Category: SG Stocks And Shares
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Please note that the market information is retrieved and compiled from various sources. Thus not all entirely from UOBKH.
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Singapore Stocks to Watch
* Cityneon (CITN SP): Lucrum 1 offers S$0.90/share for remaining shares in Cityneon
*Croesus Retail (CRT SP): Cut to hold at CIMB
* Elec & Eltek (ELEC SP): To report 250% increase in net income in 2H
*First REIT (FIRT SP): 2Q dividend per unit S$0.0214
*Keppel DC Reit (KPTT SP): 2Q dividend per unit S$0.0174
*Keppel Infrastructure (KIT SP): 2Q distribution per unit S$0.0093
*Olam International (OLAM SP): Secures JPY25b 3Y Samurai Loan
*Singapore Airlines (SIA SP): June passenger load factor 82.7% vs 77.8% y/y
* ST Engineering (STE SP): Co. buys Aethon based on enterprise value of S$50m
*Tiong Seng (TSNG SP): JV buys 2 Singapore properties for S$21m
Technical Analysis: Gold – Turning point in sight after rebounding off $1200 support
Analyst: Jeremy Ng
• The recent selloff in Gold since June 2017 FOMC meeting is ending
• Near term target Gold: $1300 / Long term target Gold: $1920
• Strong support off the $1200 psychological area kept the uptrend intact
• Oversold Relative Strength Index(RSI) since 7 July 2017 is hinting a reversal over the horizon
Keppel DC REIT – Awaiting more acquisitions
Recommendation: Neutral (Maintained), Last Close Price: $1.32
Target Price: $1.28, Analyst: Richard Leow
• 2Q17 gross revenue exceeded our forecast by 5.4%.
• 2Q17 DPU in line with our forecast.
• 3.63 cents declared for 1H 2017 semi-annual distribution
ST Engineering Ltd. has acquired Aethon Inc, a leading provider of autonomous mobile robots for material transportation and delivery for c.S$50mn. Aethon is best known for its smart autonomous mobile robot which helps automate intra-logistics in industrial, healthcare, hospitality and other commercial environments. The estimated NTA of Aethon is –S$1.4mn.
Sunpower Group Ltd. has secured contracts worth RMB65.9mn from Qinghai Damei to provide Engineering, Procurement and Construction services to the client’s wastewater evaporation and crystallization facility. The contract will be delivered in 2018 and is expected to positively impact the Group’s FY17 and FY18 results.
Tiong Seng Holdings Ltd. and Ocean Sky International Ltd. has been granted an Option to Purchase for 2 freehold sites at Jervois Road, Singapore for S$21mn (on a 60:40 basis). The sites have a combined site area of c.1,246 sqm and are zoned “Residential” with gross plot ratio of 1.4.
Source: SGX Masnet, Phillip Securities Research
– Market will likely stay range-bound ahead of corporate 2Q results.
– Technically, STI remains bounded within its 3,190-3,275 trading range.
*Keppel DC REIT
– 2Q17 DPU of 1.74¢ (+4.2%) met expectation despite a larger unit base (+27.6%).
– Surge in revenue to $34.5m (+38.8%) and NPI to $31.4m (+41.9%) was led by recent acquisitions of Milan DC, Cardiff DC, and 90% stake in KDC SGP 3.
– However, portfolio occupancy dipped 2ppt to 93.1%, while aggregate leverage ticked 0.2ppt lower to 27.7%.
– Trading at 2Q annualised yield of 5.3% and 1.36x P/B.
– Positive Jun operating stats, with improved group passenger load factor of 82.1% (+4.6ppt), as traffic (+8.6%) outpaced capacity growth (+2.7%).
– Load factor for parent on routes to Americas (+5.1ppt), Europe (+7.5ppt), West Asia and Africa (+9.6ppt) improved the most.
– Load factors at subsidiaries SilkAir (+5.7ppt to 73.8%) and budget carrier (+2.3ppt to 85.8%) were also better.
– Further, cargo load factor grew 4.5ppt to 65.6%.
– Acquiring US-based autonomous mobile robots manufacturer Aethon for US$36m.
