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Singapore stock market and companies daily report (NODX, ICP, Kingsmen Creatives) (January 18, 2013)

Contributed by Shares Investment

Non-Oil Domestic Exports Tumble 16.3% In December
The Republic’s non-oil domestic exports (NODX) tumbled 16.3 percent year-on-year in December due to lower shipments in electronics and pharmaceuticals. According to latest trade figures released by the International Enterprise Singapore, shipments to all of the top 10 markets declined. This led NODX to fall by its sharpest in 14 months since October 2011 and far exceeded the economists’ expected drop of 7.6 percent. On a seasonally adjusted month-on-month basis, NODX edged up 1.8 percent – below the market forecast of 4.5 percent growth – following a 0.4 percent dip in November. Commenting on the below-par numbers, Citigroup noted that NODX actually fell a seasonally adjusted 4.5 percent after stripping out lumpy pharmaceutical shipments and ship exports while United Overseas Bank noted that NODX inched up by just 0.5 per cent year-on-year for the whole of 2012.
Significance: Earlier flash estimates had gross domestic product (GDP) growing 1.1 percent in the fourth quarter. December’s weak NODX numbers are likely to weigh on industrial production figures that are due to be released next week, which potentially downgrading the final fourth quarter GDP. Given that the third quarter GDP had already contracted 1.5 percent, a negative final fourth quarter GDP could land Singapore into a technical recession.

ICP To Enter O&M Sector Via 51%-Stake Acquisition In GMT Group
ICP, formerly the electronic component subcontractor Goldtron, is making a strategic change in direction towards the offshore and marine (O&M) sector via a 51 percent stake acquisition in tanker owner GMT Group. On the offering, the company is making a cash and share purchase of some $3 million – the deal is conditioned to the two tankers, GMT Bravo and GMT Charlie, having a value of at least $17.25 million as at 31 December 2012 and the revalued net asset value of the GMT Group being at least $5.9 million. Funding of the acquisition will be underpinned from proceeds of a late-2012 rights issue, which saw the emergence of new shareholders led by Mercator Equity. In addition, the company is further proposing appointment of Chuan Hup Holdings and CH Offshore director Ong Kok Wah as one of its independent directors.
Significance: ICP expects its proposed acquisition to enhance shareholders’ value over the long term. It intends to pursue business opportunities in shipping, offshore vessels and marine fuel supply. Importantly, newly appointed Ong has 23 years of experience in the O&M sector and will be a steady hand in steering the new business.

Irregularities Reported At Kingsmen’s Units
In a filing on the Singapore Exchange, Kingsmen Creatives noted that its external auditors Ernst & Young LLP (E&Y) have submitted a confidential report dated 11 January 2013 to the Minister of Finance. Specifically, E&Y believes that serious offences involving fraud or dishonesty have been committed at two subsidiaries of the company. The first case relates to Kingsmen Beijing (KBJ) – in the course of reviewing an internal risk review, the audit committee (AC) noted that a few finance employees of KBJ were involved in a misappropriation of KBJ’s funds between 2009 and 2011. The second case relates to Kingsmen Exhibits (KE), where certain alleged irregularities were brought to the attention of the AC. In both instances, the AC has engaged E&Y to independently investigate.
Significance: Kingsmen Creatives estimates the financial impact to amount to $1.45 million. The company will appoint a reputable international accounting firm to conduct a complete review of the group’s internal controls and to develop a comprehensive group risk assurance framework.