Olam CEO – Sunny Verghese buy back shares

1m shares @ $1.54


Corporate Filing – 30 Nov 12, Olam directors up stake


* CSE (CSE.sp): Amundi ceased to be substantial shareholder after selling 141k shares, paring stake to 4.98%

* IHH (IHH.sp): EPF raised stake to 5.1% via purchase of 1917.9k shares

* Olam (OLAM.sp): Directors Michael Lim & Robert Tomlin each bot 200k shares in the open market

* UIC (UIC.sp): Wee Cho Yaw raised stake to 48.31% via UOL’s 218k share purchase @ $2.78241

* Yoma (YOMA.sp): Substantial shareholder Serge Pun’s 46.31% stake were diluted to 38.59% due to recent private placement exercise

* Religare (RHT.sp): MS cuts stake to 5.9242% via sale of 3.7m shares

* Ezra (EZRA.sp): Director Koh Poh Tiong bot S$250k worth of perpetual securities

* Biosensors (BIG.sp): repurchased 1426k shares @ $1.1578


Capitaland (CATL.SI) – Paying to Prevent a Sky-fall by Citi

Alert: Capitaland (CATL.SI) – Paying to Prevent a Sky-fall

*                Defensive bid comes up tops – CapitaLand beat eight other contenders for a residential site at Bishan Street 14, which is located adjacent to their current Sky Habitat project. Its bid price of S$853 psf ppr (S$505m for the total site) is 2% below the S$869 psf ppr that it paid for the Sky Habitat site. The new site is located around 200m from the Bishan MRT station and CMT’s Junction 8 shopping mall. Given that CapitaLand has sold just 28% of the total units (141 units out of 509 units) at Sky Habitat in the seven months that the project has been on the market (it was launched in April), we see this as a defensive bid by CapitaLand to lengthen the shelf life of its Sky Habitat product and to prevent any potential price under-cutting by competing developers, given that the subject site is located slightly closer to the MRT station. That said, current land-use plans indicate that there are four other sites surrounding the subject site that are currently reserved for high-rise development (see next page).

*                Warding off competition, with a thinner margin of victory – CapitaLand’s bid came in 3% ahead of Singapore Land / UOL Group, which is a more realistic winning margin compared to the 27% premium (over Keppel Land) that CapitaLand paid for its Sky Habitat site in February 2011. We estimate breakeven cost of S$1,300 psf for the subject site, and given that Sky Habitat is currently achieving an ASP of S$1,600 psf, and the fact that the sites are just next to each other, we estimate an ASP of S$1,600 psf for the subject site as well, translating to a 23% gross margin. This works out to an RNAV accretion of 3 cents for CapitaLand (see next page for RNAV sensitivity).

*                Main residential developers all represented – The tender saw interest from all the main residential developers – aside from Singland/UOL, other parties included FCL/Far East, Wheelock Properties, Keppel Land, MCL Land and City Dev. With the exception of CapitaLand, developers that bid for both sites put in a higher bid this time round, anchored by the benchmark that had been set for the Sky Habitat site, in our view. Outside the top two bidders, five developers put in bids that were clustered within a tight 4% range (S$750 to S$780 psf ppr).

*                Strategy for the site would be closely watched – We expect that the design and the sale strategy (including timing and pricing) for the new site would be closely watched. Sky Habitat was designed by renowned architect Moshe Safdie, and developing another iconic project next door could serve to dilute the exclusivity of Sky Habitat and may further impede the already slow sell-through rate for the project. However, developing a less iconic project might affect the ability for CapitaLand to price this new project, with the current ASP of S$1,600 psf at Sky Habitat serving as a potential price ceiling.


Some Msia Newsflow – Watch out for Genting Malaysia! NP – 28% YoY

*MSCI Semi Annual Review (Nov) at the close today; deletions for SPSB MK (net outflows $21.04m), BC MK (net outflows $23.36m). Lower weighting for RHBC MK (net outflows $5.38m), PCHEM MK (net outflows $2.95m), IOI MK (net outflow $2.5m), ROTH MK (net outflows $1.08m)

*CIMB MK, press report, citing unnamed sources said that the bank will not be bidding for GE’s stake in BAY TB, ending speculation that it was zeroing on the Thai bank under the rationale that the stake purchase will not allow CIMB MK to assume control of the bank.

*SPSB MK has entered into a land swap deal with the govt, acquiring 16.6ha land in Shah Alam to build a health and research institute in return for 21.2ha land in Bangsar. The Shah Alam contract is valued at RM845m and in return SPSB will develop a planned mixed development on the Bangsar land for the govt and guaranteeing RM217.1m minimum guaranteed profit.