– The robots are capable of delivering goods such as materials, meals, medication, etc, up to a load of 635kg per robot.
– Globally, 164 units have been deployed in the industrial, healthcare, hospitality and other commercial environments.
– Signed build-to-suit agreement with Adidas to develop their largest distribution centre in Asia.
– The 83,000 sqm facility in Suzhou, Eastern China will support strong demand from the growing domestic consumption.
– Awarded contract worth Rmb65.9m from Qinghai Damei Coal Industry to provide EPC services.
– Project located in Ganhe Industrial Park Development Zone, Qinghai, China.
– 60:40 JV with Ocean Sky to acquire two freehold residential sites at Jervois Road for $21m ($1,118 psf ppr).
– The combined site has a land area of 13,415 sf with gross plot ratio of 1.4 and will be redeveloped.
*Elec & Eltek
– Positive profit alert for 1H17, with a significant increase of not less than 250% in net profit.
– Due to increased sales in higher margin products, improved profit margin of laminates manufactured and sold, as well as an absence of provision for impairment (1HFY16: US$5m).
*Keppel Infrastructure Trust
– Flat 2Q17 DPU of 0.93¢, on a slightly lower-than-expected rise in distributable cash flow (+1.9%) due to timing differences in the adjustment of gas tariffs at City Gas.
– Revenue jumped 15.6% to $158.8m, on stronger contribution from City Gas (+13.6%), Basslink of A$21.7m (2Q16: A$5.2m) on service resumption, but partially offset by weakness in concessions (-17%).
– Aggregate leverage stood at 39.1% (+0.4ppts q/q).
– Trades at 6.5% 1H17 annualised yield and 1.9x P/B.
– 2QFY17 DPU inched up 1.4% 2.14¢, in line with estimates.
– Gross revenue and NPI rose to $27.5m (+3.3%) and $27.2m (+3.2%), mainly on contribution from Siloam Hospitals Labuan Bajo acquired in Dec ’16.
– Aggregate leverage remained at 31%
– NAV/unit at $1.0041.
– The successful management-led buyout of Star Media’s 52.5%-stake at $0.90/share in the company has triggered an unconditional mandatory general offer.
– Management intends to maintain the listing status of the company and does not intend to exercise any right of compulsory acquisition.
– Secured 3-year term loan worth ¥25b (US$222m) for refinancing existing loans and general corporate purposes.
News for today 18/7/2017:
– US firms face hiring difficulties, raise wages: Surveyhttp://www.straitstimes.com/business/us-firms-face-hiring-difficulties-raise-wages-survey?xtor=CS3-18
– London economy suffering ‘wobble’ over Brexit worries, says think tank http://www.straitstimes.com/business/economy/london-economy-suffering-wobble-over-brexit-worries-says-think-tank?xtor=CS3-18
– Strong Q2 growth eases way for reforms in China http://www.straitstimes.com/business/strong-q2-growth-eases-way-for-reforms-in-china?xtor=CS3-18; China GDP beats expectations with Q2 growth at 6.9 per cent http://www.businesstimes.com.sg/government-economy/china-gdp-beats-expectations-with-q2-growth-at-69-per-cent?xtor=CS3-25
– US, Malaysia to set up bilateral trade talk shops http://www.businesstimes.com.sg/government-economy/us-malaysia-to-set-up-bilateral-trade-talk-shops?xtor=CS3-25
– Singapore exports rally with 8.2% surge in June http://www.straitstimes.com/business/economy/singapore-exports-rally-with-82-surge-in-june?xtor=CS3-18; June NODX busts forecasts; good showing expected for next few months http://www.businesstimes.com.sg/government-economy/june-nodx-busts-forecasts-good-showing-expected-for-next-few-months?xtor=CS3-25
– Residential market on the upswing http://www.straitstimes.com/business/residential-market-on-the-upswing?xtor=CS3-18; Developers sold 73% more homes in first half of 2017 http://www.businesstimes.com.sg/real-estate/developers-sold-73-more-homes-in-first-half-of-2017-0?xtor=CS3-25
