Reports » Singapore

Singapore stock market and companies daily report (M&A, Z-Obee Holdings, Ezion Holdings) (September 26, 2012)

Contributed by Shares Investment

Singapore’s Merger and Acquisition Deals Strongest Since 2008
Overall value of Merger and Acquisition (M&A) deals in Singapore rose 44 percent from the previous year to US$51.3 billion ($62.9 billion) so far this year, bolstered by recent acquisitions in the local food and beverage sector. This is the strongest deal volume seen since 2008, when M&A deals hit a record US$53.6 billion. Despite the surge in deal value, the total number of announced M&A deals fell 18 percent year-on-year to 609 so far this year. Total cross-border activity reached US$38.5 billion, up 101 percent year-on-year, driven by the recent bids for Asia Pacific Breweries by Heineken, and the announced acquisitions of Fraser & Neave by Thai Beverage and TCC Assets. They boosted M&A activity in the food and beverage sector to US$20.8 billion, a 20-fold increase from the first nine months in 2011. The value of inbound M&A rose four-fold to US$23.3 billion, while outbound M&A grew 11 percent to US$15.3 billion. Domestic M&A activity declined 57 percent to US$3.2 billion.
Significance: Consolidation in certain industries such as the beer industry are occurring as matured companies streamline operations and would seek non-organic growth to uplift revenue stream rather than internal developments. Deutsche Bank notes that Singapore companies remain attractive to overseas acquirers and that the factors driving M&A are likely to continue with rising valuations.

Z-Obee Subsidiary Secures Seven Supply Contracts
Z-Obee Holdings, a company principally engaged in the mobile handset industry, announced yesterday that its wholly-owned subsidiary, Zeus Telecommunication Technology Holdings had entered into supply contracts agreement with seven independent third-party contractors worth Rmb26 million ($5 million) to supply project lighting system for the office building of China Development Bank in Fuxingmen, Xicheng District, Beijing. The supply contracts are expected to contribute positively to the group’s revenue and net profit for the financial year ending 31 March-2013. Z-Obee believes that the supply agreements will provide a good opportunity for the company to gain a foothold in the lighting market and enhance the customer portfolio of the company, which is in line with its strategy to develop high value-added scientific and technological projects and explore more diversified income streams.
Significance: This contract win provides a foundation for Z-Obee to achieve its strategic goals and is in-line with its active approach to seek alternative opportunities to broaden its revenue base amid intense competition in the mobile handset industry.

Ezion Secures A Contract And A Letter Of Intent Totalling US$283m
Ezion Holdings, an oil and gas industry service provider, has secured a charter contract and a a letter of intent to provide two service rigs to be used by a Southeast Asian based national oil company to support its oil and gas activities in the Caspian Sea. The charter contract is valued at approximately US$201 million over a five year period and the service rig is expected to be deployed and working in the fields of Garagel-Deniz (Gubkin), Deyarbekir (Barinov) and Magtymguly (East Livanov) by 4Q13 after its refurbishment and upgrading. The letter of intent with the customer is valued at approximately US$82.1 million over a five year period and is to provide another service rig which is expected to be deployed and working by 4Q14 to support the oil and gas activities in the Caspian region.
Significance: Ezion’s latest jobs come as no surprise to analysts as many of them had expected more contracts after Ezion’s recent fund-raising efforts. Looking forward, analysts said that the fund-raising proceeds could lead to more deals to come over the next three to six months.