per cent rise from this year's 537 million dwt, analysts said.
That would surpass a 5 per cent rise in expected demand growth in seaborne trade to 413 million dwt from 395 million dwt\. \-- Reuters
Bloomberg: Stay in positive territory, Price Target : S$ 0.46
JES, BUY S$0.36, Bloomberg: JES SP
Stay in positive territory
Price Target : S$ 0.46
By: Pei Hwa HO
· 3Q10 results in line
· Earnings turnaround on track with improved operating environment, higher order book and new yard
· Maintain BUY; TP S$0.46
Comment on Results
Recovery on track. JES reported net profit of RMB23m on the back of 21% rise in topline to RMB641m. Net profit was down 53% q-o-q but improved sequentially from recurring profit of RMB20m in 2Q10 (excluding US$4m or RMB27m one-off gain from contract cancellations last quarter). Gross margin recovered to c9% vs 7.3% in 2Q10. Continued delivery of better recurring earnings would boost investors’ confidence in JES’ execution and provide catalysts for the counter.
JES saw a strong order flow YTD with 24 vessels contracted or over US$600m of new orders. JES’ orderbook grew to a total of 35 vessels worth US$900m, to be delivered over the next 2 years.
Making inroad into offshore. With the commencement of the new yard, which is one of the most advanced yard facilities in China, JES is in talk with strategic partners to penetrate the offshore segment by constructing offshore vessels like FPSO. Such positive development, if successful, will raise JES profile among the Chinese shipbuilders.
Recommendation
Our TP of S$0.46 is based on 1.5x FY11 P/BV, which is the mean of its peak and trough valuations. We reckon JES to be a potential one-bagger in the shipbuilding sector, assuming net margins recover back to 2006 level of 8.2%. Maintain BUY. Near term price catalysts are strong order wins and earnings delivery. Possible key risks are poor.
Stay in positive territory
Price Target : S$ 0.46
By: Pei Hwa HO
· 3Q10 results in line
· Earnings turnaround on track with improved operating environment, higher order book and new yard
· Maintain BUY; TP S$0.46
Comment on Results
Recovery on track. JES reported net profit of RMB23m on the back of 21% rise in topline to RMB641m. Net profit was down 53% q-o-q but improved sequentially from recurring profit of RMB20m in 2Q10 (excluding US$4m or RMB27m one-off gain from contract cancellations last quarter). Gross margin recovered to c9% vs 7.3% in 2Q10. Continued delivery of better recurring earnings would boost investors’ confidence in JES’ execution and provide catalysts for the counter.
JES saw a strong order flow YTD with 24 vessels contracted or over US$600m of new orders. JES’ orderbook grew to a total of 35 vessels worth US$900m, to be delivered over the next 2 years.
Making inroad into offshore. With the commencement of the new yard, which is one of the most advanced yard facilities in China, JES is in talk with strategic partners to penetrate the offshore segment by constructing offshore vessels like FPSO. Such positive development, if successful, will raise JES profile among the Chinese shipbuilders.
Recommendation
Our TP of S$0.46 is based on 1.5x FY11 P/BV, which is the mean of its peak and trough valuations. We reckon JES to be a potential one-bagger in the shipbuilding sector, assuming net margins recover back to 2006 level of 8.2%. Maintain BUY. Near term price catalysts are strong order wins and earnings delivery. Possible key risks are poor.
Monday, November 8, 2010
BT: Cosco reports 147% jump in Q3 net profit
Business Times - 04 Nov 2010
Cosco reports 147% jump in Q3 net profit
Firm expects new contracts in Q4; sees 2010 earnings being better than 2009's
By LYNN KAN
COSCO Corporation (Singapore) yesterday announced a heartening third-quarter performance. It maintains a cautious outlook for the remaining quarter but expects 2010 earnings to be better than 2009's.
The Chinese shipbuilder recorded net profit attributable to equity-holders of $55.1 million, a jump of 147 per cent from $22.3 million a year ago. Earnings per share rose to 2.46 cents from one cent.
The profit surge was despite a $27.6 million provision for future losses to construction projects, compared with $8.9 million previously. The provision, said Cosco Singapore's management, was based on 'worst case scenario' projections on on-going and completed work on heavy lift carriers, a vessel which the group is new to building.