– Banks meet MAS’ ratio requirement http://www.straitstimes.com/business/banks-meet-mas-ratio-requirement?xtor=CS3-18
– Singapore 8th best city for women entrepreneurs http://www.straitstimes.com/business/companies-markets/spore-8th-best-city-for-women-entrepreneurs?xtor=CS3-18
Stocks to watch today 18/7/2017:
– Tiong Seng in JV to develop Jervois Road residential siteshttp://www.businesstimes.com.sg/companies-markets/tiong-seng-in-jv-to-develop-jervois-road-residential-sites?xtor=CS3-25
* Tiong Seng last close $0.315, 52wk high/low $0.38/$0.21
* Ocean Sky last close $0.07, 52wk high/low $0.149/$0.06
– DBS last close $21.44, 52wk high/low $21.48/$14.72 – Bank plans potential US dollar green bond debut http://www.straitstimes.com/business/dbs-group-plans-potential-us-dollar-green-bond-debut?xtor=CS3-18
– First Reit last close $1.335, 52wk high/low $1.39/$1.25 – REIT’s DPU for 2nd quarter up 1.4% http://www.straitstimes.com/business/first-reits-dpu-for-2nd-quarter-up-14?xtor=CS3-18
– GLP last close $3.31, 52wk high/low $3.32/$1.77 – GLP deal: Long-term investing takes patience http://www.straitstimes.com/business/companies-markets/glp-deal-long-term-investing-takes-patience?xtor=CS3-18; Buyout target GLP to develop Adidas’ largest distribution centre in Asia http://www.straitstimes.com/business/companies-markets/buyout-target-glp-to-develop-adidas-largest-distribution-centre-in-asia?xtor=CS3-18
– IHC last close $0.098, 52wk high/low $0.12/$0.036 – Lee Yi Shyan to be non-exec chairman of International Healthway Corp http://www.businesstimes.com.sg/companies-markets/lee-yi-shyan-to-be-non-exec-chairman-of-international-healthway-corp?xtor=CS3-25
– Katrina last close $0.21, 52wk high/low $0.405/$0.19 – Uses $600k of IPO proceeds to setup 6 halal certified restaurants throughout Singapore http://infopub.sgx.com/FileOpen/KGL_Annc_Use_of_IPO_Proceeds_170714.ashx?App=Announcement&FileID=461515
– Keppel Corp last close $6.41, 52wk high/low $7.23/$5.13 – Unit wins contracts for China waste-to-energy plants http://www.straitstimes.com/business/companies-markets/keppel-unit-wins-contracts-for-china-waste-to-energy-plants?xtor=CS3-18
– Keppel Infrastructure Trust last close $0.575, 52wk high/low $0.575/$0.47 – Trust maintains DPU http://www.straitstimes.com/business/companies-markets/keppel-infrastructure-trust-maintains-dpu?xtor=CS3-18
– Keppel DC REIT last close $1.32, 52wk high/low $1.33/$1.141 – Keppel DC Reit posts 4.2% rise in Q2 DPU http://www.businesstimes.com.sg/companies-markets/keppel-dc-reit-posts-42-rise-in-q2-dpu?xtor=CS3-25
– SPH last close $3.03, 52wk high/low $3.978/$3.01 – SPH to run Business Insider’s Singapore, Malaysia editions http://www.straitstimes.com/business/sph-to-run-business-insiders-singapore-malaysia-editions?xtor=CS3-18
– ST Engg last close $3.69, 52wk high/low $3.86/$3.03 – ST Engineering to acquire US robotics firm Aethon for US$36m http://www.businesstimes.com.sg/companies-markets/st-engineering-to-acquire-us-robotics-firm-aethon-for-us36m?xtor=CS3-25
– YuuZoo last close $0.069, 52wk high/low $0.187/$0.057 – Company to appoint third party to look into claims http://www.straitstimes.com/business/yuuzoo-to-appoint-third-party-to-look-into-claims?xtor=CS3-18
SIA (SIA SP) reported its June op stats.
- Parent airline’s pax load factors rose 4.9ppt yoy in June, on the back of a 5% rise in pax traffic. Load factor improved across all regions, led by West Asia and Africa, and Europe. SIA indicated that the higher loads were aided by stronger traffic on Kangaroo routes and restructuring of Americas routes.
