Reports » Singapore

Singapore stock market and companies daily report (IHH Healthcare, Keppel Corporation, Koyo International) (March 14, 2013)

Contributed by Shares Investment

IHH Subsidiary Buys Land In Hong Kong For Hospital
IHH Healthcare’s subsidiary GHK Hospital has completed a deal to buy a land parcel in Hong Kong for HK$1.69 billion to build and run a new private hospital. GHK Hospital is 60 percent owned by IHH Healthcare’s Parkway HK Holdings and 40 percent owned by Media Year Investments – a wholly owned unit of Hong Kong-listed NWS Holdings, the infrastructure and service arm of New World Development Company. The total capital investment required for the new hospital is pegged at HK$5 billion, inclusive of land acquisition costs. The plot of land measures 27,500 square metres (sq m) and offers a maximum gross floor area of 46,750 sq m. The new hospital will partner the Li Ka Shing Faculty of Medicine of the University of Hong Kong, which will oversee the clinical governance, professional standards, and the appointment and training of medical staff. The new hospital is slated to commence operations in late 2016, once construction has been completed, and will hold 500 beds.
Significance: Looking ahead, upon completion of the project and commencement of the operation of the hospital, the potential contribution from the hospital is expected to enhance the future earnings of the group from 2016 onwards in a developed market with an aging populace.

Keppel Corp Shares Fell On Cancelled Deal
Keppel Corporation (Keppel Corp) was one of the top losers on the Singapore Exchange yesterday, as its shares fell 1.1 percent following news that a US$1.2 billion deal had been cancelled. Shares for the world’s largest rig builder dropped $0.13 to $11.73 yesterday, after it announced on 12 March 2013 that a contract it signed with Naftogaz had fallen through. The firm had announced on 16 December 2012 that it had finalised a deal with the Ukrainian national gas company to build a pair of semi-submersible rigs to be delivered at the end of FY14. Analysts believe that payment terms and pricing were some of the reasons behind the termination, and were not surprised by the move, as Keppel Corp’s management had hinted during its results briefing that it would not pursue the contract if certain conditions were not met. The share price of Keppel Corp continued its fall in open market today and as of 12pm it is down another $0.10 or 0.853 percent to $11.63.
Significance: Although the cancellation might be negative for sentiment in the near term, analysts remain positive on semi-submersible rig orders in 2014, driven by tight supply in the market and do not expect this cancellation to affect the firm much, as its pipeline of orders remains strong. As at 31 December 2012, Keppel Corp’s orderbook stood at $12.8 billion (excluding the cancelled contract).

Koyo Clinches $23.7m Worth Of M&E Contracts
Koyo International announced that its wholly owned subsidiary Koyo Engineering (S.E.Asia) has been awarded two mechanical and electrical (M&E) engineering contracts worth $23.7 million. The first contract was awarded by the Jurong Town Corporation (JTC) for M&E works for the proposed erection of a six storey multi-user research and development building with basement car park. The contract is worth $15.2 million and has a contract period of 20 months commencing from 12 December 2012. The second contract was awarded by Kong Meng San Phor Kark See Monastery for M&E building services for its monastery at 88 Bright Hill Road. The contract was for proposed addition and alteration works involving the erection of a new part five to six storey Buddhist College; a new four storey multi-storey car park; and a new joss paper burner. The Buddhist College contract is worth $8.5 million and has a contract period of 22 months commencing from 7 March 2013.
Significance: The above contracts are expected to contribute positively to the earnings of the group for FY13 and FY14, and projecting ahead on a percentage completion basis it is expected that the group’s revenue performance for FY13 will be better than in FY12 (approximately $8.9 million in revenue). As at 13 March 2013, the group’s orderbook stood at approximately $30.5 million.