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Headliners | 26 June 2009
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By: David Lee
Articles (57) Profile

Starhill: Fifth REIT To Issue Rights Shares In 2009
Starhill Global REIT, which owns stakes in Wisma Atria and Ngee Ann City in Singapore, has said it will raise $337.3m through a rights issue, making it the 5th REIT this year to raise funds by issuing new units. Together, the 5 property trusts will raise some $2.5b. The rights issue is $0.35 for each unit, which represents a discount of about 45.3% to the company’s closing price of $0.64 per unit on 19 June.

The company’s announcement took many by surprise as it does not have any refinancing requirements in 2009, although the bulk of its $670.1m of borrowings are due 2010. In addition, the company has one of the lowest net gearing in the sector at 31.3% prior to the rights issue. In view of the 7.1% fall in the value of the company’s property portfolio at its latest revaluation exercise though, net gearing would have climbed to 33.4%. Hence, the rights issue will help to reduce net gearing to 20.7%.

80% Of S-Chips Pass Bank Balances Test
The bank balances of 80% of S-chips pass muster, said the Singapore Exchange (SGX), citing feedback from auditors – amid growing anxiety over the reliability of accounts. In addition, the SGX said it is looking to tighten corporate governance rules including raising the standards of issue managers, chief financial officers and directors. Newly listed companies will also come under increased scrutiny.

In its latest regulator’s column, the SGX said that the test was carried out post a March dialogue with auditors which highlighted the need for greater vigilance, particularly more checks and validation in key risk areas such as the safeguarding of cash, impairment of accounts receivable and assessment of off-balance sheet items. Indeed, extended audit checks were carried under the test including wider sampling of accounts receivable and more cases of visiting banks to obtain direct source confirmation of bank balances.

Drop In Funds Flow Into Emerging Market Funds
Funds flowing into emerging market funds appear to be slowing down, based on the latest figures from research firm EPFR Global. Indeed, net cash taken in by all dedicated emerging market equity funds fell from an average US$3.2b per week between end-April and 10 June to US$1.2b as of the week ended 21 June.

Citigroup said the sharp decline was primarily concentrated in global emerging markets fund inflows, which were down 82% week-on-week to a three-month low of US$241m, while Asia ex-Japan funds plunged 58% on a weekly basis to US$693m. Latin-America funds dived 46% compared with the week-ago figures. In Singapore, funds flow remains largely unchanged at about US$50m in the week beginning 15 June.

Merrill Lynch believes that the charts point to further correction in the emerging markets, although the emerging markets index has already come down 9% from recent high. Emerging markets have ‘not peaked for the year, but technical, valuation and sentiment factors argue correction in absolute and relative terms can continue in coming weeks’.

NOL’s Operating Woes Seem To Be Bottoming Out
The plunge in Neptune Orient Lines’ (NOL) container volumes and average rates seem to finally have bottomed out in the May reporting period, with both figures rising slightly from the month before, although they are still down over 20% y-o-y.

For the four weeks of period five from 2 May to 29 May, container shipping volumes declined 21% on-year to 159,100 forty-foot equivalent units (FEUs) while average revenue per container fell 23% to US$2,326 compared to corresponding period in the previous year. The decrease in volume was due to the decline in demand on all major trade lanes. Lower average revenue per FEU was due to lower core freight rates and lower bunker recovery.

M-o-M however, volumes and rates actually rose slightly from 157,800 FEUs and US$2,322 respectively in April. The April volume itself is a slight 1.5% increase over the 155,400 FEUs NOL carried in the March reporting period, as the sharp plunge from around 4Q08 started to flatten out.

Starhill Global REIT  0.745 -- --   
Business: Invests primarily in real estate used for retail and office purposes. [FY18 Turnover] Wisma Atria (31.5%), Ngee Ann City (30.6%), Australia ppties (22.2%), M'sia ppties (13.4%), China/Japan ppties (2.3%).

Insight: Jan-19, 1H19 gross revenue fell 2.3% to $103.1m la... Read More

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