Singapore Corporate News - 18 Jan 2008

SIAEC to extend contract with Cebu Pacific

SIA Engineering Company (SIAEC) has agreed to extend its maintenance contract with Philippine airline Cebu Pacific to cover an additional 18 Airbus A320/A319 aircraft. The deal is worth $116 million and will extend the current agreement between the two companies to 2018.

The 18 new aircraft are to join Cebu Pacific's fleet progressively over the next four years. The budget airline also has an option for another 10 aircraft.

SIAEC has been providing line, airframe and fleet management services to Cebu Pacific's current fleet of 14 A320/A319 aircraft since December 2004. The existing contract is worth $89.6 million.

Under the present arrangement, line maintenance and light checks are undertaken in Manila by an SIAEC subsidiary company in which Cebu Pacific has an equity share. Heavy maintenance checks are performed by SIAEC in Singapore.

'We are delighted that Cebu Pacific, a highly prolific and progressive airline in the Asia-Pacific, is extending the coverage and tenure of our maintenance agreement,' said SIAEC chief executive William Tan.

'This is testimony to the excellent working relationship we have established with our valued partner in the Philippines, in providing the airline with total solutions for its rapidly expanding Airbus A320/A319 fleet.

'The bundling of maintenance, repair and overhaul (MRO) services with our high value-add fleet management programme provides airlines with fully integrated maintenance solutions for all their engineering needs, and coupled with our dedication to on-time deliveries and leveraging our large base for economies of scale benefits, customers are able to achieve higher fleet operating efficiencies and cost savings,' Mr Tan said.

The transaction is not expected to have a material impact on the company's financial performance in financial year 2007-2008.

SIAEC's fleet management programme is a fast-growing business which it introduced a few years ago providing customers with technical support and engineering management, inventory management and 24-hour planning services. SIAEC now offers these services to seven airlines with a total of 48 aircraft.

Technics unit gets $22m contract

TECHNICS Oil & Gas said it has boosted its order book with more new contracts. Wholly owned subsidiary Technics Offshore Engineering Pte Ltd has secured a contract worth a total of $22 million for the overall design, procurement, engineering, construction and commissioning (EPCC) of natural gas booster compression systems, as well as the supply of operating spare parts for two years.

This brings the group's total outstanding order book to $110 million as at Jan 16, comprising work-in-progress carried forward to-date and new contracts signed, with the majority of these orders due for delivery in FY2008.

The latest contract features five packages of premier US-made compressor systems amounting to approximately 10,000 horsepower, driven by gas engines. When completed, the packages will be one of the largest gas compression systems to be packaged by the group.

Robin Ting, founder and managing director of the group, said: 'With the substantial portion due to be recognised in FY2008, this latest contract is expected to have material impact on Technics' earnings per share and net tangible assets for FY2008.'

Technics was recently upgraded to the mainboard of the Singapore Exchange.

Three Allco Reit properties gain $121m in value

ALLCO Commercial Real Estate Investment Trust (Allco Reit) said yesterday that the combined value of three of its property assets has jumped by $120.8 million or 12 per cent since the end of June last year, based on the latest revaluation.

The three properties are China Square Central and 55 Market Street in Singapore, and Central Park in Perth. Allco Reit owns the first two properties, and has a 50 per cent stake in the third.

This means that the total value of the trust's stakes in the three properties rose 36.8 per cent or $302.8 million over the full year in 2007. Their combined value at the end of December was $1.13 billion.

The Singapore properties were valued by Savills and the Perth property was valued by CB Richard Ellis.

'The most significant increases in this latest round of asset valuations were seen at China Square Central and 55 Market Street in Singapore,' said Nicholas McGrath, chief executive of Allco Reit. 'These assets increased in value by 17 per cent and 14 per cent respectively in only six months.'

China Square Central, 55 Market Street and Central Park have all achieved significant growth in value since end-June 2007, adding to earlier increases of 15 per cent, 43 per cent and 26 per cent respectively in the first six months of last year.

