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Headliners (PerennialCRT, Sim Lian, TCT, Q&M, SingPost)
Headliners | 17 June 2011
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By: Jade Lee
Articles (97) Profile

Perennial China Retail Trust Still Trading Below IPO Price
Perennial China Retail Trust (PCRT), whose listing was delayed and debut price slashed from the initially planned amount of $1 apiece, traded 11.4% below its IPO price of $0.70 on 14 Jun. The trust, as the only pure-play China retail real estate owner and developer listed in Singapore, is managed by a firm controlled by former CapitaLand retail chief Pua Seck Guan. Earlier, the trust announced that it has secured eight cornerstone investors, including AEW Capital Management, Asdew Acquisitions and Henderson Global Investors. The outlook for IPO market this year has been mixed. Counters that have dipped below their offer prices this year include Hutchison Port Holdings Trust, Mapletree Commercial Trust and Harry’s Holdings. The exception is Dyna-Mac Holdings, which has Keppel Corporation as a shareholder. Analysts’ response to PCRT so far has been unenthusiastic; noting that the stock’s yield of about 5% would pale in comparison to the other S-REITs currently available in the market. Nonetheless, HSBC believes that the equity markets will continue to be resilient as most investors view the slowdown as temporary and seek an opportunity to buy on the dips.

Sim Lian Expects Construction Cost To Rise
Sim Lian Group voiced its concern that construction costs may increase with the recent move to speed up the pace of public housing supply. The temporary policy, rolled out recently, seeks to clear the demand backlog and help young couples get their flats faster. HDB will pick up the construction pace, with plans to deliver 25k units this year, from a previously planned 22k units. According to Sim Lian, the stepping up of the public housing construction pace may drive up construction costs, affecting companies’ profit margins. Sim Lian executive director Kuik Sing Beng expects a polarity in demand for public housing in mature and non-mature estates. While he sees an adequate housing supply to meet demand in the mature estates, ‘demand for public housing in non-mature estates will diminish’. Meanwhile, the group has also expressed plans to devote more resources to private housing.

Treasury China Trust Faces Shanghai Office Glut Risk
PhillipCapital said Treasury China Trust’s (TCT) high quality of assets demonstrate the capability of its team in managing property, but also warned of the key risks involved. According to PhillipCapital, the main threat to TCT is the supply glut of office space in Shanghai, which TCT relies heavily on. It said that new office supply in 2011 alone is estimated to hit a million square metres, or about three times the average historical annual supply, which may further compress the yield due to increased vacancy rate. Meanwhile, it also highlighted that concentration risk is high as TCT’s income source hinges on the Shanghai commercial property market. Risks aside, PhillipCapital also noted that there is great potential on TCT’s ongoing acquisition of Huai Hai Mall in Shanghai due to its prime locality. Moreover, the divestment of the majority stake in Central Plaza bodes well for shareholder. Going forward, PhillipCapital expects TCT’s gross yield to increase from 4.9% in 2010 to 5.4% in 2011 with the acquisition of Central Avenue Mall earlier this year and Huai Hai Mall.

Q&M Acquires 49% Of China Dental Lab For Rmb25m Under Joint Venture
Q&M Dental Group (Q&M) has signed a non-binding memorandum of understanding with the shareholders of Beijing Le Le Jia Medical Solutions Co (LLJ) in which Q&M China would acquire 49% of their shares for Rmb25m. Q&M felt that LLJ, whose core business centres on the processing and manufacturing of dental devices and materials research, would be able to assist in its expansion plans into China by providing a variety of dental products to Q&M Clinics in China. Asides from this new joint venture, Q&M also owns 30% of Aiyashi dental group and 50% of Dan De dental group, both totalling seven dental clinics, one dental centre and one dental clinic in Beijing and Nanjing. Q&M’s newest aggressive push into the China market reflects its confidence in the growing Chinese demand for dental services and its ability to capture a portion of the market share. Q&M aims to list its China business within five years, once the joint ventures net a combined profit of Rmb80-90m.

SingPost Acquires 50m Additional Shares In Efficient
Singapore Post (SingPost) entered into a memorandum of understanding with Malaysian listed firm Efficient in which 50m ordinary shares will be allocated to SingPost through a private placement. Efficient’s core business centres around integrated outsourcing solutions in data and document processing. With the new agreement, SingPost now owns 10.1% of Efficient, totalling 71.2m shares, up from 21.2m. SingPost and Efficient will work together to seek out business opportunities and engage in talks with other potential investors and business partners. This move by SingPost further reinforces its recent attempts in diversification. Earlier this year in March, SingPost disposed of SpeedCash, a pawnbroker, and in May acquired the remaining 30% stake in DataPost. With an increased stake in Efficient, SingPost appears to be heading towards the data processing and hybrid mail route through overseas expansion.

Jade manages and oversees a portfolio of stocks which are mainly focused on the mining and property sectors at Shares Investment.

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Singapore Post  0.950 -0.015 -1.55%   
Business: [FY19 Turnover] Post and Parcel (47.8%), logistics (31%), eCommerce (15.5%), property (5.7%).

Insight: May-19, FY19 revenue rose 2.9% to $1.6b largely du... Read More

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