Revenue for Q3 climbed 27 per cent to $952.7 million, of which 96 per cent came from its ship repair, ship building and marine engineering operations and 3 per cent from its dry bulk shipping operations.
Turnover in Cosco's ship building and marine engineering activities rose 27.4 per cent year-on-year to $918.7 million on progressive completion of projects. Cosco's Zhoushan, Dalian and Guangdong shipyards each delivered two bulk carriers in the third quarter alone.
Currently, the group's ship building productivity stands between 14 and 16 months, with 14 months being the average time to build 57,000 deadweight ton (DWT) vessel. It is setting its targets at 12 months for future builds to further improve productivity.
Although dry bulk shipping operations makes up a slim 3 per cent of group revenue, these activities showed a 13.7 per cent increase in revenue contribution because of higher charter rates secured by the group.
Also helping the results was a 42.8 per cent rise in 'other income' to $40.4 million, due mainly due to higher sales value of scrap materials and higher net currency exchange gain.
As at 30 Sept, Cosco's order books showed US$6.1 billion worth of projects that would keep Cosco's seven shipyards busy until Q1 2013.
On Nov 1, Cosco added contracts for three bulk carriers worth US$87 million to its books.
While Cosco expects FY2010 to be a profitable year, it sees next year as still beset by uncertainty. For one thing, Cosco foresees the dry bulk carrier market in 2011 being weaker with problems of oversupply in bulker capacity creeping in.
Despite this grey outlook for next year, it said that the fourth quarter looks likely to see some new contracts, as interested parties are in talks with Cosco for more bulk carriers.
Cosco shares added five cents to close at $1.94 yesterday.
Cosco reports 147% jump in Q3 net profit
Firm expects new contracts in Q4; sees 2010 earnings being better than 2009's
By LYNN KAN
COSCO Corporation (Singapore) yesterday announced a heartening third-quarter performance. It maintains a cautious outlook for the remaining quarter but expects 2010 earnings to be better than 2009's.
The Chinese shipbuilder recorded net profit attributable to equity-holders of $55.1 million, a jump of 147 per cent from $22.3 million a year ago. Earnings per share rose to 2.46 cents from one cent.
The profit surge was despite a $27.6 million provision for future losses to construction projects, compared with $8.9 million previously. The provision, said Cosco Singapore's management, was based on 'worst case scenario' projections on on-going and completed work on heavy lift carriers, a vessel which the group is new to building.
Revenue for Q3 climbed 27 per cent to $952.7 million, of which 96 per cent came from its ship repair, ship building and marine engineering operations and 3 per cent from its dry bulk shipping operations.
Turnover in Cosco's ship building and marine engineering activities rose 27.4 per cent year-on-year to $918.7 million on progressive completion of projects. Cosco's Zhoushan, Dalian and Guangdong shipyards each delivered two bulk carriers in the third quarter alone.
Currently, the group's ship building productivity stands between 14 and 16 months, with 14 months being the average time to build 57,000 deadweight ton (DWT) vessel. It is setting its targets at 12 months for future builds to further improve productivity.
Although dry bulk shipping operations makes up a slim 3 per cent of group revenue, these activities showed a 13.7 per cent increase in revenue contribution because of higher charter rates secured by the group.
Also helping the results was a 42.8 per cent rise in 'other income' to $40.4 million, due mainly due to higher sales value of scrap materials and higher net currency exchange gain.
As at 30 Sept, Cosco's order books showed US$6.1 billion worth of projects that would keep Cosco's seven shipyards busy until Q1 2013.
On Nov 1, Cosco added contracts for three bulk carriers worth US$87 million to its books.
While Cosco expects FY2010 to be a profitable year, it sees next year as still beset by uncertainty. For one thing, Cosco foresees the dry bulk carrier market in 2011 being weaker with problems of oversupply in bulker capacity creeping in.
Despite this grey outlook for next year, it said that the fourth quarter looks likely to see some new contracts, as interested parties are in talks with Cosco for more bulk carriers.