- SilkAir and Budget Aviation Holdings (BAH – Scoot and TigerAir) also fared well with a 5.7ppt and 2.3ppt improvement in loads respectively, as traffic growth outpaced capacity expansion.
- Cargo loads also improved 4.5ppt yoy on the back of a 7% rise in cargo traffic.
- We note that while SIA showed strong pax load factor improvement in June, yoy comparison was flattered by a low base effect (Jun-16 had the lowest pax traffic and lowest pax load in 5 years). SIA’s pax traffic grew only 1.4% when compared with Jun-15. There is also the possibility that the improved load factors were achieved at the expense of yields.
For now, we maintain HOLD on the stock and a target price of S$10.00.
Singapore Post (SPOST SP) HOLD /S$1.37/Target: S$1.37
Update on Review of TradeGlobal Acquisition
Update on Review of TG acquisition. Post the impairment of TG in May, SPOST has engaged WongPartnership and FTI to assist on the review of circumstances surrounding the consideration and approval of TG acquisition. While review is at an advanced stage of completion, WongPartnership has issued an interim summary report detailing key observations and recommendations (see below and attached). SPOST board accepts the recommendation.
Future Plans for TG. SPOST is executing a turnaround plan for TG to recover as much value for shareholders and to focus on extracting post acquisition synergies from the networks.
Maintain HOLD with SOTP target price of S$1.37. While we remain positive on SPOST’s long-term prospects, we believe near-term earnings will continue to be hampered by transformation costs. Losses at TG and costs incurred to build out the e-commerce logistics network will be key earnings headwinds for 2018. Entry price: S$1.25.
- No clear leader/clear structure within the project management team. This led to certain lack of ownership and accountability in respect to the acquisition.
- Overstepping of directorial stewardship role. This could render the system of checks and balances between non executive director and management less effective.
- Asymmetrical flow of information to Board and not in timely fashion. Some relevant information was not communicated to entire Board while some relevant information was raised to EXCO but not to the rest of the Board. As a result of delays, the Board was not in a position to fully consider or debate material risks to TG acquisition.
- Approval to conduct due diligence was obtained from incorrect approving body. SPOST’s internal process prescribed that acquisitions over S$50m should be sought from the Board but approval was sought from EXCO instead.
- Commercial due diligence not fully documented and lacking in relation to TG’s valuation. No finalized commercial due diligence report was issued. Commercial due diligence may also be lacking in relation to TG’s valuation process. A more detailed review of TG’s performance in FY13/14 against its forecasts may have revealed that TG’s main operating subsidiary had significantly underperformed its forecasts for those years.
- Valuation performed did not fully accord with best practices. For instance, justification of acquisition price did not appear to have considered Bregal’s lower earlier transaction price or the underperformance of TG’s main operating subsidiary in the years prior to acquisition. Also there was limited information on comparable transactions.
- Mitigation measures adopted may not have been sufficient.
- M&A policy: To set out key roles and responsibilities of project manager for an investment, as well as include execution and closure policy that prescribes practices to be adopted in due diligence and valuation.
- Corporate governance: Recommendations pertaining to corporate governance have already been identified in the previous corporate governance review conducted and SPOST has taken steps to implement them. These include reconstituting EXCO as financial investment committee with reduced scope, setting up a corporate governance committee, instituting clear standards for quality and timeliness of information sharing following Board meetings, and establishing clear delineation between roles of Board and Management
Banking Sector OVERWEIGHT
Schedule For Announcements Of 2Q17 Results
- DBS: 4 Aug 17, Friday
- OCBC: 27 Jul 17, Thursday
- UOB: 28 Jul 17, Friday
Attached is links to our results preview:
DBS Group Holdings (DBS SP)2Q17 Results Preview: Sequential Pull-back From Near-Record Earnings In 1Q17
Analysts: Jonathan Koh, CFA Tel: (65) 6590 6620
- Earnings are expected to recede 10.8% qoq from the near-record earnings in 1Q17.
- Fees could have declined 8% qoq from the record high in 1Q17.
- Specific provisions are expected to have increased 19.5% qoq due to a drop in valuations for collaterals.
