Author: tfwee
Hyflux Water Trust – BT
Hyflux to list trust based on China water plants
SINGAPORE – Water treatment firm Hyflux said on Thursday it will set up a business trust that includes 13 China water treatment plants to be floated on the stock market in a deal that a source said would be worth more than US$100 million.
Hyflux plans to list the trust on the Singapore stock market by the end of this year. Called Hyflux Water Trust (HWT), the entity will own 13 plants with a total daily capacity of 445,000 cubic metres. The trust will also have right of first refusal on all other water assets owned by Hyflux, the Singapore company said in a statement.
Hyflux will retain between one-quarter and one-third of the trust after the IPO, it added.
The spinoff of the plants into a business trust will enable Hyflux to achieve its asset-light strategy and allow it to use its capital for expansion elsewhere, Hyflux Chief Executive Olivia Lum said.
Hyflux had previously assigned first right of refusal to CitySpring Infrastructure Trust, which earlier on Thursday said the agreement had been called off by mutual consent.
HWT will be headed by Saud Ibne Siddique, while Hyflux Chief Financial Officer Grace Goh Bee Kheng will take care of the trust’s finances after resigning from Hyflux.
Shares of Hyflux rose as much as 4.12 per cent to a two-year high of $3.56 with 2.3 million shares traded when they resumed trading at 2pm. — REUTERS
Rickmers – SGX
RICKMERS MARITIME SECURES GROWTH FOR 2008 WITH ACQUISITION OF FIVE 4,250 TEU CONTAINER VESSELS
Ten-year time charters to major Japanese shipping company
Acquisitions expected to be yield-accretive
Provides near term expansion of fleet capacity
Singapore, 11th October 2007 – Rickmers Trust Management Pte. Ltd. (“RTM”), the trusteemanager of Rickmers Maritime, is pleased to announce that it has entered into a memorandum of understanding (“MOU”) to acquire five 4,250 TEU container vessels (the “Vessels”) from Polaris Shipmanagement Company Limited pursuant to the right of first offer granted to RTM under the Omnibus Agreement dated 24 April 2007 entered into by (1) RTM (acting on behalf of Rickmers Maritime), (2) Rickmers Holding GmbH Cie. KG, (3) Pacific Holdings International GmbH & Cie. KG and (4) Mr. Bertram R. C. Rickmers. The new acquisitions are in addition to the recently announced acquisitions of four 13,100 TEU and four 4,250 TEU container vessels, which together will increase Rickmers Maritime’s current total contracted fleet capacity by 220% from 40,910 TEU to 131,560 TEU.
The five new Vessels are scheduled to be delivered between June 2008 and February 2009 from Dalian Shipbuilding Industry Co., Ltd. (“DSIC”) shipbuilding facilities in Dalian, the People’s Republic of China (“PRC”). DSIC is one of the leading state owned shipbuilders in the PRC with whom the Rickmers Group have concluded a number of newbuilding contracts in the past. The purchase price of each vessel is US$72.0 million, to be paid upon delivery of the respective Vessels to Rickmers Maritime.
Each vessel will commence service upon delivery with ten-year, fixed-rate time charters to MOL, Tokyo (the “Charterer”). MOL is one of the largest vessel operators in the world, operating in excess of 800 vessels, including about 120 containerships. The Vessels have been chartered out at accretive hire rates, which for competitive reasons cannot be disclosed at this time.
The Vessels will be of identical design to Rickmers Maritime’s current fleet of 4,250 TEU vessels, and this is expected to result in economies of scale and operating efficiencies. Rickmers Maritime expects to have 15 of these sister vessels in operations at the end of 2009.
Each of the Vessels will be 260 metres in length, 32.25 metres in breadth and will have a cargo carrying capacity of 50,000 metric tonnes. The MAN B&W 49,720 horsepower fuel-efficient engines will allow each vessel to sail at a service speed of 24.5 knots.
The Vessels are among the nine 4,250 TEU vessels that were disclosed in Rickmers Maritime’s Initial Public Offering Prospectus1 as falling under the right of first offer granted to RTM through Rickmers Group. These Vessels will provide a boost to Rickmers Maritime’s already fastgrowing fleet capacity.
Mr. Thomas Preben Hansen, Chief Executive Officer of RTM said: “With the acquisition of the five vessels we can present our investors with a pearl string of accretive deliveries throughout the next three years while bringing further Asian flavour to our valuable portfolio of highly reputable container liner shipping companies. MOL ranks among the world’s top carriers and we are privileged to have entered into this long-term contract with them.”
Mr. Quah Ban Huat, Chief Financial Officer of RTM, added, “Although it has been less than 6 months since our listing, we have delivered and will continue to deliver on our promise of growth through accretive acquisitions. With the vessel acquisition announcements made so far, we will have visible earnings for years to come. Once delivered, the five new vessels will contribute approximately US$49m per annum of charter hire revenue to the trust.”
The purchase of the Vessels is subject to the entry into of Memorandum of Agreements. The transaction will be classified as an interested person transaction under the Listing Manual of the SGX-ST and is subject to the approval of Unitholders at an extraordinary general meeting (“EGM”) to be convened. A circular in relation to the acquisition containing more detailed financial information, a notice of the EGM and the recommendation of the audit committee will be dispatched to Unitholders in due course.
Source : SGX
K-REIT – SGX
Continued Positive Growth in Net Profit and Distributable Income
- Net Profit increases to $11.8 million for the first nine months of 2007, outperforming the same period last year by 46.6%
- Higher rental income pushes up Distributable income by 34.8% to $14.9 million for the nine month period to September 2007.