'The continued improvements to Allco Reit's underlying asset values are a direct reflection of (the trust's) asset management strategy, combined with underlying market rental growth across the Singapore and Perth commercial property markets,' Mr McGrath said.

Allco Reit's share price closed 1.5 cents lower at 80.5 cents yesterday. The trust's share price has fallen 10.1 per cent since the start of the year.

A-Reit's portfolio hit record occupancy of 99% at end-2007

ASCENDAS Real Estate Investment Trust (A-Reit) said yesterday its overall portfolio occupancy rate increased to a record 98.7 per cent at end-2007 from 96.1 per cent at end-2006.
The occupancy rate for A-Reit's multi-tenanted buildings rose to 97 per cent at end-2007 from 93.1 per cent at end-2006, the trust said.

Based on value, A-Reit's portfolio comprises 51 per cent multi-tenanted buildings and 49 per cent sale- and-leaseback properties.

A-Reit renewed and signed new leases including expansions amounting to a net lettable area of 46,933 sq m for the three months ended Dec 31, 2007. These leases represent 6.8 per cent of the net lettable area of its multi-tenanted buildings and annualised rental income of $11.1 million.

Total new leases including expansions for the quarter were 16,961 sq m - 28.7 per cent in business and science parks, 32.8 per cent in hi-tech industrial buildings and 38.6 per cent in two other sectors - light industrial and flatted factories and logistics and distribution centres. A-Reit said HansaPoint@CBP, a partial built-to-suit development project it undertook in November 2006, attained 100 per cent pre-committed occupancy during construction. The development is expected to be completed next month.

Looking ahead, demand for industrial space is likely to remain healthy due to multi-national companies setting up facilities in Singapore and the spillover effect from tight office supply in the central business district, A-Reit said.

But anticipated high supply of 702,000 sq m of logistics and distribution space in the next two years is expected to dampen rents, it warned.

AIS sees 1m new subscribers despite competition

Advanced Info Service PCL (AIS), Thailand's top mobile phone operator, yesterday said that it expected more than one million net new subscribers this year despite stiff competition.

'Competition should be rising this year,' vice-president Vilasinee Puddhikarant told reporters. 'Our new subscribers should increase more than one million and we are also working to keep our existing clients,' she said.

AIS estimated that it had about 24 million subscribers last year, when it aimed for five million new subscribers, Mr Vilasinee said.

AIS is 43 per cent owned by Shin Corp, controlled by Singapore's Temasek Holdings after the family of ousted prime minister and Shin founder Thaksin Shinawatra sold its controlling stake in the conglomerate in January 2006. Singapore Telecom also has a key stake in AIS.

After the sale, AIS was hit by a string of politically driven actions, ranging from a small boycott of Shin goods and services to a probe into whether Temasek's US$3.8 billion takeover broke laws limiting foreign ownership of Thai firms.

At 0736 GMT, shares in AIS, valued at around US$9.3 billion, were up 2.69 per cent at 95.50 baht and the overall market was up 2.63 per cent.

Hong Leong Asia sees 20% annual revenue growth

Singapore's Hong Leong Asia Ltd expects its revenues to grow by more than a fifth annually in the next two years, led by its building materials, diesel engines and home appliances, its chief executive officer told Reuters.

The holding company, which also runs industrial packaging operations, is looking at Vietnam for a construction property business and may enter Myanmar, Teo Tong Kooi said in an interview.

'We see at least 20 per cent revenue growth in the next two years,' he said during his visit to South Korea for a CNBC awards ceremony late on Wednesday.

A buoyant construction market in Singapore, led by casino and infrastructure projects, and Asia's resilient economy are behind his aggressive plans, as is the Singapore government's move to promote the island state as a financial hub, which is drawing professionals.

His forecast is above an average analyst forecast for a 13 per cent rise in sales to $3.4 billion in 2008 from $3 billion, according to Reuters Estimates.