- DBS has completed its review of dividend policy. We expect the upcoming interim dividend to rise from 30 cents to 32 cents/share.
- Maintain BUY. Target price: S$25.25.
Singapore: NODX Growth Back On Track In June, With A Cautious Outlook In 2H 2017
· Singapore’s non-oil domestic exports (NODX) for the month of June rose 8.2% y/y, stronger than the revised 0.4% y/y gain in May, due to the increase in both electronics and non-electronic exports. Electronic exports continued to expand for the 8th consecutive month and were up 5.4% y/y in June, while Non-electronic NODX gained 9.3% y/y
· We note that the pharmaceuticals segment continued to perform poorly in June and contracted 34.2% y/y.
· Oil domestic exports grew 5.1% y/y, the 10th consecutive month of expansion, following a 24-month decline previously. Higher oil prices helped to push up the nominal value of oil exports this year so far. However, going forward, the low base effects of oil prices from 2016 will start to wear off in 2H. This means that the strong increases in oil exports over the past few months due to price effects will not be supportive anymore.
· In our May NODX report, we highlighted that the past (April-May) two months of stagnated NODX growth many seem alarming to many market watchers, especially since it was growing at an average growth of 14% over the 5 months prior to that. We opined then that that was only temporary, especially since May 2016 was a high base month. In fact, we reiterated that NODX growth rates are notoriously volatile and technical pullbacks should not veer us off course in our longer term view of the recovery in global trade for 2017.
· Today’s release of June NODX validates our argument and we still maintain our positive outlook on the overall NODX expansion for 2017, supported by continued growth in electronics exports. However, we do not expect the strong double digit NODX growth since November 2016 can be sustained into the second half of 2017. This is especially since the current electronics cycle may be coming towards an end with the rolling out of the next wave of smartphones likely in 2H 2017.
- IESingapore (the trade agency) had in May revised their forecast for 2017 NODX to grow 4% to 6% from 0% to 2% previously, and we maintain our NODX growth forecast at 4.0%.
DBS Group Holdings (DBS SP/BUY/S$21.42/Target: S$25.25)
2Q17 results preview: Sequential pull-back from near-record earnings in 1Q17.
At A Glance
First REIT: 2Q17 DPU up 1.4% to 2.14 S cents.
Keppel Corp: Unit secures 2 technology solutions contracts for China waste-to-energy plants.
Keppel DC REIT: Posts 4.2% rise in 2Q17 DPU.
KIT: Posts 0.93 S cent DPU for 2Q17, unchanged from a year ago.
ST Engineering: To acquire US robotics firm Aethon for US$36m.
Sunpower: Secures contract worth Rmb65.9m.
Tiong Seng: In JV to develop Jervois Road residential sites.
Click on the link for detailsMONEY TALK
Keppel Infrastructure Trust (KIT SP)HOLD | Price/Tgt: S$0.575/S$0.54| Mkt Cap: S$2,218.0m
2Q17: Results In-Line; On The Lookout For AcquisitionsVALUATION
· Maintain HOLD; target price of S$0.54. Our target price remains unchanged, and is based on the discounted cashflow of KIT’s assets. This is based on a risk-free rate assumption of 2.5% and ~6% cost of equity. Current share price presents a yield of 6.5%.
· 2Q17 results in-line at S$38.7m distributable cashflow. Keppel Infrastructure Trust (KIT) reported distributable cash flows of S$38.7m for 2Q17 (26% of our full-year estimate). On a half-yearly basis, this represented 50% of our full-year forecast and in-line with expectations. Cashflows for each business units (BUs) were mostly in-line. Two changes noted for the quarter: 1) a step up in core rent for DC One (expiry of the first year rebate) and, 2) lower fees from CityNet which ceased being the Trustee-Manager of Netlink Trust on 13 Apr 2017.
· Distribution of 0.93 S cents announced. The quarterly distribution remains unchanged at 0.93 S cents. Payout is on 18 Aug 2017, with the ex-div date on 21 July 2017.
