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Singapore stock market and companies daily report (REIT, Courts Asia, JES International) (October 09, 2012)

Contributed by Shares Investment

Focus On REITs Amidst 3Q Earnings Season
According to analysts, real estate investment trusts (REITs) are likely to hog the spotlight as the upcoming 3Q results are expected to be “one of the weakest quarters this year, on a year-on-year basis”, dragged lower by slower growth in Asian economies, especially China, coupled with the sluggish activity in Europe and the US. The market will be figuring out whether there is still room on the upside for REITs, having received strong interest over the past year as defensive yield plays. Maybank Kim Eng noted that distribution per unit and asset enhancement initiatives would be some of the key indicators whether investors would take profit. JP Morgan highlighted, however, that REITs and developers could actually benefit from the prospect of asset inflation and yield compression as yields from REITs are still better than the long-term average spreads. Looking beyond the numbers, analysts were also keen to dissect outlook statements, given the latest cooling measures by the Singapore government aimed at the property market.
Significance: Looking ahead, expectations are muted for the final quarter of 2012 with a depressed commodities and banking sector despite the expectations for a stronger oil and gas and offshore services sector. Nonetheless, analysts are more bullish for 2013.

Courts’ IPO To Raise $137m For Indo Expansion
Courts Asia has launched its initial public offering (IPO) for a mainboard listing, with 178 million shares priced at $0.77 each. This is the group’s second attempt at a listing after an earlier effort in 2010, which was later withdrawn. Courts Singapore was also previously listed on the Singapore Exchange, before taken private by Singapore Retail Group (SRG) in 2008. SRG is owned by Asia Retail Group, which is backed by Barings Private Equity. For the $137 million IPO, Courts Asia is offering 60 million new shares while SRG is offering 118 million existing shares. About 77.9 million of the shares on offer are going to four cornerstone investors collectively investing $60 million and taking up 44 percent of the offering. Some 76.9 million shares have been set aside for institutional investors, while 8.9 million shares are being offered to the public. According to bookrunner HSBC, the institutional placement tranche was more than three times oversubscribed.
Significance: Courts Asia plans to use about 91 percent of the net proceeds ($43.8 million, excluding the $86.2 million from the sale of SRG’s shares) from the IPO to invest in Indonesia and capitalise on its economic growth rate. Its first store in Indonesia is expected to come up in Jakarta by early 2014.

JES Makes Foray Into Offshore Space
JES International Holdings has marked its expansion into the offshore support vessel (OSV) market with a new order for a UT 755 LN platform support vessel. The contract for an undisclosed sum came from a new Norwegian customer through wholly-owned JES Universal and Jiangsu Eastern Heavy Industry. This is the first offshore support vessel it has been contracted for, having built commercial shipping vessels before and marks a milestone for the company’s expansion from building commercial shipping vessels to constructing more complicated and sophisticated offshore support vessels. The delivery of the vessel is expected to take place at the end of 2014. For the second quarter ended 30 June 2012, JES was hit by lower margins and a sharp fall in other operating income, leading to an 82.9 percent year-on-year fall in net profit to Rmb20 million despite revenue falling just 1.2 percent to Rmb737.4 million.
Signficance: The contract win is part of JES’ strategy to maximise, enhance and leverage on its capabilities to explore growth opportunities beyond the commercial shipbuilding industry into the more robust offshore oil and gas sector to enhance shareholders’ value and boost its financial results.