Reports » Singapore

Singapore stock market and companies daily report (Tiger Airways, TTJ Holdings) (March 06, 2013)

Contributed by Shares Investment

Tiger Plans $297m Offering To Fund Pan-Asian Expansion
Budget carrier Tiger Airways Holdings is proposing to undertake the issuance of rights shares and convertible bonds to raise gross proceeds of $297 million. The 1-for-5 rights shares at $0.47 each will raise $77.2 million while a further $219.8 million will be raised through convertible bonds. Shareholders are entitled to subscribe for one convertible securities with a denomination of $1.07 for every four shares held. Each convertible bond comes with a 2 percent per annum coupon rate for the first five years and can be converted into new shares at the prevailing conversion price. Bulk of the proceeds raised will go towards repayment of existing loans. Between $80 million and $100 million has slated to strengthen its financial position. Part of the proceeds, between $70 million and $90 million will be used to fund Tiger’s growing operations in Indonesia and Philippines. Another $60 million to $80 million is earmarked for purchase of aircraft and other aircraft parts. Till September 2015, Tiger has 25 aircraft on order for delivery. The balance will be used for working capital and issue expenses. To show support, major shareholder Singapore Airlines has undertaken that it will subscribe for its pro-rata entitlements to the offerings as well as any excess not subscribed for, provided that its resultant shareholding does not exceed 49.9 percent.
Significance: The fund-raising exercise is structured as two offerings for two reasons. The offering of perpetual convertible capital securities allows Tiger to raise funds at a lower cost of capital while shareholders can choose to subscribe for additional shares through the rights issue to reduce dilution.

Recent Wins Boost TTJ’s Order Book To $182m
Multiple contract awards totalling $20 million lifted structural steel fabricator TTJ Holdings’ order book to $182 million. The latest deals see TTJ engaged in the supply of structural steelworks and civil defence shelter doors for the Tampines East Station on the Downtown Line 3 and other projects. The company will also be supplying structural steelworks for commercial, institutional and industrial projects such as the second phase of the Stamford American International School and an industrial development in Woodlands area. The company expects to substantially complete the projects in its pipeline in FY13 and FY14. The company’s shares price opened 3.2 percent higher or $0.01 higher at $0.32.
Significance: With a record FY12, TTJ sees the momentum of encouraging performance flow into the current fiscal year. Chairman and managing director of TTJ, Teo Hock Chwee said “This year looks to be another positive year for the Singapore construction industry. The Building and Construction Authority has projected a strong construction demand of between $26 million and $32 million for 2013.”

Derivatives Trading Remains Solid In February
Derivatives volumes continued to grow in February, with daily average volume rising 59 percent year-on-year and 11 percent month-on-month to a record 512,551 contracts. This was the third consecutive record of one-month high since it hit new heights in December 2012. Meanwhile, the monthly report by Singapore Exchange released 5 March also showed that volume of commodity swaps cleared increased 48 percent year-on-year to 36,127 contracts. However, the traditional securities business saw lower market activity. Amid a lower-value rush for penny stocks, securities daily average value was down 2 percent year-on-year at $1.8 billion while total value traded was down 16 percent year-on-year at $31.7 billion. Fewer trading days also partly attributed to the decrease. According to the Business Times, the initial public offering market continued to show modest signs of life, with $82 million raised in February, compared to zero new listings a year ago.
Significance: With SGX facing stiff competition from Hong Kong, DBS opined that the derivatives business is a source of strength for the company and a way of diversifying. Still, analysts believe securities will remain SGX’s main business for a while more.