- Distribution Per Unit (DPU) amounts to 6.14 cents for the year to date 2007, which works out to annualised DPU of 8.21 cents.
- Portfolio’s committed occupancy remains strong at 99.6% as of 30 September 2007.
Consistent Improvement in Performance
K-REIT Asia Management Ltd, the manager of K-REIT Asia, is pleased to announce that K-REIT Asia achieved a distributable income of $14.9 million for the period from 1 January to 30 September 2007, up 34.8% from the same period in 2006. Backed by higher occupancy and rental rates, rental income was higher at $28.3 million. This in turn pushed up property income by 17.7% year-on-year to reach $29 million.
DPU continued to improve with the rise in net property income and distributable income. DPU
increased by 4.2% from 2.14 cents in 2Q2007 to 2.23 cents in 3Q2007. For the first nine months of 2007, DPU amounted to 6.14 cents and 8.21 cents on an annualised basis.
Execution of Growth Strategy with Maiden Acquisition
K-REIT Asia has proposed to acquire a one-third interest in One Raffles Quay (ORQ) from Keppel Land for $941.5 million. The strategic acquisition will more than double K-REIT Asia’s portfolio size to $1.76 billion and will further strengthen its position as a premier office-focused commercial REIT in Singapore. In addition, yield accretion from the acquisition of the ORQ stake will benefit unitholders with a higher distribution payout. The acquisition is subject to the approval of shareholders of Keppel Land and unitholders of K-REIT Asia at their respective Extraordinary General Meetings to be held on 11 October 2007.
The manager will continue to actively seek acquisitions of prime commercial properties in Singapore and other Asian growth cities to further grow K-REIT Asia’s portfolio size to a targeted $2 billion. KREIT Asia will also identify possible asset enhancement initiatives to add value and achieve better returns for its existing properties.
Rosy Office Market Outlook Suggests Further Rental Growth
The Singapore economy continues to expand at a steadily pace and the Singapore government has earlier revised upward its GDP growth forecast for 2007 to 7 – 8% from 5 – 7% previously. Economic growth is now more broad-based, driven particularly by the construction, manufacturing and financial services sectors.
Demand for prime office space is expected to remain strong with continued economic growth, sound business prospects and further expansion of the financial services sector. As such, prime office rents are expected to increase further, especially when new office supply in the central business district (CBD) remains scarce over the next two to three years. With demand surpasses supply, prime office rents edged up further to $12.60 psf in 3Q2007 from $10.80 psf in 2Q2007 and $6.90 psf a year ago.
The buoyant prime office market will continue to augur well for K-REIT Asia, given its portfolio of quality office buildings in the CBD and the new downturn at Marina Bay following the acquisition of the one-third stake in ORQ. With about 70% of the portfolio’s net lettable area due for renewal between 2008 and 2010, K-REIT Asia is in a good position to ride on the rising rental market, underpinned by strong underlying demand and tight supply.
Source : SGX
Shipping Trusts – DB
Laggards with yield and growth
Buy FSLT and Rickmers
FSLT and Rickmers have lagged the STI by 17% and 14%, respectively, over the last three months. In FY08, we expect FSLT’s yield of 12% to be the highest among Asian stocks that DB covers. Rickmers’ 8% yield is not far behind. Further, we expect acquisitions to see DPU growth of 22% for FSLT and 10% for Rickmers during FY07-09. We prefer FSLT because of its superior yield and forecasted DPU growth.
Steady cash flow from acquisitions; Second hand vessel prices may surprise.
Cash flows are backed by LT contracts with the earliest expiry in seven years time and not affected by rate volatility. Experience in the US indicates that yield compression will happen as dividend accretive investments are made. There is also an under-appreciated possibility that second hand vessel prices may actually go up in situations of tight demand and limited supply, enhancing book value. We estimate that FSLT’s book value is 10% understated because of the rise in bulk vessel prices.
Under-researched laggards; Management keen to see share price perform.
We think there is great room for the laggard performance to turn around over the coming 12 months, especially since this sub-sector still appears to be underresearched, with only three brokers covering FSLT and Rickmers. In our view, managements of both FSLT and Rickmers seem committed to seeing the share price better reflect the underlying value, therefore enhancing the equity fund, raising options in the future.
DCF valuation and yield; Key risk is credit risk.
The two key valuation matrices we have employed are DCF and dividend yield. We have valued FSLT at US$1.10/share based on an assumption of US$200m worth of acquisitions in each of FY08-09. This translates to a yield of 9% in 2008. For Rickmers, the acquisition pipeline is more visible and we have assumed that it increases its capacity by 2.9x by end 2010. We have a TP of S$2.25/share, which is based on DCF and would imply a FY08 yield of 5.8%. The key risk to shipping trusts relates to credit risk of the charterers. Future cash flows will be in jeopardy
if one of the clients of the vessels does not pay charter fees.
Suntec – SGX
RESULTS OF EXTRAORDINARY GENERAL MEETING HELD ON 8 OCTOBER 2007
(a) the proposed acquisition of a one-third interest in One Raffles Quay;
(b) the proposed issue of up to S$450,000,000 aggregate principal amount of S$ denominated
convertible bonds;
(c) the proposed issue of consideration units to the vendor;
(d) the proposed general mandate for the issue of new units and/or convertible securities; and
(e) the proposed supplement to the trust deed in connection with the valuation of real estate,
as set out in the Notice of EGM dated 18 September 2007 were passed by the unitholders of Suntec REIT at the EGM held today.