· City Gas reports higher cashflow of S$11.6m. This was higher than our average quarterly cashflow of ~S$10m per quarter, and was expected owing to the delay in gas tariff adjustment. The business unit (BU) achieved 100% plant availability during the quarter, and saw its customer base grow to 798,000 (+4.2%) in the quarter. Several of City Gas’ assets have fully depreciated, resulting in the substantially lower depreciation in 2Q17. This is expected to be the run rate going forward.
· DC One reports higher quarterly distribution of S$1.1m. This was up from S$0.45m in 1Q17, and was due to expiry of the rental rebate granted in its first year of operations.
· Still looking out for suitable acquisitions. KIT remains on a lookout for a suitable acquisition. Assuming it raises the maximum 20% of its market cap in equity, and leverages up to three times, its maximum acquisition size is ~S$1.2b. A rough calculation assuming these parameters requires KIT to minimally acquire an asset with ~2% cash yield to maintain its current distribution after share dilution. We estimate that every 1% increase in cash yield translates to 1-4 S cents rise in fair value. A sensitivity table of its fair value is provided below:
· Small tweaks to 2017-19 estimates. Our 2017-19 distributable cashflow estimates remain largely unchanged at S$149m (+1%), S$154m (+0%) and S$154m (+0%). We have adjusted our net profit numbers to account for other gains (losses) reported in 1H17.Click on the link for details.
Global Logistic Properties, the Singapore warehouse operator pursuing a sale, has picked a Chinese bidder consortium for final talks on a deal valuing the company at about US$10 billion (S$13.8 billion), people with knowledge of the matter said.The inv…
The FASTEST way to learn is when your money is in it. Before you make your move, read more, ask more and make friends.Make friends?!Yes, you will need a network of information to be ahead of news publications (if possible). That will give you an incred…
Noble seeks debt waiver from lenders
Commodity trader faces risk of breaching covenant on $1.1bn credit line
YESTERDAY by: Neil Hume, Commodities and Mining Editor
Noble Group, the Hong-Kong based commodity trader, has asked lenders to waive a debt covenant tied to a $1.1bn credit line that matures next year while it continues work on a plan to recapitalise the business.
Noble wants the banks to set aside the condition on the borrowing facility given the risk that a measure of net debt to earnings before interest, tax, depreciation and amortisation could rise above an agreed limit this year, according to people with knowledge of the discussions.
The approach to lenders comes just weeks after the crisis-hit trader was granted a four-month extension to repay or refinance another credit line.
Noble declined to comment on discussions with its lenders. Credit investors said they expected Noble’s lenders to grant the waiver.
Founded in the 1980s by former metals dealer Richard Elman, Noble rose to become one of Asia’s biggest commodity traders, helping to meet China’s seemingly insatiable appetite for raw materials.
But in recent years the company, which acts as a middleman for coal, iron ore and oil deals, has been hit hard by a downturn in commodity markets amid questions about its accounting.
Noble’s market value has collapsed to $600m from more than $11bn at its peak in 2011 as investors and analysts have doubted management’s ability to turn around the business.
In May, Noble announced a first-quarter loss of $130m, which it blamed on a “challenging” operating environment and unusual movements in the coal market. It also reported a 14 per cent increase in net debt to $3.29bn.
Over the past year, Noble has sold businesses, raised money from shareholders and replaced its chief executive. It has also been searching for a strategic investor to help recapitalise the business and manage its debt load. The company must repay or refinance $2bn of debt and loans over the next year.
But so far it has failed to find an investor and some analysts believe it will have to sell parts of its oil unit, one of its core operations. Paul Brough, who took over as chairman in May from Mr Elman, is leading a strategic review of the entire business.
Shares in Noble leapt 36 per cent to S$0.64 cents on Thursday on speculation that Noble had launched a formal sale process for its US oil division.
Noble, however, said it was not aware of any reason for the price rise in response to an inquiry from the Singapore stock exchange, where its shares are listed. The Financial Times reported in June that Noble had received unsolicited approaches for its oil business from industry rivals.
Even after Thursday’s rise, Noble shares are still down more than 90 per cent since early 2015 when Iceberg Research, a previously unknown research group, produced the first in series of reports highly critical of the company. Noble has always defended its accounting.
Copyright The Financial Times Limited 2017. All rights reserved.
- Smart money can load or unload according to their needs based on their private research.
