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Stocks In Focus SG (NSL, SingHaiyi, Suntec REIT) – 18/11/13
Daily Bulletin | 18 November 2013
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NSL To Sell Shareholding In BST For $328.3m
NSL Chemicals, a subsidiary of NSL, has agreed to sell its 100 percent shareholding in NSL Chemicals (Thailand) (NSCT) which holds a 22.38 percent shareholding in Bangkok Synthetics (BST), to SCG Chemicals for $328.3 million. Due to the cyclical nature and capital intensity of the petrochemical industry, projects require a long investment horizon before any meaningful returns can be realised. BST is no longer a part of NSL’s core strategy and therefore would be in the best interests of NSL to divest the investment. The sale of BST will allow NSL to better align its strategy to develop and grow its four core businesses – construction products, environmental services, engineering and chemicals. With the proceeds received from the sale of BST, NSL is poised to evaluate and invest in opportunities to maximise returns for its shareholders.

Significance: Based on NSL’s carrying value in NSCT as of 30 September 2013, the proposed divestment will result in an accounting gain of $119.8 million to NSL when completed.

SingHaiyi Purchase US$33.1m US Project
SingHaiyi Group has acquired Vietnam Town (VT), a partially completed commercial condominium development project in San Jose, California, US, for US$33.1 million, via a trustee auction. Following the purchase of Tri-County Mall (TCM) in Cincinnati, Ohio for US$45 million in September 2013, VT represents SingHaiyi’s second acquisition in distressed US real estate. VT, a freehold project, comprises of several parcels of land sitting on a total site size of 0.9 million square feet. Out of the 256 planned condominium units, 115 have been completed with 64 of them sold. SingHaiyi intends to sell the remaining 51 units over the next one to two years and channel the sales proceeds into the construction and sale of the balance 141-units within the next three to five years. The acquisition was funded by proceeds from its recent rights issue and share placement exercise. The purchase is in line with SingHaiyi’s strategy to expand its real estate investment activities to the US.

Significance: In its recent financial report, SingHaiyi returned to the black with a gain on bargain purchase of $12.8 million from the acquisition of TCM as well as one month of rental income from the mall.

Suntec REIT Acquires Landmark Office In North Sydney CBD
Suntec Real Estate Investment Trust (Suntec REIT), via its trustee, HSBC Institutional Trust Services (Singapore), has entered into agreements to acquire a 100 percent interest in 177-199 Pacific Highway, a freehold land and property to be developed for a consideration of A$413.2 million. The property, a 31-storey Grade-A commercial office property with an approximate net lettable area (NLA) of 0.4 million square feet, is located at the junction of Pacific Highway and Berry Street within the Central Business District (CBD) of North Sydney. Subsequently, the property which is scheduled for completion in early 2016 has already been pre-committed with Leighton Group, an Australian company involved in building, contracting and property development, for a head lease of 76 percent of the NLA. In addition, the property will serve as Leighton Holdings’ corporate headquarters where the weighted average lease expiry of Leighton Holdings’ lease is approximately 10 years, and a four-year rental guarantee is provided by the company for any vacant space on completion. The purchase will be fully funded by a $500 million unsecured loan facility with repayment tenure of five years.

Significance: The land and property purchase will boost earnings and distribution income to unitholders as there will be coupon payments of 6.3 percent per annum payable to Suntec REIT during the construction.

NSL  1.050 +0.065 +6.60%   
Business: FY18 Turnover] Precast & PBU (59.7%), environmental services (34.4%), others (5.9%).

Insight: May-19, 1Q19 revenue slid 27.8% due to delays in t... Read More
Suntec REIT  1.920 -0.010 -0.52%   
Business: Real Estate Invs Trust. Ppties incl Suntec Office Towers, Suntec City Mall & Park Mall. [FY18 Turnover] Office (46.8%), Retail (34%), Others (Ad space, car park income , convention & exhibits) (19.2%).

Insight: Jan-19, FY18 gross revenue rose 2.6% to $363.5m du... Read More


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