But the company's net profit is projected to jump by a quarter to $116.7 million this year from last year's $93.4 million.

In the industrial packaging business, the company does not expect to post significant growth amid stiff competition, he said, before adding: 'We hope through acquisitions, we can expand our growth.'

The CEO declined to give further growth forecasts.

OKP Holdings wins $7 million LTA tender

OKP Holdings said it has won a tender for the Land Transport Authority (LTA) involving construction of covered linkways, covers for pedestrian overhead bridges and bus shelters. The value of the contract is $7.067 million. The project is expected to be completed in July 2010 and is expected to contribute positively to the earnings per share of the company for the current financial year ending Dec 31, 2008.

BBR Holdings awarded $6m LTA bridge contract

BBR Holdings said that it has secured a $6 million contract from the Land Transport Authority (LTA) to upgrade vehicular bridges at seven locations in Singapore as part of LTA's ongoing efforts to enhance the load-carrying capacity of its existing bridges. Work is expected to start on Jan 28 and the works are expected to completed by end-March 2009, BBR said.

Vita Holdings' chief financial officer resigns

VITA Holdings said that its chief financial officer and company secretary Kwek Siew Hwee is leaving the company to 'pursue other career options' with effect from March 7. A new chief financial officer and company secretary will be appointed in place of Ms Kwek and a further announcement will be made in due course, the company said.

Ntegrator signs MOU with Surbana, Cellular Systems

NTEGRATOR International, a communications network specialist and systems integrator, yesterday announced that it has entered into a memorandum of understanding (MOU) with Surbana Technologies Pte Ltd and Cellular Systems International, a pioneering provider of cellular-based remote monitoring solutions based in Israel, to develop a centralised car park management system which will be marketed by the consortium in Singapore and the region.

Wilmar shares dive as China price curbs bite

Singapore-listed Wilmar International, a major supplier of edible oil to China, yesterday saw the worst fall in its share price in 11 months, after Beijing imposed curbs on prices to dampen inflation.

Makers and sellers of grain, cooking oil, meat, milk and eggs must seek approval for price rises, the country's top planning agency said on Wednesday, naming 12 companies including Wilmar.

The government 'could issue further documents and expand the list of goods and companies,' Chong Han Lim, a Singapore-based analyst at Merrill Lynch said in a report yesterday. 'If the vegetable oil price were to increase by one per cent and Wilmar could not pass it on at all, we estimate earnings could shrink by US$15 million.'

Wilmar dropped 37 cents, or 7.6 per cent, to S$4.49, the largest one-day decline at the close since February 2007, and was the worst-performing stock on the Singapore exchange.

Demand for food is rising as China prepares for the Chinese New Year next month, which is celebrated with communal feasts and gifts of packaged foods.

Inflation in the world's most populous nation soared to 6.9 per cent in November. A central bank survey showed last month that Chinese household concern over rising prices was at the highest since 1999. China last week announced a freeze on energy prices.

Prices of pork surged 43 per cent and beef climbed 46 per cent in the first 10 days of January from a year earlier, the National Development and Reform Commission said, citing results for 36 major cities.

'The reality is many domestic cooking-oil processors would have to operate at losses if they don't raise prices,' Tian Renli, general manager at Jiusan Oils & Grains Industry Group Co, said from Harbin.

'The government has never said it won't allow price increases. It knows that if the processors are pushed too hard, they'll be forced to shut down operations, which will have dire consequences on prices.'

Wilmar's stock decline 'has to do with the Chinese curbs,' said Por Yong Liang, an analyst at Lehman Brothers in Hong Kong. 'About 50 per cent of their business comes from China. If prices are frozen and if raw material prices go up, their profit margins might compress.'

In the first nine months of 2007, Wilmar's net profit doubled to US$346.42 million, on sales of US$9.97 billion. Its gross profit margin was 10.4 per cent, it said on Nov 14.