Monday, June 29, 2015

OUE COM Reit Rights Issue

OUE COM Reit proposes an acquisition of an indirect interest of One Raffles Places through the acquisition of between 75% to 83.33% of OUB Centre Limited from OUE Ltd (the sponsor).Valuation of OUBC interest is at around $1734m from two independent valuers.Funding of the acquisition is a mixture of voluntary rights ($218.3m), CPPU ($500m to $550m) and debt($333.3m to $399.3m). The 9-for-20 rights issue at $0.555 will result in a TERP of $0.731 per share based on yesterday closing price of $0.81.The CPPU will be issued to the Sponsor for an annual coupon of 1% per year with a restriction period of 4 years.The CPPU will be classified as equity with a conversion price of $0.841 with no more than one third of the CPPU initially issued can be converted in any one year. This represent a 15% discount over the TERP.Assuming a 75% indirect interest, leverage will be at 40.9% of the enlarged portfolio.

Wednesday, June 17, 2015

GrexIt - Why No Panic this time????

Why markets seems not reacting violently to impending Grexit???The answer may lie in the below article I read from somewhere.

"Years ago, back when the Greek debt crisis and attendant political machinations in the Eurozone first hit the headlines, the media was full of people screaming at you to pay attention to arcane fiscal disputes in far-off European capitols. And they were right. At the time, there was a serious risk of financial contagion from Greece to other European countries that could have lead to the collapse of the Eurozone and all kinds of wild consequences for global banking, the world economy, and other big, important things.
Now Greece's debt woes are back in the headlines, and if you want to get caught up, we've got you covered. But if you don't want to get caught up, that's okay! There's a big difference between this round of Greek drama and the previous one. This time it's really not that important. You don't have to pay attention.

The Greek crisis is very important for Greece

The crisis in Greece is very important for the nation of Greece. If you are Greek, if you live in Greece, if you have family in Greece, etc., this is very important.
Basically, if Greece cannot work out a new deal with the people to whom it owes money (primarily the European Central Bank, the International Monetary Fund, and various richer European nations), then Greek people are going to experience some (more) terrible economic pain.
Their country may leave the Eurozone, or the country may continue to formally use the euro but with Greek people unable to take their euros out of the country or exchange them for foreign money. Either way, the best-case scenario would be a healthy bout of inflation complete with lost savings and reduced incomes for pensioners and public employees followed by a reduction in the unemployment rate. The worst-case scenario would be the rapid breakdown of Greek politics and the further rise of the neofascist Golden Dawn political party.
Long story short — Greek people should pay attention to the Greece news.

The previous Greek crisis was important for everyone

Note that list of people to whom Greece owes money. Those are governments and government-backed institutions, not banks and individual investors.
That's not an accident, it's a consequence of the resolution of the last Greek crisis.
When that crisis happened, lots of Greek debt was owned by foreign banks. And lots of those banks also owned the debt of other European countries — notably Ireland, Portugal, and Spain — which had been hit by devastating recessions. This led to two big ways that Greece's crisis could become everyone's crisis:
  1. A Greek default could imperil the solvency of some foreign banks.
  2. A Greek default could lead people to anticipate defaults from other countries.
In other words, a Greek default could have led to runs on both foreign banks and whole foreign countries, as panicky investors started selling things. And then behind the four PIGS (Portugal, Ireland, Greece, and Spain) lay Italy, a massively indebted country whose economy is also far too large for the rest of Europe to be able to avoid a bailout. People feared a worst-case scenario of cascading national defaults and the chaotic, unplanned collapse of the Eurozone. If that happened, the US economy, which was still fragile following the 2008 recession, could've fallen back into crisis.
But in the end, Greek politicians and German politicians worked out a bailout deal. Then the European Central Bank assured everyone that no country would be forced into default as long as it was playing by the austerity-minded rules of Eurozone elites. There was no contagion.

Today, Greece is isolated

Greece is in crisis today because the deal the previous crop of Greek politicians worked out forced a steep fall in Greek living standards. The Greek government had to pursue a very austere fiscal policy, enact a series of unpopular changes to labor law, and, by staying in the Eurozone, was unable to use currency depreciation as a way of spurring job creation. As a result, Greece's unemployment rate has hovered at more than 20 percent for years.
Naturally, Greek voters were angry about this. So they turned to an opposition political party — in this case the far-left Syriza — to lead them out of the abyss. And since January, Syriza has been asking for a better deal.
But Syriza has a problem. The old risk that a Greek meltdown would burn the entire Eurozone has gone away. Greece's debt is in the hands of European governments, which are using that debt as a means of political control to force Greece to change its policies, not as an investment. And the European Central Bank is fully backing Portuguese, Spanish, Irish, and Italian debt, since all four of those countries are sticking with the program. If Greece defaults, nothing terrible happens to the rest of Europe. Syriza is playing high-stakes poker, but it has no cards, and everyone else at the table knows it.

