Company Briefs - 11 Jul 2007

CapitaLand tie-up to develop China malls

CAPITALAND has signed a cooperative agreement with China Vanke, China's largest residential developer, in a move that will increase the Singapore property giant's potential pipeline of retail mall assets in the country.

Under the agreement, CapitaLand and Vanke will jointly develop identified retail assets - for ongoing projects and upcoming ones - in Vanke's residential townships. These retail assets will then be acquired by CapitaLand 'at the appropriate time', the company said.

CapitaLand and Vanke will also employ the same partnership arrangement for potential greenfield residential township projects, which Vanke intends to continue building in China.

The retail assets could eventually be injected into CapitaLand's CapitaRetail China Trust (CRCT), which is made up of some of CapitaLand's retail assets in China.

'There is a possibility of them (the new retail assets developed jointly with Vanke) being ultimately injected into CRCT, but this will only be in the medium to long term,' said a CapitaLand spokesperson.

CapitaLand now has over 70 malls in its China portfolio, and this agreement is expected to add to the number.

'The partnership with Vanke is not only mutually beneficial but also a strong endorsement from China's largest developer of our retail property development and management skill sets, and on-ground delivery capabilities in China,' said Liew Mun Leong, chief executive of CapitaLand.

'In addition, by having our retail property presence in these townships, residents in Vanke's properties will enjoy even higher quality of living and there will be greater appeal for such developments among the local population.'

The joint venture is expected to raise the standards of residential township projects in China to be on a par with international township developments - where residential and retail components are well laid-out to allow residents to enjoy F&B and retail facilities within easy reach, said CapitaLand.

CapitaLand's shares closed 20 cents down at $7.80 yesterday.

F&N to seek strategic alliances overseas

WHEN one mentions Fraser and Neave (F&N), Tiger Beer and F&N canned soft drinks usually come to mind. However, some may not know that the 124-year-old, Singapore mainboard-listed conglomerate is also an international player in the property, publishing and printing sectors, in addition to their brewery and food and beverages businesses.

Started in 1883 by John Fraser and David Chalmers Neave to produce carbonated water for the Singapore and Malaysian market, the company only began to push its products beyond its two main markets in a big way from the early 1990s, executive director Anthony Cheong told BT in a recent interview.

'Given Singapore's small domestic market, growth for the group can only be achieved by extracting operating efficiencies, expanding into new markets and venturing into new businesses. In addition, expanding into new geographic regions also reduces our exposure to regional economic downturns, hence providing long-term sustainable earnings to our shareholders,' said Mr Cheong.

Just over half of the group's revenue came from overseas in 1992, but in the latest 1H2007 results released recently, almost two-thirds of F&N's total half-year revenue of $2.19 billion was from its international operations and sales.

In the brewery business, the company had interests in five breweries under joint venture Malayan Breweries in four countries - Singapore, Malaysia, Papua New Guinea and China - before 1990. To reflect the growing regionalisation of its business, the JV was renamed Asia Pacific Breweries (APB). Today, APB operates a global marketing network spreading across 60 countries. It is supported by 33 breweries in 12 countries, namely Vietnam, Cambodia, Thailand, India, New Zealand, Sri Lanka, Myanmar and Mongolia. The Indochina region has done particularly well, as it is now APB's largest revenue and profit contributor, noted Mr Cheong.

In the property unit, Frasers Centrepoint Ltd's (FCL) business has evolved from a single shopping centre along Orchard Road to a diversified real estate group, comprising shopping centres, residential homes and serviced apartments.

Its international arm, Frasers Property, is now involved in residential and mixed used projects in China, Australia, New Zealand, the UK, Thailand and Vietnam, while its Fraser Hospitality brand boasts a portfolio of gold-standard serviced residences in South Korea, Philippines, the UK, France, China, Australia and Thailand.

In publishing and printing, F&N has a global outreach through the Marshall Cavendish Publishing Group, which publishes a variety of educational, business and home reference books, and Times International Printing, one of the largest web offset printers in the region. Major magazine customers include international publications like The Economist, Time, Newsweek, Business Week, Fortune and Forbes Global.

Mr Cheong reckons that branding is one of the most important success factors for F&N. 'Over the years, F&N's effective brand strategy has given us a major edge in increasingly competitive markets. In essence, our brand is our promise to our customers that they can expect good quality and great-tasting products and services. It also differentiates our offerings from our competitors,' he said.

The group now manages a multibrand portfolio, targeted at distinct segments with unique value propositions. In its brewery business, for example, customers looking for a premium brew can look to their flagship brand, Tiger Beer, which is positioned as a premium pan-Asian brand, and Heineken, an international premium brew. Those who prefer a local brew can look to the other 40-plus beer brands - for example, in Shanghai, the REEB brand has been well-received; in New Zealand they have the Tui, Gold Export and Monteith's brands; while SP Lager, South Pacific Export Lager and Niugini Ice Beer have cornered the Papua New Guinean market.

However, there were some setbacks along the way for F&N. APB first ventured into China in 1988 by acquiring a stake in Shanghai Asia Pacific Brewery (SAPB) and to meet the growing beer demand in southern China, its first greenfield brewery, Hainan APB (HAPB) was built and commenced operations at end-1996.

After many years of losses, APB's China operations turned around in FY2006, marking a significant milestone for the group. The group's interest in Kingway Brewery and Jiangsu Dafuhao Breweries contributed positively to the bottom line, enabling the group's China brewery operations to turn profitable (at PBIT level) and poised for future growth. These positive results were powered by substantial brand investments and effective advertising in the years of operations, said Mr Cheong.

Currently, there appears to be no let up in overseas expansion by F&N's property division. FCL is developing a number of mid to high-end property projects in various countries. For example, it has started work on the SheShan Four Seasons residential development in Shanghai, and it will launch the City Quarter and Lorne Avenue residences in Sydney by 2008.

More recently, FCL announced its acquisition of a 5.7 hectare Carlton & United Breweries site in Sydney from Foster's Group, doubling its portfolio in Australasia to A$4 billion. The group is also looking to expand into the real estate sector of India and possibly Russia as well. On the other hand, Frasers Hospitality has secured overseas management contracts for developments in Seoul, Manila, London, Glasgow, Paris, Tokyo, Shenzhen, Shanghai, Bangkok, Beijing, Nanjing, Sydney, Switzerland, Bahrain and Dubai, and is expected to manage up to 6,000 serviced apartments by 2009.

In the brewery business, F&N's brewery count is expected to add up to 36 in 13 countries by 2008, with its recent joint ventures in India and Laos. 'We shall continue to seek strategic alliances and joint ventures with other business partners to take up new business opportunities overseas,' said Mr Cheong. 'In addition, we will increase speed to market by accelerating our expansion efforts, through acquisitions in the Asia Pacific.'