- Brokerage houses continue to have ongoing businesses even the fees are lower than low as times go by.
- Retail traders still have their low fees for individual trading. And they are ok if they lose money in the market. But certainly not ok with high trading fees.
NetLink NBN Trust’s IPO: A Brief Walk Through History
Singapore Telecommunication Limited’s (SGX: Z74) associate, NetLink Trust, has filed its preliminary prospectus to list on the Singapore stock exchange as NetLink NBN Trust.
NetLink Trust is a business trust that was established under IMDA’s (Info-communications Media Development Authority of Singapore) effective open access requirements for Singapore’s NextGen NBN initiative. Singtel’s stake in NetLink Trust can be considered to be unconventional. The unusual arrangement and the trust’s IPO can be traced back its history.
With that in mind, let’s take a quick look at the trust’s history.
A long, long time ago …
The history of NetLink NBN Trust can be traced back to a consortium called OpenNet.
OpenNet was owned by Singtel, Axia NetMedia Corporation, Singapore Press Holdings (SGX: T39), and SP Telecommunications. Singtel and Axia had a 30% stake each while SPH had a 25% stake. The remaining 15% was with SP Telecommunications.
In late 2008, OpenNet was designated as the “Network Company” after winning a competitive tender to design, build and maintain passive infrastructure in Singapore. In conjunction with the tender, Singtel committed to transfer infrastructure such as manholes, ducts and exchange buildings to OpenNet. Allen Lew, who was Singtel’s CEO Singapore back then, said:
“… passive network assets like ducts and manholes will no longer be a telco’s competitive advantage as every service provider has equal access to the infrastructure.”
With that, OpenNet would be tasked in building a ultra-high-speed broadband network that would connect all physical addresses in Singapore and its connecting islands.
This valuable access will be sold to service providers and telcos.
Along came Netlink Trust (and controversy!)
In 2011, NetLink Trust was established. Singtel had full ownership of NetLink Trust and transferred its underground ducts, manholes and central offices into the trust. These infrastructure assets were used to support OpenNet’s fiber network deployment.
But it was a strategic move in 2013 that had Singtel’s rivals up in arms.
In 2013, NetLink Trust proposed to acquire OpenNet (through its trustee CityNet). Seven opposing companies, including Singtel’s rivals M1 Ltd (SGX: B2F) and StarHub Ltd (SGX: CC3), released a strongly worded statement against the acquisition. The group said:
“We must respectfully dismiss any suggestion that CityNet will be a ‘neutral’ or ‘independent’ entity that will serve the best interests of the industry. On the contrary, under the Act, CityNet is obliged to put SingTel’s interests ahead of its own.”
In its defense, CityNet said:
“There are safeguards in place to prevent SingTel from having control over NetLink Trust. CityNet’s independence is also preserved by a majority-independent board and a professional management team.”
Singtel also added its voice, saying:
“NetLink Trust and CityNet operate within a strict regulatory framework that ensures open access to the Next Gen NBN fibre network and regulated pricing to all industry operators.”
Ultimately, the Infocomm Development Authority of Singapore (IDA) approved the deal, but it came with caveats to address concerns raised by Singtel’s competitors.
For one, Singtel will relinquish its role as OpenNet’s key subcontractor and transfer all relevant personnel into OpenNet. NetLink Trust will also receive all assets under OpenNet. Most crucially, Singtel is also mandated to divest more than 75% of its holdings by April 2018.
And that brings us to the present day with the NetLink Trust IPO.
As you can see, the roots of NetLink Trust’s IPO can be traced back to OpenNet and the controversy behind NetLink Trust’s acquisition of OpenNet. In the trust’s preliminary IPO filing, Singtel indicated that it will be maintaining a 24.99% stake in NetLink NBN Trust after the IPO.
For more investing insights and to keep up to date on the latest financial and stock market news, you can sign up for a FREE subscription to The Motley Fool’s investing newsletter, Take Stock Singapore.
We are currently having book building exercise for NetLink NBN Trust (“NLT”) IPO. The Company preliminary prospectus web-link are attached at the bottom of this email for your information please.
