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Singapore stock market and companies daily report (Tiger Airways, Hyflux) (January 14, 2013)

Contributed by Shares Investment

Government Determined In Cooling Property Prices
The government on last Friday announced its seventh and most comprehensive cooling measures in over three years. Deputy Prime Minister and Minister for Finance, Tharman Shanmugaratnam, described the package as the “most significant to date” and stronger than those introduced in previous rounds. Some measures will be temporary and will be reviewed later, once prices soften, while others are likely to stay for the long term. Among the many, effective on 12 January 2013, residential property buyers are being slapped with steeper additional buyer’s stamper duty rates to tighten property investment as well as foreign buying, while loan-to-value limits are being lowered and minimum cash downpayment raised on housing loans to discourage excessive borrowing. For the first time, the authorities have introduced a seller’s stamp duty (5 to 15 percent) for those who sell industrial properties within three years of purchase – to discourage speculation in this market segment which has heated up from a diversion of monies from the residential sector.
Significance: These latest curbs the most significant thus far, relative to the earlier six rounds, point to a strong political will to soften property prices and possibly more aggressive measures ahead if property prices remains high. Coupled with the large supply pipeline of public and private housing over the next two years, residential selling prices will very likely be depressed and stabilise this year.

Tiger Airways Stages Strong Recovery
Local budget carrier Tiger Airways enjoyed a significantly stronger year-on-year boost in loads and passenger numbers for the full-year 2012, as it recovered from a difficult 2011. The latest operating results show that Tiger Airways appears to be on a steady growth trajectory as it recovers following the debilitating groundings of its Australian fleet in July and August 2011. For the 12 months, Tiger Singapore recorded a 19 percent increase in traffic to 7.6 billion revenue passenger-kilometres (RPK), on the back of a 17 percent increase in capacity to 9.1 billion available seat-kilometres (ASK). Passenger load factor for the year was 83 percent, up one percentage point from a year ago. The number of passengers carried grew 12 percent to 4.2 million. In Australia, Tiger Australia recorded a 11 percent increase in traffic to 2.5 billion RPK for the 12 months, following a 14 percent increase in capacity to three billion ASK. Passenger load factor was 82 percent, down two percentage point from 2011. The number of passengers carried grew 6 percent to 2.1 million.
Significance: Tiger Airways is planning to divest itself of 60 percent of Tiger Australia to Virgin Australia for A$35 million, though the deal still has to be approved by Australian regulators. Even as it is scaling back its operations in Australia, Tiger Airways has chartered its regional expansion with purchases of stakes in existing players in Indonesia (Mandala Airlines) and the Philippines (SeAir).

Hyflux Closes Deal On Indian Project
Water treatment company Hyflux said last Friday that the water purchase agreement for its first large-scale project in India has been finalised and signed. The agreement between Dahej SEZ Limited (DSL) and a special purpose company that Hyflux is in with Hitachi, Swarnim DahejSpring Desalination will be for 30 years, including an estimated three year construction period. Under the agreement DSL is committed to purchase 100 percent of the water on a take or pay basis. The project will have a capacity of 336,000 cubic metres per day. The total project cost is estimated at US$600 million and will be funded through a mix of equity and non-recourse project finance. The consortium is currently in discussion with financial institutions to provide non-recourse financing for the project. Separately, in another announcement, Hyflux also said that its development and construction of Tuaspring Desalination Plant is on track. This is Singapore’s second and largest seawater desalination plant and is expected to be completed later this year.
Significance: Hyflux is expected to undertake an estimated US$420 million worth of the project value. It said the signing of the India agreement may have a positive material financial impact to the company if the financial close is concluded before the end of the current financial year that ends on 31 December 2013.