Cosco shares added five cents to close at $1.94 yesterday.
BT: Top Global eyes plot of land on Shanghai-governed island
Business Times - 05 Nov 2010
Top Global eyes plot of land on Shanghai-governed island
Site can be developed at a cost of $900m for residential, retail and commercial use
By JAMIE LEE
TOP Global, the Catalist-listed property company that was part of a consortium that recently succeeded in its $250 million bid for an iconic site in Singapore, has revved up its interest in China, with its sights set on a plot of land on an island governed by Shanghai.
The land, which has a gross floor area of about 808,000 square metres, can be developed for residential, retail and commercial use, with development cost expected at about $900 million.
Top Global - led by Sukmawati Widjaja - will acquire a 51 per cent stake in Longrunn International for about $1.5 million under a memorandum of understanding signed yesterday. 'Additional capital requirements shall be subject to plans to be jointly agreed,' said Top Global.
Longrunn International, which is run by a Chinese investor, will co-manage the planning and development of the piece of land on Fisherman Pier, Changxing Island. It takes about 30 minutes by car to access Changxing Island from the city centre of Shanghai.
Top Global is now looking at various options of developing the land, including bringing in investors, chief operating officer of Top Global Jennifer Chang said, adding that the company has not committed the amount that it would set aside to develop the land.
The company has also not decided if the property development would be more focused on residential or retail and commercial purposes, she told BT.
The stock of Top Global was in active play once again yesterday, closing unchanged at 1.5 cents with 124.3 million shares changing hands for the day.
It was in the limelight when the company, through a consortium, won the tender for the iconic site that includes Capitol Theatre, Capitol Building and Stamford House.
With its partners - Pontiac Land's Kwee Liong Seen and Pua Seck Guan, founder of Perennial Real Estate Group and former chief executive of CapitaMall Trust Management - Top Global plans to turn the historic site into a hotel, theatre, retail and residential development.
It has also plans to lease and acquire hotels near transportation points such as airports and railway stations in China, as well as set up and manage an investment fund to acquire these hotels.
Over in Singapore, it has also set up a real estate agency, with the aim of gathering data and research on property deals, executive director Hano Maeloa told BT.
Top Global eyes plot of land on Shanghai-governed island
Site can be developed at a cost of $900m for residential, retail and commercial use
By JAMIE LEE
TOP Global, the Catalist-listed property company that was part of a consortium that recently succeeded in its $250 million bid for an iconic site in Singapore, has revved up its interest in China, with its sights set on a plot of land on an island governed by Shanghai.
The land, which has a gross floor area of about 808,000 square metres, can be developed for residential, retail and commercial use, with development cost expected at about $900 million.
Top Global - led by Sukmawati Widjaja - will acquire a 51 per cent stake in Longrunn International for about $1.5 million under a memorandum of understanding signed yesterday. 'Additional capital requirements shall be subject to plans to be jointly agreed,' said Top Global.
Longrunn International, which is run by a Chinese investor, will co-manage the planning and development of the piece of land on Fisherman Pier, Changxing Island. It takes about 30 minutes by car to access Changxing Island from the city centre of Shanghai.
Top Global is now looking at various options of developing the land, including bringing in investors, chief operating officer of Top Global Jennifer Chang said, adding that the company has not committed the amount that it would set aside to develop the land.
The company has also not decided if the property development would be more focused on residential or retail and commercial purposes, she told BT.
The stock of Top Global was in active play once again yesterday, closing unchanged at 1.5 cents with 124.3 million shares changing hands for the day.
It was in the limelight when the company, through a consortium, won the tender for the iconic site that includes Capitol Theatre, Capitol Building and Stamford House.
With its partners - Pontiac Land's Kwee Liong Seen and Pua Seck Guan, founder of Perennial Real Estate Group and former chief executive of CapitaMall Trust Management - Top Global plans to turn the historic site into a hotel, theatre, retail and residential development.
It has also plans to lease and acquire hotels near transportation points such as airports and railway stations in China, as well as set up and manage an investment fund to acquire these hotels.
Over in Singapore, it has also set up a real estate agency, with the aim of gathering data and research on property deals, executive director Hano Maeloa told BT.
