Reports » Singapore

Singapore stock market and companies daily report (Tiger Airways, ST Aerospace) (September 18, 2012)

Contributed by Shares Investment

Recession Risk Rises As August Exports Plunged
Singapore’s economy faces a looming technical recession for the third quarter of 2012, drawn closer by August’s dreadful trade numbers. The risk was raised significantly with a year-on-year 10.6 percent plunge in the key non-oil domestic exports (NODX) in August. The decline which was broad-based and the first since October 2011 come on the back of a 5.7 percent spike in July. And it exceeded market expectations of a 4.6 percent fall. Compared to a month earlier, the NODX’s plunge in August was far worse than anticipated by private-sector economists – a seasonally-adjusted 9.1 percent drop against a predicted 0.7 percent dip. Michael Wan, an economist at Credit Suisse stated: “With this weak print, we suspect gross domestic product (GDP) will contract for a second consecutive quarter in 3Q, pushing Singapore into a technical recession.” He added that this time around, exports to emerging markets and Asia could not lift the headline figures as overall exports to emerging markets fell 1.4 percent year-on-year, while exports to Asia moderated after strong performance for the first half of 2012.
Significance: Singapore’s GDP fell by a seasonally-adjusted 1.1 percent quarter-on-quarter in 2Q12. A second straight decline in two quarters would put the economy technically in recession.

Tiger Airways On Recovery Path As Operations Stabilised
Tiger Airways, the regional low-cost carrier, is on the rebound with Australian operations turning around while South-east Asian business continues to grow steadily. Australia has been highly problematic for the carrier following the July 2011 grounding of Tiger’s fleet by regulators there. The losses in Australia have weighed down heavily on the group, overwhelming the profit generated out of Singapore. Koay Peng Yen, Tiger’s new group chief executive officer acknowledged that challenges remain in Australia as even the two main carriers reported losses amid cut-throat competition and thin yields. However, he said: “But we have stabilised operations there and have been winning back confidence of passenger and regulators. Our loads are at 80 percent and our aircraft utilisation has been rising.” Going forward, Tiger looks to expand in the region, especially in Indonesia and the Philippines where it sees potential and has started steadily scaling up operations.
Significance: After a turbulent year (2011), Tiger is back on the right path as it have stabilised operations and started winning back confidence of passenger and regulators in Australia. With its clear vision, operational efficiency and growth plans in place, Tiger seems poised for growth under the new leadership.

Singapore Technologies Engineering’s Aerospace Arm Sets Up Rotables Unit
Singapore Technologies Aerospace (ST Aerospace), the aerospace arm of ST Engineering has set up a wholly-owned subsidiary called ST Aerospace Rotables Pte Ltd (STAR). STAR has a paid-up capital of US$1.5 million, and will serve as a global asset services company which will have its headquarters in Singapore, alongside marketing offices in the Americas, Europe, the Middle East, Africa and Asia Pacific. According to ST Aerospace, the new subsidiary will focus on rotable assets leasing, asset trading, as well as rotables loan and exchange – all of which will make up a new growth area. STAR will also support the sector’s Maintenance-By-the-Hour programme. Currently, ST Aerospace manages more than US$400 million of rotables and has a maintenance capability for more than 25,000 component part numbers, as well as an annual production of 85,000 components.
Significance: Streamlining and restructuring exercise at ST Aerospace continues as this latest incorporation comes amid earlier announcement that ST Aerospace was laying off some 300 employees at its operations in Denmark, Norway and Sweden.