Ocean Forest Investment Research

Unifiber’s second RTO deal

oceanforestcorp — Mon, 30 Jan 2012 02:51:28 +0000

Unifiber’s second RTO deal
Unifiber’s second makeover into coal miner

United Fiber System may soon morph from a pulp producer into a thermal coal miner through a second RTO (reverse takeover offer), giving shareholders another chance to unlock value in the stock which has been languishing since its first backdoor listing.
On Jan 27 before the market opened, Unifiber announced that it will be issuing 44.3 billion new shares at 3.5 cents each to buy over 67% stake in PT Golden Energy Mines (GEMS), in an RTO deal worth $1.55 billion. The new shares will represent 92.8% of the enlarged share capital.
The seller is PT Dian Swastatika Sentosa Tbk, the Jakarta-listed mining and infrastructure unit controlled by the Sinar Mas Group, one of Indonesia’s largest conglomerates in various resources businesses that include palm oil as well as pulp and paper. The conglomerate, founded by China-born Indonesian billionaire Eka Tjipta Widjaja, father of high profile corporate figure Oei Hong Leong, also has businesses in financial services, real estate and telecommunications.
First listed back in May 1997 as construction company Poh Lian Holdings, Unifiber shifted its focus to forestry and pulp production in April 2002 through its first RTO deal. Although the stock has plodded along after its first transformation, the new coal-mining business, if executed successfully, could provide Unifiber the lift it needs. Investors may remember it was through an RTO that Ezyhealth morphed into palm oil giant Wilmar International.
The announcement already pushed the stock to as high as 4.8 cents, its biggest increase since May 2003, from 2.8 cents, before closing the day at 3.9 cents with 112 million shares changing hands.
In its announcement via the Singapore Exchange, Unifiber notes that the GEMS group controls nearly 2 billion tonnes of thermal coal — including reserves. “The development of extensive power plant industries including in China and India, which rely on medium and low calorie coal, has significantly increased demand for the commodity and the GEMS Group is well positioned to address the surge in demand for the commodity due to its competitive advantages over its competitors,” the company states.
These include lower stripping ratio, proximity of its mines to shipping facilities, and Indonesia itself is closer to the two main markets of India and China compared to Australia, the other leading coal exporter. “The Board is of the view that the Proposed Acquisition and resultant focusing of the Company on coal mining is appropriate given the growth opportunities they offer,” says Unifiber in its statement.
DMG & Partners Securities and Stamford Law Corporation are advising Unifiber on this deal, which the parties involved aim to complete by March 7.
In other developments, ST Engineering announced that its aerospace arm won contracts worth a total of $350 million in the last quarter. As at end September 2011, the company’s total order book is around $11 billion. The company will provide the latest updates when full year results are announced on Feb 23. On Jan 27, the stock closed 3 cents higher at $2.90.
Incidentally, ST Engineering is one of the top ten stocks picked by The Edge Singapore for 2012. The company’s aerospace division, with its business in aircraft maintenance, repair and overhaul, brings in around one third of the total revenue for the three months to September 30 2011.
While the aerospace unit gives ST Engineering a significant exposure to the global aviation industry, the business is also susceptible to the wider economic environment. But there is a limit to how much airlines can cut maintenance services, so if the global economy turns around, that would provide an extra lift for ST Engineering.
Besides ST Engineering, our other picks for the year are: Bukit Sembawang Estates, CapitaMalls Asia, FJ Benjamin Holdings, Genting Hong Kong, Noble Group, OKP Holdings, Pan-United Corp, Sembcorp Marine, and United Overseas Bank.

Indonesia tanker firm Berlian Laju to stop debt payments

oceanforestcorp — Fri, 27 Jan 2012 08:58:53 +0000

Indonesia's largest oil-and-gas shipping company PT Berlian Laju Tanker Tbk will stop servicing its debt of around $2 billion, putting it at risk of a default rating from Fitch.

The company blamed the global economic downturn and weak freight rates on the one hand and higher shipping fuel and other operating costs on the other, highlighting concerns that have already driven other shipping firms to the wall.

These factors "have significantly impacted the company's business and financial position," President Director Widihardja Tanudjaja said in a statement, which added that the company is considering a restructuring of its operations and finances.

Berlian Laju shares were suspended from trading in Singapore and Jakarta, but the announcement sent a subsidiary's stock to a record low and hit customer shares as well.

Berlian Laju's total outstanding debt was $1.9 billion as of the company's last financial statement in September. About $418 million in scheduled principal payments are due this financial year.

Financial Director Kevin Wong insisted the standstill would be temporary and that creditors were supportive.

"Debt standstill is just a temporary solution. We still need to do a lot of work," he told Reuters between meetings in Singapore on Friday with creditors.

The Indonesian tanker firm, with a fleet of around 100 vessels, said it hopes to carry on with its normal business while it reviews its financial position and arrangements.

It will give the "highest priority" to servicing its obligations to its suppliers and trade creditors, who will not be affected by the debt standstill, the company said.