Thursday, November 4, 2010
DBSV: COSCO Q310 - Upside surprise
From DBSV.
Cosco : Upside surprise!
• 147% rise in 3Q earnings blew estimates, 9M10 accounts for 88% of consensus’ full year forecast • Fuelled by improved shipbuilding margins, tax savings and lower operating costs
• FY10F raised 10%; street to upgrade earnings and TPs
• BUY the powerful recovery play; TP S$2.35
3Q10 is a confidence booster.
3Q net earnings rose 147% yoy to S$55.1m on higher sales from all divisions except conversions, strong margin recovery from shipbuilding, and cost savings from preferential tax rate and tightened cost management.
Shipbuilding margins leaped further.
Adding back the cost overrun provision of S$27.6m for heavy lifts, bottomline would have been stronger at over S$70m, raises overall margins by 2.8ppt. In particular, gross margin for bulk carriers is estimated to have lifted to c10% from 6-8% in 2Q. We believe this is owing to efficiency gains, cuts in staff headcount and lower steel cost. We expect margin improvement to be sustainable, as projects delivered next year are based on higher shipbuilding prices secured in 2007 vs lower cost of steel.
Street to play catch up.
9M10 net profit of S$155m beats our already highest estimate on the street, accounting for 81% and 88% of our and consensus’ full year estimates. We believe the street will react positively on this set of strong results and bring about FY11 earnings upgrades closer to our 25%-above-consensus forecasts. We are leaving our FY11 numbers intact, but tweaked FY10 estimate upwards by 10% to reflect the lower tax rate and operating costs.
Target order wins met.
Cosco has won US$1.8bn new orders YTD, hitting our FY10 assumption. Current order book of US$6.1bn will sustain workflow till 1Q13. Going into 2011, offshore orders should take centre-stage with expected order wins of US$2.15bn in anticipation of 2-3 turnkey projects including SEVAN drilling rigs and FPSOs.
Earnings turnaround play.
We expect sequential improvement in shipbuilding earnings over the next few quarters to underpin share price performance. There is ample room for growth as Cosco maximizes the utilization of its seven shipyards. Maintain BUY. Our TP of $2.35 is based on blended fair values based on SOTP (S$2.13) and P/BV (S$2.59). Key risks to our forecast lie in RMB appreciation, rising steel cost, weak shipping rates and project execution.
Cosco : Upside surprise!
• 147% rise in 3Q earnings blew estimates, 9M10 accounts for 88% of consensus’ full year forecast • Fuelled by improved shipbuilding margins, tax savings and lower operating costs
• FY10F raised 10%; street to upgrade earnings and TPs
• BUY the powerful recovery play; TP S$2.35
3Q10 is a confidence booster.
3Q net earnings rose 147% yoy to S$55.1m on higher sales from all divisions except conversions, strong margin recovery from shipbuilding, and cost savings from preferential tax rate and tightened cost management.
Shipbuilding margins leaped further.
Adding back the cost overrun provision of S$27.6m for heavy lifts, bottomline would have been stronger at over S$70m, raises overall margins by 2.8ppt. In particular, gross margin for bulk carriers is estimated to have lifted to c10% from 6-8% in 2Q. We believe this is owing to efficiency gains, cuts in staff headcount and lower steel cost. We expect margin improvement to be sustainable, as projects delivered next year are based on higher shipbuilding prices secured in 2007 vs lower cost of steel.
Street to play catch up.
9M10 net profit of S$155m beats our already highest estimate on the street, accounting for 81% and 88% of our and consensus’ full year estimates. We believe the street will react positively on this set of strong results and bring about FY11 earnings upgrades closer to our 25%-above-consensus forecasts. We are leaving our FY11 numbers intact, but tweaked FY10 estimate upwards by 10% to reflect the lower tax rate and operating costs.
Target order wins met.
Cosco has won US$1.8bn new orders YTD, hitting our FY10 assumption. Current order book of US$6.1bn will sustain workflow till 1Q13. Going into 2011, offshore orders should take centre-stage with expected order wins of US$2.15bn in anticipation of 2-3 turnkey projects including SEVAN drilling rigs and FPSOs.
