Reports » Singapore

Singapore stock market and companies daily report (Olam International, Cerebos Pacific, Tiger Airways) (January 31, 2012)

Contributed by Shares Investment

Olam To Acquire 75% Stake In Russian Dairy Firm
Olam International (Olam) intends to acquire a 75% stake in Rusmolco, a Russian dairy farm player for US$75 million ($94.2 million). Rusmolco comprises nine livestock farms in seven areas of the Penza region in Russia, specializing in dairy husbandry and crop production. The area of land under management is 133,000 hectares (ha), livestock accounts for more than 7,200 heads. The two firms are expected to form a partnership for the large scale development of dairy and grains farming in the Penza region of Russia. They plan to invest to expand the area under grains cultivation from the current 52,000 ha to 106,000 ha. In addition, four new modern dairy farms will be constructed, taking the total milking cow population from the current 3,600 heads to 20,000 heads. The total investment required for the initial stage of expansion is estimated at US$400 million ($502.6 million) over the next 4 to 5 years.
Significance: Operating cash flows from the business, as well as attractive government incentives for the dairy sector in Russia, would imply that Olam will not need to make further equity investments for the additional capital expenditures. Meanwhile, the aforesaid investment marks another important step for Olam towards the implementation of its dairy & grains strategy.

Cerebos Announces $100.1m FY11 Earnings
Cerebos Pacific (Cerebos) announced FY11 net profit of $100.1 million on a turnover of $977 million. All three of Cerebos’ core businesses of health supplements, coffee and sauces showed reasonable growth for their respective segments. Operating profit stood at $158.1 million. However, sales of its health supplements were adversely affected by distribution disruptions as a result of the widespread flooding in Thailand, Cerebos’ largest market and also by the continued impact from the Taiwan nationwide food contamination scare. Cerebos’ main markets are Thailand, Taiwan, Singapore, Malaysia, Hong Kong and China. More than 150 million of its health supplement products were sold last year. The firm was also hit by a depreciating Thai baht as it fell 1.95% against the Sing dollar during 4Q11. Excluding the translation loss of $4.7 million, turnover would have been 4% higher.
Significance: A challenging 2011 may have chipped away Cerebos’ top and bottom lines due to increases in raw material prices, natural disasters and an uncertain economic environment. Although the Thai floods have subsided, Cerebos believes FY12 will continue to be challenging.

Tiger Sinks Into The Red In 3Q12
Tiger Airways (Tiger) recorded a loss of $17.4 million for 3Q12, compared to a $22.5 million profit for 3Q11. Passenger numbers and seat capacity were 12% and 2.7% lower, respectively, in 3Q12 compared to the same period last year, due to the under-utilisation of the Tiger Airways Australia fleet as a result of its reduced flying programme. Despite the reduction in passengers, passenger seat revenue increased by 2.8% to $139.9 million from $136.1 million, resulting from a 16.9% increase in average passenger fares. A 33.9% increase in fuel prices compounded Tiger’s bottom line to the red as total expenses increased by 26% in 3Q12. Separately, Tiger has made progress in its expansion plans in the region with the purchase of a 33% stake in PT Mandala Airlines (Mandala) in Indonesia. Mandala is currently in the process of reactivating its Air Operator’s Certificate. Tiger intends to deploy some of its aircraft to Mandala in 4Q12. Tiger expects Mandala to commence commercial operations in 1Q13.
Significance: Tiger is counting on contributions from its regional ventures, the granting of more sectors in Australia and rising travel demand out of Singapore to steer it back into the black.