Singapore Corporate News - 13 Mar 2008

APB slakes thirst of Laotians with new brewery

CEMENTING its presence in Indochina, Asia Pacific Breweries (APB) has opened a $49 million brewery in Vientiane, the capital of Laos.

The Indochina region is an important one for the group, accounting for about 48 per cent of APB's total profit before tax for FY2007/2008. With the new brewery in Laos, APB now has seven operating breweries throughout Indochina - five in Vietnam and one each in Cambodia and Laos.

APB hopes to muscle in on the Laos market, which is the stronghold of local brand BeerLao, which is owned by Carlsberg and the Laos government.

'Regional expansion has always been a critical cornerstone of APB's growth strategy as we work towards our aspiration of becoming the leading brewery group in the Asia-Pacific region,' said Koh Poh Tiong, chief executive officer of APB.

The potential of Laos' beer market is promising. The country's per capita consumption is 21 litres, and the beer market is growing at more than 10 per cent annually.

Laos' economy is also growing at 7 per cent per year. A population of six million people consume about 1.3 million hectolitres of beer annually.

The brewery is established by Lao Asia Pacific Breweries Limited (LAPB), a joint-venture company between APB (68 per cent), the Laos government (25 per cent) and SBK Consultant Ltd (7 per cent), and is the second brewer to be granted a beer investment licence by Laos. The other brewer is BeerLao.

The brewery churns out 300,000 bottles of beer a day and occupies a 13-hectare site. It will brew Tiger Beer initially and later also introduce other brands.

Tiger Beer will be priced at a premium over the local beer brands and will be marketed as an international premium beer, said Danny Chan, general manager of Lao APB.

He added that this investment is expected to see returns in about three years' time.

Mr Koh said: 'The realisation of APB's brewery in Laos provides an excellent platform to build its market position in a growing beer market; and, enables us to reinforce our leading position in the Indochina beer market.'

He added that it is a fulfilment of APB's long-standing ambition of having a brewery in each of the countries in Indochina.

The premises were officially opened yesterday by Wong Kan Seng, Singapore Deputy Prime Minister and Minister for Home Affairs, and Asang Laoly, Laos' Deputy Prime Minister and Chairman of the State Control Commission.

Mr Wong is in Laos on an official visit to sign a memorandum of understanding on enhancing cooperation to combat trans-national crime.

At a press conference yesterday, Mr Koh said APB's strategy to become the leading brewery group in the Asia-Pacific region has not changed, even with Simon Israel taking over as chairman of the company.

'Our strategy is still very clear, we want to be the leading brewer, with 33 operating breweries in 12 countries.' Laos is the ninth country in the Asia- Pacific region to brew Tiger Beer.

Goodman exit seen as chance for A-Reit expansion

IN A move that could pave the way for Ascendas Real Estate Investment Trust (A-Reit) to finally expand overseas, Australia's Goodman Group has exited the trust.

Goodman is selling its 40 per cent stake in the entity that manages A-Reit as well as a 6.28 per cent stake in the trust itself. The latter transaction is for $158.16 million or about $1.90 per A-Reit unit. The counter closed at $1.95 yesterday, down two cents.

The buyers in both transactions are fully owned units of Ascendas Pte Ltd, which will gain full control of the Reit manager, which will be renamed from Ascendas-MGM Funds Management to Ascendas Funds Management (S).

Ascendas' stake in A-Reit will also go up to 26.77 per cent.

An announcement last night put an end to speculation late last year that Goodman would exit A-Reit. Market watchers expected Goodman to sell its stake in the A-Reit manager when the Australian group was tipped to land the job of managing a proposed Reit that will hold some properties being divested by JTC Corp.

The strategy would have been to remove the conflict of interest of Goodman having an interest in two Singapore industrial Reit managers potentially competing for the same assets and tenants.

However, JTC eventually gave its Reit management job to Mapletree Investments in February. Although Goodman did not clinch that deal, some market watchers nonetheless welcome Goodman's exit from A-Reit's manager, as it paves the way for A-Reit to invest in properties outside Singapore.

A-Reit has never expanded overseas because of an understanding among the shareholders of the Reit manager to avoid conflict of interest, analysts say.

Goodman Group CEO Greg Goodman possibly hinted almost as much when he told BT last night that 'we have operations in the region, and so does Ascendas' and parting ways will minimise mutual conflict of interest.