Earnings turnaround play.
We expect sequential improvement in shipbuilding earnings over the next few quarters to underpin share price performance. There is ample room for growth as Cosco maximizes the utilization of its seven shipyards. Maintain BUY. Our TP of $2.35 is based on blended fair values based on SOTP (S$2.13) and P/BV (S$2.59). Key risks to our forecast lie in RMB appreciation, rising steel cost, weak shipping rates and project execution.
Top Global News release 4 Nov 10: MoU ACQUISITON OF A 51% STAKE IN LONGRUNN INTERNATIONAL LIMITED
MEMORANDUM OF UNDERSTANDING IN RESPECT OF AN ACQUISITON OF A
51% STAKE IN LONGRUNN INTERNATIONAL LIMITED
1. INTRODUCTION
The Board of Directors of Top Global Limited (the “Company”) is pleased to announce that the Company has entered into a Memorandum of Understanding (“MOU”) dated 4 November 2010 with the shareholder of Longrunn International Limited (“LRI”), a BVI registered company (collectively referred to as the “Parties” in this Announcement) in relation to an acquisition of a 51% stake in LRI, whose purpose is to co-manage the planning and development of a plot of land at Fisherman Pier on Changxing Island, governed by Shanghai City (the “Acquisition ”) for residential, retail and commercial use.
The principal terms of the Acquisition as set out in the MOU are subject to the terms and conditions to be agreed and set out in sale & purchase agreement and shareholders’ agreement to be entered into between the Parties (the “Definitive Agreements”).
2. SALIENT TERMS OF THE MOU
• Subject to the entry into the Definitive Agreements, the Company or its nominees shall acquire a 51% stake in the issued and paid-up share capital of LRI.
• The paid-up capital of LRI shall be increased to S$3,000,000. Additional capital
requirements shall be subject to plans to be jointly agreed by the Parties.
• Fisherman Pier is located at the south eastern part of Changxing Island, which is one of the several islands of Shanghai City and is linked to Pudong, Shanghai by the 8.9km Shanghai Yangtze River Tunnel which opened in October 2009. It takes approximately 30 minutes by car to access Changxing Island from the city centre of Shanghai.
• The land area and gross floor area subject for development are approximately 1,117,225 square meters and 808,000 square meters respectively.
• The estimated development cost is approximately S$900,000,000.
• The Company shall appoint the Chairman of LRI and other shareholder of LRI shall
appoint the Chief Executive Officer.
• The Definitive Agreements shall be governed by the laws of Singapore.
3. EXECUTION OF DEFINITIVE AGREEMENTS
Subject to satisfactory due diligence review by the Company, the Definitive Agreements shall be executed within six months from date of the MOU, failing which, the MOU shall be automatically terminated and neither party shall have any claim whatsoever against the other thereafter.
Shareholders should note that none of the Parties are under any legal obligation to undertake the Joint Venture until such time as the Definitive Agreements are negotiated, mutually executed and delivered.
4. FURTHER ANNOUNCEMENTS
Further announcements on this matter will be made in due course in the event that the
Definitive Agreements are signed, and as and when appropriate.
51% STAKE IN LONGRUNN INTERNATIONAL LIMITED
1. INTRODUCTION
The Board of Directors of Top Global Limited (the “Company”) is pleased to announce that the Company has entered into a Memorandum of Understanding (“MOU”) dated 4 November 2010 with the shareholder of Longrunn International Limited (“LRI”), a BVI registered company (collectively referred to as the “Parties” in this Announcement) in relation to an acquisition of a 51% stake in LRI, whose purpose is to co-manage the planning and development of a plot of land at Fisherman Pier on Changxing Island, governed by Shanghai City (the “Acquisition ”) for residential, retail and commercial use.
The principal terms of the Acquisition as set out in the MOU are subject to the terms and conditions to be agreed and set out in sale & purchase agreement and shareholders’ agreement to be entered into between the Parties (the “Definitive Agreements”).
2. SALIENT TERMS OF THE MOU
• Subject to the entry into the Definitive Agreements, the Company or its nominees shall acquire a 51% stake in the issued and paid-up share capital of LRI.