"The company has decided to temporarily cease repayments on all of the company's bank loans and bonds and payments on ship leases and on similar obligations of its other subsidiaries, save for PT Buana Listya Tama Tbk," Berlian Laju said.

The decision to freeze debt payments follows a covenant breach on a loan granted to a Berlian Laju subsidiary, for which Berlian Laju is a guarantor, the company said. It didn't identify the subsidiary.

Fitch immediately placed Berlian Laju's CCC rating, one grade above a default rating, on watch negative. If coupon payments or principal payments are not made within the contractual period, Fitch will cut the company's rating to RD to indicate the company is in default.

It also placed $400 million in unsecured notes due 2014 issued by BLT Finance B.V. and guaranteed by Berlian Laju on ratings watch negative.

Fitch downgraded Berlian Laju's rating in December from B minus, citing heightened liquidity risks. It said the company had not at that time secured refinancing for 1.1 trillion rupiah in domestic bonds maturing in May and July 2012. It also faces looming debt maturities in 2013 and 2014, Fitch said.

Berlian Laju is not alone in feeling the impact of a severe downturn in the oil tanker freight market.

"This sends across a message that owners are in deep trouble and if they default on a loan repayment … charterers will avoid them," said a shipping broker based in Kuala Lumpur, who declined to be identified because he is not authorised to speak to the media.

General Maritime Corp, a crude oil and refined petroleum products shipper based in New York, filed for Chapter 11 bankruptcy protection in November, while the world's largest independent oil tanker operator, Frontline of Norway, was forced to restructure and split in two.

Shares in Berlian subsidiary PT Buana Listya Tama Bull fell 3.3 percent in Jakarta to a record low of 87 rupiah.

First Ship Lease Trust, which has leased three chemical tankers to Berlian Laju, fell 6.7 percent in Singapore trading.

Berlian Laju 2014 bonds dropped 10-11 points on Thursday to 22-23 cents on the dollar. They were around 39 cents at the end of December.

However, some hedge funds stepped in to lift the price on Friday to around 26-30 cents.

"We view the bonds as having largely priced in a debt restructuring scenario," Nomura said in a client note.

"That said, there could be potential downside risk in the bonds should the company go down the path of liquidation as most of its assets have already been pledged to creditors."

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Free Seminar 免費課程

oceanforestcorp — Fri, 27 Jan 2012 06:15:39 +0000

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The Quest For The Sparkling 12 Continues

oceanforestcorp — Thu, 26 Jan 2012 11:09:30 +0000

Stock Recommendation & Price Target 120125

oceanforestcorp — Wed, 25 Jan 2012 04:29:26 +0000

Stock Recommendation & Price Target 120120.pdf Download this file

Enter the dragon

oceanforestcorp — Wed, 25 Jan 2012 02:38:04 +0000

Year of the black water dragon

Chinese New Year has come a little early this year and soothsayers, economists, fortune tellers and strategists are all coming together to give their take on what 2012 will look like. In this weekend’s issue (Issue 507), The Edge Singapore features its own collection of crystal ball gazing from geomancers, geopolitical analysts and a number of market experts.

There are several other views floating about too though. CLSA has just put out its annual Feng Shui Index, which attempts to predict the monthly rise and fall of the Hang Seng Index (HSI) using feng shui principles. The dragon is regarded as a major game-changer, but is also an unpredictable beast. CSLA therefore sees a gradual slide in the HSI till August, when we should see a strong rebound that will begin to taper off in December.

Based on a reading of the five elements – metal, water, wood, fire and earth – CLSA also forecasts that several sectors will have a better year than others. Those with a fairly good prognosis are transport, gaming, cement, property and tourism. Cement, in particular, is likely to fare exceptionally well. Those that might see some trouble are oil and gas, telecoms and Internet, technology and utilities.

If you were born in the year of the rat, 2012 will be a fab year for you, CLSA says. To boost your wealth, put a red object in the south of your home or office. To boost your health, put a music box in the west. “This year promises sterling returns for the quick and the debt-free,” the report says. Also set to have good years: the tiger, rabbit, monkey and rooster. Cows and dogs may need to take a little extra care.

Retail therapy
Getting into the spirit of things, here are 12 names that typically enjoy some kind of seasonal boost in the first quarter because of the Lunar New Year.

Mail volumes at Singapore Post always hit a high in the period from the beginning of December to the end of the Chinese New Year. While e-cards have gained popularity, the physical greeting card is still highly valued. And companies also flood the mail system with calendars and red packets.

Preparing for the festivities means more than spring cleaning. Buying New Year clothes has become an important part of the celebration and local retailer FJ Benjamin Holdings, which distributes clothing under the brands Banana Republic, Gap, GUESS and La Senza, as well as its own brand Raoul, ought to be able to take full advantage of that.