Another important reason Goodman is exiting its involvement with A-Reit's manager is because 'our approach is that we prefer to have full control of any Reit manager we're involved with, and that's not possible in this case', Mr Goodman said.

However, the group is not bidding goodbye to the Singapore industrial property market.

'Goodman will re-enter the Singapore market at some point. We know this market well and we like it,' Mr Goodman said.

The group could invest in the Singapore industrial property scene again, possibly through its wholesale property funds, or development activity.

Order book swells for KSH and Lian Beng

RIDING the continuing boom, two construction firms announced big contracts yesterday.

KSH Holdings said it has won a contract worth more than $121 million for the construction of a luxury condominium, Seascape at Sentosa Cove, which is jointly owned by Ho Bee Investment and IOI Land.

And Lian Beng Group said it has been awarded two contracts worth $90.2 million in total - one from Voda Land for the construction of a condominium, Amber Residences, and the other for an industrial building at Paya Lebar iPark, awarded by Scorpio East Properties.

KSH said the Sentosa contract brings its construction order book to more than $614 million. Work on the 151-unit Seascape is scheduled to start next month and is expected to be completed in 28 months.

'This is our fourth high-end residential project at Sentosa Cove since The Berth By The Cove and The Berthside, which were awarded in June 2004 and completed in October 2006, and the fifth for us here including One°15 Marina Club,' said KSH executive chairman and managing director Choo Chee Onn.

KSH's order book has grown more than 162 per cent in less than 16 months, Mr Choo said.

Lian Beng said its two contracts bring its order book to about $700 million.

The Amber Residences contract is worth $73.5 million while the design-and-build contract for the building at Paya Lebar iPark is worth $16.7 million. Work on Amber Residences is expected to start in May 2008 and will be completed over 30 months, while the other contract is expected to be completed by early 2009.

Both companies are gunning for more contracts. 'The demand for construction services is still very strong, and there are many more projects out there for tender,' said Lian Beng's managing director Ong Pang Aik.

Analysts agree, saying that even as the property market takes a breather, the construction sector continues to recover, driven by a new phase of nationwide projects.

'We are still sanguine about the sector's prospects, given the development plans in place for the island, and the visibility it offers against the backdrop of uncertainty tainting the global economy,' Phillip Securities analyst Stella Tan said in a recent note.

KSH shares gained 1.5 cents to close at 41.5 cents yesterday, while Lian Beng's stock rose half a cent to close at 40.5 cents.

SembCorp signs MOU for Abu Dhabi utilities firm



SEMBCORP Industries (SembCorp) and the Higher Corporation for Specialised Zones (ZonesCorp) of Abu Dhabi yesterday signed a memorandum of understanding (MOU) to jointly establish what the two partners called a 'a world-class utility services company'.


The signing took place on the sidelines of a meeting of the Abu Dhabi-Singapore Business Forum, held at the Emirates Palace in Abu Dhabi.

'The new company is expected to provide highly efficient utility services to ZonesCorp's specialised economic zones and will significantly add to the attractiveness of the Emirate of Abu Dhabi as a location for establishing manufacturing and related industrial enterprises,' said a joint statement.

The aim is to provide efficient, centralised utility services, facilities management and one-stop customer relationship management to all of ZonesCorp's industrial and commercial tenants, including those in the Industrial City of Abu Dhabi (ICAD), the Al Ain Industrial City and the numerous worker residential cities currently under development.

The planned utility service company will work closely with relevant government authorities and other agencies to deliver the integrated supply of district cooling, chilled water, electricity, wastewater treatment and recycling, high grade industrial water, natural gas, industrial gases and solid waste management.

A state-of-the-art customer management and billing system for the supply of all utilities services will be implemented as a key part of the new company's operations, thus providing an additional one-stop service to ease the administrative burden on all of Zones-Corp's tenants, the statement added.

CWT opens $80m logistics hubs

LEADING logistics provider CWT is all set to ride on the petrochemicals boom with the investment of more than $80 million in two new integrated logistics hubs at Tanjong Penjuru which were launched yesterday.

The two buildings have about 850,000 sq ft of warehouse space and are Singapore's largest integrated facilities for the handling of hazardous and chemical goods. Easy access to port terminals and Jurong Island are also advantages. The space is fully taken up by about three key clients with BASF as the anchor client.

Many of the chemicals handling specialists were slow to get in on the third party logistics (3PL) bandwagon and as a result there is not much competition, said CWT group CEO Loi Pok Yen. 'We've focused on a few verticals and done very well,' said Mr Loi.

