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Headliners (Perennial China, COSCO, GLP, China Healthcare)
Headliners | 03 June 2011
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By: Ong Qiuying
Articles (131) Profile

Perennial China Retail Trust To List On SGX At 70 Cents Apiece
Citing potentially more rewarding returns for investors, Perennial China Retail Trust (PCRT) has confirmed that units will be priced at 70 cents each for its IPO, significantly lower than the $1 per unit which it had planned previously. Although earlier IPO plans were shelved due to concerns of slow growth in China as well as the worsening debt situation in Europe, PCRT expects to raise $776.2m through the IPO and they have forecast a 5.3% and 5.51% distribution yield for 2011 and 2012 respectively.

Notably, distribution yields are expected to be high as rental yields in China are set to embark on rapid growth as a result of pent-up demand for consumer spending. Current assets in Shenyang, Foshan and Chengdu contribute to its $1.1b initial property portfolio. PCRT has stated that growth will be next on their agenda, starting with the purchase of two commercial development projects which are connected to high speed rail stations in Chengdu and Xi’an. PCRT will start trading on SGX on 9 Jun-11.

COSCO Faces Risk Over Customer’s Troubles
COSCO Corporation (Singapore) could possibly be in imminent danger from Sevan Marine, the parent of its customer Sevan Drilling. Sevan Marine withdrew plans for a US$275m rights issue following its share price’s freefall on the Oslo Stock Exchange. In addition, Sevan Marine has also anticipated being in breach of its minimum liquidity requirements.

Sevan Marine’s troubles were further amplified with the resignation of their CEO, Jan Erik Tveteraas, citing personal reasons. COSCO stands to lose from this turn of events as Sevan Drilling makes up an estimated 10% of its order book. Exposure of Sevan could hit 22% due to a recently signed letter of intent for two rigs worth US$1.05b, which could be deferred or withdrawn.

Bearing a 10% hold on COSCO’s order book, troubles at Sevan Marine could represent not just current losses for COSCO, but future earnings as well. COSCO shares however, were cushioned with the announcement of a US$356m contract with KS Energy as well as news that Sevan Drilling is attempting to negate cross default clauses with its parent. The market does not seem to be overly concerned as seen in the 3% drop in price on 27 May as compared to the 7% plunge on 23 May when there was news on accounting irregularities on its Chinese parent.

GLP’s 4Q11 Bottomline Falls 63% On Absence Of Revaluation Gains
Global Logistic Properties (GLP), which owns logistics facilities in China and Japan, posted a 63% drop in 4Q11 earnings to US$49.2m mainly due to the absence of fair value gain. GLP said it recognised a fair value loss of US$8.9m during the recently concluded quarter as opposed to a US$100.2m fair value gain a year ago, mainly due to the Tokyo earthquake.

Excluding revaluation, profit after tax and minority interests rose 13.5% to US$59.8m. 4Q11 revenue rose 17% to US$124.4m, attributed mainly to the completion and stabilization of its development projects in China, the acquisition of China’s Airport City Development and the strengthening yen against the US dollar.

“With 80% of our China facilities catering to domestic consumption, we are in a unique position to ride the powerful wave of consumption growth in China,” said Jeffrey Schwartz, chairman of the executive committee of GLP. GLP would also ride on the booming logistics industry in China, which has been boosted by growing consumer spending. Not to mention, GLP’s cash and cash equivalents stood at a strong US$1.6b as at 31 Mar-11, up from US$412m a year ago.

China Healthcare Returns To The Black With $3.8m Earnings
China Healthcare returned to the black at $3.8m for the full year ended 31 Mar-11, driven mainly by the absence of impairment losses as well as higher revenue. The firm registered a net loss of $5.7m in FY10 mainly due to a $9.2m impairment loss on investment in an overseas subsidiary. Its cash and cash equivalents stood at $7.7m, compared with $1m a year ago.

China Healthcare’s higher revenue was contributed from medicare centres and nursing homes in Singapore and Malaysia. Ancillary services such as Econ Home Care, Chinese medicine and ambulance services added a further boost to the top line. Meanwhile, the firm will commence the construction of new medical facilities at West Point Hospital in FY12 following the completion of temporary medical and administrative facilities in the 1Q12. Going forward, the healthcare group expects to benefit from the growing demand for medicare centres and nursing homes with an ageing population.

Qiuying oversees the construction and real estate investment trusts sectors at Shares Investment.

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COSCO Shipping Int'l (S)  0.285 +0.005 +1.79%   
Business: Engaged in shipping and other logistics services. [FY18 Turnover] Logistics (69.7%), property management (11.9%), Shipping (9.5%), ship repair and marine related activities (8.9%).

Insight: Mar-19, FY18 revenue jumped 340% to $163.7m and gr... Read More

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