Given the large number of foreigners and permanent residents in the population, a good number will be leaving the country to visit family and friends in their countries of birth or just to take advantage of the long break. Those with deeper pockets will fly Singapore Airlines while its regional airline SilkAir flies to several cities in China like Changsha, Chengdu, Chongqing, Kunming, Shenzhen, Wuhan and Xiamen. Budget travellers, on the other hand, will turn to Tiger Airways Holdings, which flies to the Philippines, Vietnam, Thailand, Indonesia and Malaysia.

For the all-important reunion dinner, there is a growing trend of dining out these days, or getting take-out. Popular options are dim sum restaurant Din Tai Fung, operated by BreadTalk Group, and sushi and yu sheng from Sakae Sushi, owned by Sakae Holdings. And through the course of the next few days, as visitors go from house to house, they will be downing beers distributed by Asia Pacific Breweries and all sorts of juices, teas and soft drinks made by Fraser and Neave and Yeo Hiap Seng.

Gambling is a big part of the Chinese New Year tradition, and where better to do that this year than Genting Singapore’s Resorts World at Sentosa. Many will also be heading over to Marina Bay Sands, which is particularly convenient now that the Bayfront station on SMRT Corp’s Marina Bay extension has opened.

Finally, a recent survey of Digital Life’s Facebook fans found that only 19.6% plan to save their hongbao money in the bank. An overwhelming 36.9% of them will buy a new computer, gadget or gadget accessory. What are the chances that they’ll be heading down to Epicentre Holdings to get hold of an iPad or a new case for their Apple product of choice?

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Will STI reach 2,910, Dow reach 12,700?

oceanforestcorp — Fri, 20 Jan 2012 09:38:18 +0000

Fw: The Edge Weekend Comment Jan 13: Retail sales growth slows

oceanforestcorp — Mon, 16 Jan 2012 02:38:34 +0000

Retail sales growth slows amid weak consumer sentiment

Despite the lead up to the peak year-end shopping period, Singapore’s retail sales’ growth slowed in November 2011. According to the latest figures released by the Statistics Department, the retail sales index rose 6.4% from a year earlier, lower than the 8.4% growth seen in October. Adjusted for seasonal factors, November’s sales were also 0.6% lower than in October, when they had risen a revised 6%.

Telecommunications and computers saw the biggest jump in sales, or 34.5% more than the year before. However, as analysts at Barclays Capital note, the slower performance in November can be attributed to lower sales in cars, clothing and footwear, recreational goods, watches, jewellery and furniture – all of which had increased sharply in October. Vehicle sales have a 25% weighting in the retail sales index, and rose 5.5% in November from the year before.

“We think retail sales are likely to weaken gradually, alongside softer growth conditions,” analysts Leung Wai Ho and Joey Chew write in a Jan 13 note. They add that the lower bid values for vehicle Certificates of Entitlement also indicate softening consumer sentiment. Moreover, “real wages started to slip in Q3 and are likely to remain subdued as growth slows, but inflation remains fairly elevated.” BarCap forecasts CPI inflation of 5.3% in 2011 and 3.3% in 2012.

Analysts are recommending that investors stick to companies who deal with consumer staples such as food, instead of those which could be hit by lower discretionary spending. In a Jan 4 note, DBS Vickers highlighted Fraser and Neave, Breadtalk Group and Conscience Food Holding, which have sustainable earnings growth as well as the ability to control costs.

Leung and Chew add that the retail sales figures are unlikely to have an impact on the second estimate of Q4 GDP growth. On Jan 3, advance estimates from the Ministry of Trade and Industry showed GDP fell an annualised 4.9% in Q42011 from the previous quarter — indicating a possibility of a technical recession caused by a slump in exports and manufacturing output — although it grew 3.6% y-o-y.

“A sharp decline in manufacturing activity, largely reflecting a pullback in biomedical output, offset stronger services activity and led to overall contraction in Q4,” the BarCap analysts say. Singapore’s economy is expected to average 4.8% growth in 2011. However, “we think it is possible that the final estimate for Q4 GDP may be revised slightly higher.”

BarCap is forecasting the Singapore economy will grow 3% in 2012; the government is expecting growth of 1–3%. “Our base case remains for the Monetary Authority of Singapore (MAS) to maintain a modest and gradual appreciation stance for the SGD NEER (nominal effective exchange rate) in April, barring severe financial contagion from the European debt crisis or a hard landing in China,” Leung and Chew write.

They also expect inflation to remain. “In our view, the MAS will prefer to remain vigilant against a resurgence in cost pressures — arising from a tight labour market and imported food and energy prices.”

Fw: The Edge Weekend Comment Jan 13: Retail sales growth slows

oceanforestcorp — Mon, 16 Jan 2012 02:38:33 +0000

Retail sales growth slows amid weak consumer sentiment

Fw: The Edge Weekend Comment Jan 13: Retail sales growth slows

oceanforestcorp — Mon, 16 Jan 2012 02:38:31 +0000

Retail sales growth slows amid weak consumer sentiment