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Singapore stock market and companies daily report (Thai Beverage, GuocoLand) (September 13, 2012)

Contributed by Shares Investment

Private Sector Economists Lowers 2013 GDP Forecasts
More evidence pointing to a gloomier second half of the year has led private sector economists to lower their gross domestic product (GDP) forecasts for Singapore. In a poll conducted by the Monetary Authority of Singapore (MAS), economists forecasted a lower median GDP growth of 2.4 percent (versus 3 percent forecasted in May). However, as The Business Times noted, their median forecast of growth in the third quarter suggests that Singapore could avoid a technical recession, much to the surprise of some. Growth forecasts for key industries were all cut with the financial services, wholesale and retail trade sectors experiencing the deepest cuts. Given the lack of growth catalysts in the global economic environment, the weaker estimates were not entirely surprising. However, some economists seem to feel that the median forecast of 2.3 percent year-on-year growth is too optimistic. Citi economist Kit Wei Zheng told The Business Times that given the 9.1 percent plunge in industrial production in July, growth in the manufacturing sector should not be overestimated.
Significance: The lower 2013 GDP forecasts has cast a darker shadow over 2013 as worries of growth have extended into that year. Economists point to potential pitfalls including the possibility of conflict in the Middle East and escalating oil prices.

ThaiBev, In Concert With Partners Launches $9b Bid For F&N
Thai Beverage has launched a $9 billion bid to take over Fraser and Neave in concert with its partners. TCC Assets, the concert party, announced that it will pay $8.88 per F&N share for the remaining shares it does not already own. According to data compiled by Bloomberg, ThaiBev already owns about 29 percent of F&N. The offer price presents a 4.3 percent premium over F&N’s closing price yesterday. Thapana Sirivadhanabhakdi, president and chief executive officer of ThaiBev said that the company believes the offer “represents an opportunity for F&N shareholders to realise the value of their investment in cash and to make a complete exit from F&N”. He went further and said that ThaiBev holds “F&N in high regard and we (ThaiBev) believe its long-established track record and success in its core business will be beneficial to our group”.
Significance: This bid comes ahead of a 28 September 2012 meeting where F&N shareholders will vote on the potential Asia Pacific Breweries divestment. Thus, according to Bloomberg, this offer, if successful, could potentially throw a spanner into the ongoing Heineken – Asia Pacific Breweries deal.

GuocoLand Sells 40 of 70 Released Units At Leedon Residence
GuocoLand has sold about 40 out of the 70 units it released for a private preview of Leedon Residence. The Business Times understands that the 40 sold units represents 10 percent of the total 381 units in GuocoLand’s freehold project in the Holland Road area. The company is also said to have achieved $2,000 per square foot (psf) average price for the freehold project. This is in contrast with the next door development, d’Leedon, developed by a CapitaLand-led consortium which fetched a median price of $1,527psf. The Leedon Residence project is expected to be completed in 2014, will have a 200 metre long “forest walk” of mostly rain trees. The project’s architectural design, landscaping and interior design are handled by SCDA. GuocoLand is developing the project on the former Leedon Heights site which it had bought for $835 million.
Significance: The Business Times estimates that with the $2,000 psf average selling price, the pretax profit from the development would be around $420-520 million. GuocoLand has another development, Goodwood Resident along Bukit Timah Road which is already more than 60 percent sold.