European elites care more than you'd think

This naturally raises the question of why the drama keeps happening at all. Why don't Greece's partners call the bluff and walk away from the table?
The reason is that the Eurozone is more of a political project than an economic one, and it's one that most of Europe's politicians believe in. If Greece were to leave the Eurozone, that would be a blow to the prestige of the project. Non-Greek politicians (and the voters they are accountable to) are not willing to pay a large price to avoid this outcome, but they are willing to pay something. Consequently, though Syriza isn't going to get anything close to what it promised Greece's voters, it really can get some kind of more generous deal.
This has left Europe in an endless cycle of negotiations that break up, only to return, only to break up again. If a deal is reached, it will be at the last minute, and it won't drastically alter the status quo. If a deal isn't reached, we won't know until the last minute, and it won't have big consequences for the rest of the rest of the world.
So if you're Greek, you really should be paying attention to this news. And if you're just interested in high-stakes economic stories, it's a fascinating, important story. "

Monday, May 18, 2015

Kra Canal - Whither Singapore?

China and Thailand recently agreed in Guangzhou on a canal project through the Kra Isthmus, the narrowest part of the Malay peninsula in southern Thailand, which means the project, in the pipeline for years, may start construction soon, according to the website of Hong Kong-based Oriental Daily.

The agreement follows on from efforts by China to hammer out the implementation of its New Silk Road Economic Belt and 21st Century Maritime Silk Road initiatives, with the ongoing push to establish a China-Pakistan economic corridor and a Sino-Russia high-speed rail project. When the canal of over 100 kilometers in length opens, ships will be able to pass from the Gulf of Thailand in the Pacific directly into the Andaman Sea in the Indian Ocean, cutting down the current route by at least 1,200 kilometers, the website stated.

Guangzhou Agreement

At the research and investment cooperation talks in Guangzhou, China and Thailand signed a memorandum of understanding on the canal project, according to the website. The project, expected to begin construction soon, will likely take ten years to complete and will cost US$28 billion. The canal will mean that oil transport ships and merchant ships travelling from the Middle East to China will no longer have to pass through the Strait of Malacca.

The Strait of Malacca is a an important maritime passage and especially important for China's oil supply, as 80% of China's oil comes from the Middle East and Africa and 80% of this has to pass through the strait, where pirates pose a constant threat to China's oil supply.

Liang Yunxiang, a professor at the School of International Studies of Peking University told the website that the memorandum of understanding suggests that China is going to be the main driver behind the opening of the canal, which has important political and strategic significance. Liang said the project will help strengthen China's cooperation with the Association of Southeast Asian Nations (ASEAN) Free Trade Area at the same time as ridding itself of its reliance on the Strait of Malacca. It will also cut short the route ships have to take, cutting the time taken by two to five days and consequently reduce costs and boost the development of ports in Hong Kong and the mainland. Liang said, however, that there are also political risks to the project, as it is subject to the political climate of countries in Southeast Asia and US-Thai relations.

Another motive behind the project is China's fear that the US could blockade the Strait of Malacca, cutting off the country's oil supply, according to the website.

Macau-based military analyst Huang Dong said that the canal will also improve the PLA Navy's ability to react to international incidents. The PLA Navy recently evacuated citizens of several countries from Yemen, for example, after the civil war there escalated.

Li Zhenfu, a professor at Dalian Maritime University, stated said that as Chinese companies will participate in the project, China will likely be granted some level of authority over the canal and may even be able to negotiate to refuse passage through the canal to warships from certain countries, increasing China's influence in Southeast Asia.

The idea for the canal, which will be the largest in Asia on its completion, is said to have first emerged in the 17th century and over 100 years ago it was formally proposed by Chulalongkorn, king of Siam. The costs were too much for Siam to bear, however, and the project was later delayed by the two world wars of the 20th century.

The current proposal is for a two-way 25 m deep canal measuring 102 km in length and 400 m wide. The Panama Canal is only 15 m deep and it measures only 304 m at its widest point.

Wednesday, May 13, 2015


Revenue                                  $425m
(Food Solution                        $250.9m
 Gateway Services                  $173m
 Corporate                               $1.2m)

Operating Profit                      $44.7m
Share Of Associates                $13.1m
PATMI                                    $51.6m
EPS                                          4.7 cents
NAV                                        $1.3
Debt/Equity Ratio                    0.07
DPU                                         9 cents

With a Debt/Equity ratio of 0.07, SATs is one of the least leverage counter I have in my portfolio.It is generating a quarterly EPS higher than SIA Engineering at a 75% share price.

Tuesday, May 12, 2015


Basic Cable TV                       756K (ARPU: NT$ 537)
Premium Digital TV                136K (ARPU: NT$188)
Broadband                                185K (ARPU: NT$526)

Revenue                                    $82,292,000
EBITDA                                    $48,663,000 (EBITDA Margin: 59.1%)
Gearing                                      44%
Interest Cover                            Greater than 4
NAV                                           90 cents

Thursday, May 7, 2015


Revenue                                 = $41,203,000
NPI                                         = $39,026,000
Distributable Income             = $21,501,000
DPU                                       = 0.79 cents
NAV                                       = 42 cents
Gearing                                   = 31.6%

SembCorp Industries 1QFY2015

Revenue                                 = $2,338m
Profit From Ops                     = $254m
Net Profit                                = $142m
EPS                                         = 7.8 cents
DPU                                        = NA
ROE                                       = 9.7%
Interest Cover                         = 9.7X
NAV                                       = $3.31

Utilities contribute $74.5m net profit whereby $30.9m came from Singapore. The breakdown of the $30.9m are as follows Energy ($12.2m), Water ($8.9m) and Onsite Logistics & Solid Waste ($9.8m).