• The paid-up capital of LRI shall be increased to S$3,000,000. Additional capital
requirements shall be subject to plans to be jointly agreed by the Parties.
• Fisherman Pier is located at the south eastern part of Changxing Island, which is one of the several islands of Shanghai City and is linked to Pudong, Shanghai by the 8.9km Shanghai Yangtze River Tunnel which opened in October 2009. It takes approximately 30 minutes by car to access Changxing Island from the city centre of Shanghai.
• The land area and gross floor area subject for development are approximately 1,117,225 square meters and 808,000 square meters respectively.
• The estimated development cost is approximately S$900,000,000.
• The Company shall appoint the Chairman of LRI and other shareholder of LRI shall
appoint the Chief Executive Officer.
• The Definitive Agreements shall be governed by the laws of Singapore.
3. EXECUTION OF DEFINITIVE AGREEMENTS
Subject to satisfactory due diligence review by the Company, the Definitive Agreements shall be executed within six months from date of the MOU, failing which, the MOU shall be automatically terminated and neither party shall have any claim whatsoever against the other thereafter.
Shareholders should note that none of the Parties are under any legal obligation to undertake the Joint Venture until such time as the Definitive Agreements are negotiated, mutually executed and delivered.
4. FURTHER ANNOUNCEMENTS
Further announcements on this matter will be made in due course in the event that the
Definitive Agreements are signed, and as and when appropriate.
The Edge 1 Nov 10: Top Global's Capitol plan
Dated 1 Nov 10
Top Global's Capitol plan
Stock in focus as historic Capital Theatre gets new lease of life Catalist traded TOP GLOBAL has long operated below the radar screens of analysts, apart from making a few forays into the top-volume list. This week, however, the co could find itself in the limelight.
Top Global is part of a consortium that has successfully bid to redevelop the much sought after Capital site on North Bridge and Stamford Roads. Formerly a shell, Top Global has so far developed one property, Top Residence, near Kovan MRT.
The loss making company recently made news after major shareholder Sukmawati was installed as chairman and CEO and her son Hano Maeloa as managing director.
Together, the duo owns 54% of Top Global. Widjaja is business Oei Hong Leong's younger sisiter and also known as Oei Siu Hoa. Last week, the URA announced it had awarded the tender to redevelop the Capitol site to Perennial Capitol, a consortium comprising Perennial Real Estate, owned and run by Pua Seck Guan, former CEO of CapitalLand Retail and CapitaMall Trust; Chesham Properties, the private vehicle of Kwee Liong Seen, who controls Pontiac Land; and Top Global. Theirs was the top bid of $250 million for the land, and the plans are grand.
Capitol Building & Stamford House will be restored into a luxury 200 room five star hotel; Capitol Theatre will be turned into an 800 to 1,000 seat cinema cum performance theatre, and the nondescript Capital Centre will be torn down and redeveloped into a 15 storey and residential development. The total cost of the project is likely to be $700 million, according to details released by Perennial Real Estate. A spokeswoman from Perennial declined to reveal the individual shares of the joint venture.
The yr alone, Perennial Real Est has stitched together three deals, including the Capitol redevelopment. In Apr, it announced it had acquired Katong Mall for $248 m and would be spending a further $55 m to upgrade it. In jul, it acquired the retail podium of Chinatown Pt for $250 m. In just 6 mths, Perennial Real Est has managed to accumulate $1.2 b to $1.3 b in assets under management.
No doubt, Perennial Real Est will be able to raise the funds necessary for the Capitol project. But what abt Top Global, the only listed entity among the Perennial Capitol consortium? On opening on Oct 28, its share price tripled to 1.5 cts. Top Global reported a net loss of $7.4 m for the 6 mths to jun 30, compared with a profit of $1.3 m in FY2009, attributed to profits from the completion of Top Residence last yr.
In Sep, the Co announced a three for one rts issue of 8.4 b rts shares, at one cent, with attac hed (five yr) wrts of 8.4 b, convertible intp 8.4 b new shares. That wld cause the no of shares outstanding to balloon frm 2.48 b currently to 10.88 b this yr. The exercise price for the free wrt is half a cent.On Sep 29, the Co announced that 8,078,460,456 rts shares & 8,078,460,456 wrts were alloted, raising $80.78 m. If all the wrts are exercised over their 5 yr lifespan, the co wld raise a further $40 m. Before the rts exercise, the co was already in net cash position, but had a small equity base of $17 m.