For example, CWT only has about five competitors in the chemicals logistics space and has about 50 per cent of the market. In commodities, meanwhile, there are less than 15 players that are seen as real competition.

But making this happen means making a commitment towards putting the infrastructure in place, Mr Loi said. He revealed that the current buildings are part of a larger plan to have 2.3 million sq ft of warehouse space available for these two sectors by 2009. The first phase of 1.1 million sq ft will be completed by next month.

'On the global stage, Singapore is often recognised as a leading logistics hub, because of its world-class port infrastructure and highly efficient customs,' said Minister for Trade and Industry Lim Hng Kiang at the opening ceremony. 'However, we must not and cannot rest on our laurels. Supply chains and trade patterns are always changing and Singapore must respond accordingly,' he added.

He highlighted three key initiatives the logistics industry should focus on. Firstly, there is a need to deepen integrated logistics capabilities to leverage on the growing logistics outsourcing trend. Secondly, specialised infrastructure must be developed. Finally, local companies must be groomed to become world-class. 'We often mention the fact that 21 of the top 25 3PLs globally have a significant presence in Singapore,' Mr Lim said. 'I am however, very pleased to learn of how our local 3PLs such as CWT, YCH and Freightlinks have been able to establish a brand-name for themselves within the region too.'

CWT manages more than four million sq ft of warehouse space in Singapore and the region with another three million sq ft coming onstream by mid next year. Expansion plans in the region include in China, India and Vietnam, said Mr Loi.

Wilmar shares up as China may lift price curbs

WILMAR International Ltd, the biggest vegetable oil supplier to China, saw its share price jump the most in more than two weeks in Singapore trading yesterday after the Chinese Ministry of Commerce said it may allow cooking oil retailers to raise prices.

China wants to increase supplies after price controls imposed in January cut the retail stockpile, Assistant Minister Huang Hai said. The government has asked Wilmar, Cofco Ltd and other companies to increase consumer sales, he said.

'That's a very good move,' Ivy Ng, an analyst at CIMB Research said in Kuala Lumpur. 'What people want to know is what is the increase and if it can offset the higher feedstock price.'

Record prices for palm oil and soybean oil are stoking gains in food prices globally, and led China to impose price controls to fight inflation. The policy reversal suggests the plan failed, and may bolster sales at companies including Wilmar.

Wilmar's share price gained as much as 30 cents, or 7.2 per cent, to $4.46, the biggest gain since Feb 25. It closed at $4.26, up 10 cents or 2.4 per cent.

China Agri-Industries Holdings Ltd, a unit of China's biggest grain trader Cofco, rose as much as 5 per cent, the most in three weeks, to HK$5.90 (S$1.05) in Hong Kong trading.

Dayen raising $50m through notes

DAYEN Environmental is raising $50 million through a proposed issue of convertible notes. It has signed a note agreement with Pacific Capital Investment Management. It plans to use the net proceeds to fund its growth strategy.

CityDev unit in Abu Dhabi JV

CITY Developments' wholly owned unit, CBM International, yesterday entered into an agreement with Gulf Industrial Services Co, a Bin Hamoodah Group company, to set up a limited liability joint venture company in Abu Dhabi. The agreement was signed at the 2nd Abu Dhabi-Singapore Joint Forum in Abu Dhabi. The JV, in which CBM International will have a 49 per cent stake, will provide integrated facilities management services and will tap into the facilities management market in the Emirates.

Pan Asian Water wins $33m jobs

PAN Asian Water Solutions yesterday announced $33 million worth of contracts secured in Vietnam and Singapore. In Vietnam, it won a contract worth $22.09 million from Salcon Engineering Berhad to supply ductile iron pipes, valves and fittings to the Nhon Trach Water Supply Project (NTWS) and another contract worth about $6.85 million from Kenh Dong Water Supply Joint Stock Co for supplies in the construction of the Kenh Dong Water Supply System Project. In Singapore, it won a $3.9 million contract from the Public Utilities Board (PUB) to supply butterfly valves and dismantling joints for the 80 km Newater infrastructure transmission pipeline system from Changi to Jurong.

US$29m deal for Swiber

SWIBER Holdings said yesterday it secured a letter of intent (LOI) from a company in Malaysia to provide offshore installation and engineering of pipelines for an oil company for US$29 million. This will be its third offshore contract secured from oil companies in Malaysia this year. The LOI is subject to approvals from relevant authorities and will boost Swiber's outstanding order book to US$506 million.