*GENT MK 9MFY12 net -28% YoY at RM1.51bn, EPS 40.82cents. Earnings were 58% of consensus FY12 est due to weaker earnings by its subsidiaries GENP, GENM and GENS.

*GENM MK 9MFY12 net -11% YoY at RM956.8m, EPS 16.89cents. Earnings were 60% of consensus FY12 est after incurring RM178.9m impairment loss due to goodwill for the acquisition of the Omni Center in Miami and certain provincial casino licenses and assets in UK.

*CAB MK 9MFY12 net +17.3% YoY at RM151.16m, EPS 49.44cents. Earnings were 82% of consensus FY12 est on higher revenue during the summer events (Euro 2012) and better sales of its premium beer products (Kronenbourg 1664, Asahi).

Greece’s update…Bond buyback in sight

A European bond buyback plan meant to shave roughly €20bn ($25.8 bn) off Greece’s debt burden must prove successful before the IMF Fund will fully support the bailout program, IMF will look for implementation of Greek debt buy back by Dec 13

The Institute of Int’l Finance, in charge of negotiating the terms of a debt-swap deal with private bondholders, said in a statement that it’s “critical that any buyback be conducted on a purely voluntary basis.”

Greek Debt Buyback Offer to Be Extended to PSI Holdouts -Troika Draft Report The most significant of those measures was a plan by Greece to buy back possibly as much as half of the EUR62 billion stock of debt now held by private creditors. Details of the plan are expected to be announced next week, possibly as early as Monday. But market participants expect Greece will use some EUR10 billion loaned to it from Europe’s temporary bailout fund to buy back some EUR30 billion in debt, paying an average price of between 30 and 35 eurocents on the face value of the bonds.

 Since a EUR200 billion debt restructuring earlier this year, Greek bonds have been trading mostly at around a quarter of their face value, but have rallied substantially over the past few weeks as investors predicted that Greece would offer to buy back its bonds.

Market Commentary by Decoder – 30 Nov 12

  • MSCI rebalancing @ close today. Affected markets with > 20% ADV – Aus/HK/Indo/India/Jap/KR/Msia/SG/TW/TH.
  • HKEX (388 HK): Placement last night, US$800m placement @ HK$118 (~5.4% disc) to fund LME acquisition which has just been approved by the UK regulators.
  • The markets are getting mixed signals from the regulators as House Speaker Boehner said yesterday, “no substantive progress” has been made on the fiscal cliff issues as oppose to what President Obama said the day before. Probably due to the expectation of a Christmas rally/an eventual compromised deal on the deadlock, investors are still quite optimistic with the markets, supporting the 3 major indices to close +ve overnight. On the macro side, except for the pending home sales (which came in bte), the rest of the data fell short of expectations (GDP/Personal Comsumption/Jobless Claims/Manufacturing Data). With all the rebalancing going on today (month end), expects a volatile start, a roller coaster ride intraday and an explosive closing!

Market EOD Wrap by broker – 29 Nov 12


FSSTI: 3,045.9 (+1.1%)            VOL: 2,961.2m                 VAL: S$1,611.7m

Index ended at a day high, recording its biggest % gains in over 2 months today led by bullish sentiment and optimism on resolution of the US fiscal cliff; STI managed to close above the 50MA and 100MA. Only tech sector -0.3% as the loser, while the rest advanced led by O&G +2.6%, maritime +2% and property +1.5%. 26/30 constituents gained led by GGR, OCBC and KEP, while only 3 losers were FNN, JS and IHH; gainers > loserse 279>137.

*OLAM +4% as CEO Verghese says business with its counterparties had not been  affected by short-seller Muddy Waters report.

*Plantations stocks rallied as the Indo Palm Oil Association’s chairman calls  for changes in export tax to rival M’sia duty reduction; GGR +4.7%, FR +3.9%,  IFAR +1.6%, FR +3.9%, BAL +0.9%.

*RHT +2.5% as two more firms, CIMB and StdCht also issued initiation reports  today with target prices in the high 90s.

*SMM +4.1% after announcing a drillship order for US$806.4m from Sete Brasil;  boosting YTD wins to S$10.5bn; parent company +3.6%.

*COS +1.1% after announcing US$41m contract to build 2 bulk carriers; DBSV  maintains fully valued on news as current pricing is barely profitable.

*FCOT +1.6%, its convertible preferred, CPPUs’ trading was halted, leading to  speculation of possible redemption or conversion.