Thr rts document stated that 90% of the proceeds wld be used to invest in new business. Since the rts announcement, Top Global has been announcing various investments in commercial paper, which offers a higher yield than fixed deposits, including Russian bank VTB and Glencore Finance. The timing of the Capitol redevelopment is opportune.
I am vested in Top Global. With patience, I believ e that it will be a multiple bagger in the long term giving time to the Mgt of the co. Congrats to all holders of Top Global. God bless.
Top Global's Capitol plan
Stock in focus as historic Capital Theatre gets new lease of life Catalist traded TOP GLOBAL has long operated below the radar screens of analysts, apart from making a few forays into the top-volume list. This week, however, the co could find itself in the limelight.
Top Global is part of a consortium that has successfully bid to redevelop the much sought after Capital site on North Bridge and Stamford Roads. Formerly a shell, Top Global has so far developed one property, Top Residence, near Kovan MRT.
The loss making company recently made news after major shareholder Sukmawati was installed as chairman and CEO and her son Hano Maeloa as managing director.
Together, the duo owns 54% of Top Global. Widjaja is business Oei Hong Leong's younger sisiter and also known as Oei Siu Hoa. Last week, the URA announced it had awarded the tender to redevelop the Capitol site to Perennial Capitol, a consortium comprising Perennial Real Estate, owned and run by Pua Seck Guan, former CEO of CapitalLand Retail and CapitaMall Trust; Chesham Properties, the private vehicle of Kwee Liong Seen, who controls Pontiac Land; and Top Global. Theirs was the top bid of $250 million for the land, and the plans are grand.
Capitol Building & Stamford House will be restored into a luxury 200 room five star hotel; Capitol Theatre will be turned into an 800 to 1,000 seat cinema cum performance theatre, and the nondescript Capital Centre will be torn down and redeveloped into a 15 storey and residential development. The total cost of the project is likely to be $700 million, according to details released by Perennial Real Estate. A spokeswoman from Perennial declined to reveal the individual shares of the joint venture.
The yr alone, Perennial Real Est has stitched together three deals, including the Capitol redevelopment. In Apr, it announced it had acquired Katong Mall for $248 m and would be spending a further $55 m to upgrade it. In jul, it acquired the retail podium of Chinatown Pt for $250 m. In just 6 mths, Perennial Real Est has managed to accumulate $1.2 b to $1.3 b in assets under management.
No doubt, Perennial Real Est will be able to raise the funds necessary for the Capitol project. But what abt Top Global, the only listed entity among the Perennial Capitol consortium? On opening on Oct 28, its share price tripled to 1.5 cts. Top Global reported a net loss of $7.4 m for the 6 mths to jun 30, compared with a profit of $1.3 m in FY2009, attributed to profits from the completion of Top Residence last yr.
In Sep, the Co announced a three for one rts issue of 8.4 b rts shares, at one cent, with attac hed (five yr) wrts of 8.4 b, convertible intp 8.4 b new shares. That wld cause the no of shares outstanding to balloon frm 2.48 b currently to 10.88 b this yr. The exercise price for the free wrt is half a cent.On Sep 29, the Co announced that 8,078,460,456 rts shares & 8,078,460,456 wrts were alloted, raising $80.78 m. If all the wrts are exercised over their 5 yr lifespan, the co wld raise a further $40 m. Before the rts exercise, the co was already in net cash position, but had a small equity base of $17 m.
Thr rts document stated that 90% of the proceeds wld be used to invest in new business. Since the rts announcement, Top Global has been announcing various investments in commercial paper, which offers a higher yield than fixed deposits, including Russian bank VTB and Glencore Finance. The timing of the Capitol redevelopment is opportune.
I am vested in Top Global. With patience, I believ e that it will be a multiple bagger in the long term giving time to the Mgt of the co. Congrats to all holders of Top Global. God bless.
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