Surprise Bump In GDP Figures Have Economists Upbeat
Flash estimates from the Ministry of Trade and Industry (MTI) showed better-than-expected GDP growth in the first quarter of 2012. On a sequential basis, GDP bumped up 9.9 percent beating market consensus by about three percentage points. Even though Singapore might have grown a modest 1.6 percent on a year on year basis, that figure was still above forecasts for growth of only one percent. The rebound has led to some economists to project a turnaround in the economy this year. At the very least, some economists feel that this year’s GDP growth will likely exceed the official forecast of one to three per cent growth. MTI said that manufacturing’s “healthy sequential expansion” of 14.7 percent recovered from the 11 percent quarter-on-quarter decline in 4Q11. In particular, electronics and precision engineering rebounded and produced higher levels of output in 1Q12 than in 4Q11. MTI also pointed to accelerated growth in the services sector which saw a 6.9 percent incline on a quarter-on-quarter basis.
Significance: In spite of the surprise bump in GDP figures, caution is still in the wind as signs of a recovery in global demand looks to be at best tentative and conflicting. Economists also point out that Singapore’s sequential numbers tend to be highly volatile.
LionGold Launches Bid For Australia’s Castlemaine Goldfields
LionGold Corporation has made a takeover bid for Castlemaine Goldfields (CGT), an Australian gold producer and explorer. The bid is valued at around A$50.3 million ($65.2 million), which values CGT at A$0.1842 per share, or a 62.02 percent premium over the average volume weighted price of CGT shares at the end of trading on the ASX on 13 April 2012. LionGold intends to issue consideration shares at an issue price of $1.0738 on the basis of nine CGT shares for every two consideration shares. CGT possess exploration titles across five goldfields in Australia with its main project being the Ballarat Goldfield, which is touted as the second largest historical goldfield in Victoria, Australia. Over A$400 million has been poured into the project, providing it with significant mining, ore processing and supporting infrastructure. Further, LionGold opines that CGT has been trading a a major discount since October 2011.
Significance: LionGold feels that the proposed acquisition will be earnings and cash flow accretive as the main Ballarat Goldfield operations have reached a cash-positive position and have been significantly de-risked.
SPH Reports Jump In 2Q12 Net Profit
Singapore Press Holdings (SPH) reported that its earnings have grown 11.6 percent over 2Q11 to $84.1 million. SPH attributed this growth to higher rental income from its operations of two shopping malls as well as a slight boost in print advertising revenue. SPH’s rental income grew 21.6 percent as income from its Clementi Mall jumped to $9.2 million from $1.4 million after becoming fully operational. The group’s print media however, saw flattish growth, with operating revenue from print media, and print advertising revenue growth pared by a 1.1 percent dip in circulation revenue. Although earnings grew at an increased pace, earnings per share (EPS), remained stagnant at $0.05. For 1H12, SPH recorded a 2.2 percent growth in earnings on top of 1H11, as growth in topline performance was pared by a 69.6 percent drop in investment income.
Significance: SPH’s print advertisement revenue looks to continually be affected and move in tandem with the performance of the local economy. With the recent bump in local GDP figures, SPH might be able to look forward to better performance in this avenue.