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Singapore stock market and companies daily report (Olam International, Pine Agritech) (August 18, 2010)

Contributed by Shares Investment

By Shares Investment

US Stocks Advance On Positive Economic Data
The Dow Jones Industrial Average ended 1.01% higher, closing at 10,405.85, ending a 5-day losing streak, on the back of encouraging economic data and positive quarterly earnings from retail giant Wal-Mart and home improvement chain Home Depot. The S&P 500 gained 1.22% and the Nasdaq advanced 1.3%. The market was bolstered by a 1% rise in industrial production in July, double the median economist forecast. Wholesale costs increased in July for the first time in 4 months, signaling slower growth is not resulting in deflation. Wal-Mart, which reported higher-than-expected results, upgraded its yearly earnings forecast, but warned that the impact of the faltering economic recovery could hamper sales. Meanwhile, gold hit US$1,230 an ounce, its highest level in nearly 2 months and oil prices rose above US$76 a barrel.

Olam To Invest US$43.5m In Ivory Coast Processing And Warehousing Facilities
Olam International will be investing US$43.5m to set up a greenfield cocoa processing facility, as well as a primary processing and warehousing facility in the Ivory Coast. The investment will be funded by internal funding and borrowings, based on a debt-to-equity ratio of 1 time. Olam expects the cocoa processing plant to contribute an annual revenue of about US$175m and an earnings before interest, tax, depreciation and amortisation margin of up to 12%. The new warehousing facility will replace a smaller facility that Olam is currently leasing, to dry, clean, and sort the beans. Both facilities will be completed by 1Q12. Currently, the company’s cocoa business makes up about 15% of its total business.
Significance: Accounting for 40% of global production along with its abundance of high quality cocoa beans, the Ivory Coast represents an attractive origin processing of cocoa beans industry. The investment is also in line with Olam’s strategy to develop an integrated cocoa supply chain.

Link Crest Bids To Take Pine Agritech Private
Pine Agritech’s major shareholder Link Crest (LC) has launched a mandatory conditional offer to take the mainboard-listed company private. Currently, LC has a 40.97%-stake in Pine Agritech. LC’s bid to acquire the shares it does not yet own comes with 2 choices for shareholders: accept cash at $0.20 apiece for their Pine Agritech shares or 1 new share of $0.20 each in LC’s wholly owned unlisted subsidiary State Crest, or a combination of both. The offer price represents 11.1% premium over the last traded price before the announcement and a premium of 31.5% over the volume weighted average price for a 12-month period prior to the trading halt of the shares last Friday. A shareholders’ agreement has been signed with Pine Agritech’s CEO, with the intention of him having a stake in LC and being appointed a director of LC following the completion of the shareholders’ agreement.
Significance: With Pine Agritech’s stock price hovering around $0.11 to $0.174 from start of the year to July, LC’s offer price provides an opportunity for shareholders to realise their entire investment at a premium.

This article is contributed by Shares Investment. Visit Sharesinv.com for the latest Singapore, Malaysia and China stock market news and reports.