For those interested to participate in this exercise, please email the required information stated below to me
1. TR code:
2. Client code:
3. Client name:
4. Indicative demand [ units ] :
5. Offering price: S$0.80 to S$0.93 per unit
1) Book building exercise is scheduled to close on the 7 July 2017 (Friday), at 12 pm.
2) To avoid duplicate order, please email your order once only.
3) IOI must be reflective of the clients’ true demand. No withdrawals or amendments to the IOIs will be permitted after the book is closed.
4) 1% brokerage plus GST is chargeable for allocable demand.
5) Allocation result will be communicated via email after the prospectus is registered with MAS.
ISSUER : NetLink NBN Trust (“NLT”)
TRUSTEE-MANAGER: NetLink NBN Management Pte. Ltd.
SINGTEL STAKE POST IPO: 24.99% before exercise of over-allotment option
LISTING : Mainboard of SGX-ST
LISTING CURRENCY: SGD
KEY INVESTMENT HIGHLIGHTS:
More detailed information on NLT business description can be found in the preliminary prospectus lodged with MAS dated 27 June 2017
· Critical infrastructure enabling Singapore’s Next Gen NBN
· Resilient business model with transparent, predictable and regulated revenue stream
· Sole nationwide provider of residential fibre network in Singapore, an attractive market with high demand for fibre broadband services
· Well positioned to benefit from growth in the non-residential segment as the independent nationwide network provider
· Well positioned to capitalise on growth in connected services including Singapore’s Smart Nation initiatives
· Extensive nationwide network affording natural barrier to entry
· Highly scalable operations and credit strength support unitholder returns
· Experienced management team with proven track record
· Joint Global Coordinators and Issue Managers: DBS, Morgan Stanley and UBS
· Joint Bookrunners and Underwriters: DBS, Morgan Stanley, UBS, BAML, Citi, HSBC, OCBC and UOB
OFFERING PRICE RANGE: S$0.80 – S$0.93 per Unit
BASE OFFERING SIZE OF 2,898,000,001 units (appx $2,318.4m to $2,695.1m):
· Public offer of up to [S$250m]
· Over-allotment option (OA) of up to approx. S$100m: approx. 107.5m units to 125m units
TOTAL UNITS OUTSTANDING, POST OFFERING (ASSUME FULL OA OPTION EXERCISED): 3,971.5m units to 3,989m units
FORECAST DISTRIBUTION YIELD
· FP2018E: 4.73% to 5.50% (annualized);
· FY2019E: 4.99% to 5.80%
All distributions are exempt from Singapore tax for all investors
MARKET CAPITALISATION (BASED ON OFFERING PRICE RANGE): S$3,091.2m – S$3,593.5m
LOCK-UP: 6 months (from Listing Date) lock-up for the Trustee-Manager, Singtel and HoldCo
USE OF PROCEEDS:
· Settlement of the cash component of the aggregate consideration payable to Singtel for the acquisition of 100% units of NetLink Trust (NLT) by the Trust;
· Repayment of the principal amount of S$1,100,000,000 due and owing under the facility agreement with Singtel;
· Funding the consideration for the purchase by the Trust Group of approximately 27,000 lead-in ducts from Singtel;
· Funding the consideration for (a) the purchase by the Trust of the shares of NLT Trustee and (b) the purchase by Unitholders of beneficial interests in the Trustee-Manager;
· Payment of the equity issue expenses and other costs
· If the over-allotment option is exercised in full, the additional proceeds may be used for capital expenditure and general corporate purposes
· Books open: 27 June, 2017 upon MAS lodgment
· Books close: 12pm, 07 July, 2017 or subject to notification by the Bookrunners
· Pricing & allocation: 10 July, 2017
· MAS registration: 10 July, 2017
· Singapore Public Offer: 10 – 17 July, 2017
· Listing: 19 July, 2017 at [3PM]
SELLING RESTRICTIONS: Regulation S, Cat 1.
END PLACEE BROKERAGE: 1.0% & applicable GST payable by all investors in the Placement Tranche
MULTIPLE APPLICATIONS: Multiple applications are allowed between the Placement and Public Offer Tranches
Details as above.Interested friends, please drop me a message to open this trading account.Be sure to catch this offer before it closes.