Singapore shares may open higher on Wednesday after global markets rallied on strong manufacturing data and easing concerns about the Middle East, although volumes are expected to be light on the eve of Chinese New Year. Citigroup in a note its clients on Wednesday said ample global liquidity suggests continued Singapore dollar strength, low interest rates and buoyant commodity prices. Singapore’s benchmark Straits Times Index <.FTSTI> was up 0.16% to 3,184.74 points. Here are some stocks and factors to watch:
The following companies may have unusual price changes in Singapore trading. Stock symbols are in parentheses, and share prices are from the previous close. Singapore’s Straits Times Index gained 0.2% 3,184.74.
Cerebos Pacific (CER SP): The maker of Brand’s Essence of Chicken health tonic said net income in the three months ended December rose 16% to $42.6 million from a year earlier. The shares lost 1.2% to $4.87.
SATS (S58.SG) off 0.4% at $2.83, giving back some of yesterday’s 0.7% gain which came amid a weak market on news the company has completed the acquisition of Japan Airlines International’s entire 50.7% stake in in-flight caterer TFK Corp. for $122 million.
Phillip Securities, which has a Buy call and raises its target to $3.48, says the purchase is a proxy to growth at Japan’s Narita and Haneda airports.
SATS says its wholly-owned subsidiary, SATS Investments Pte Ltd (SIPL), has completed the acquisition of Japan Airlines International Co., Ltd’s (JALI) entire stake of 50.7% in TFK Corporation (TFK).
The purchase consideration of ¥7.8 billion ($122 million) was fully satisfied in cash and funded through debt. Following the completion, SIPL now owns 504,195 shares or a 53.8% stake in TFK.
BNP Paribas says SATS’ (S58.SG) buy of Japan Airlines 50.7% stake in TFK Corp for $122 million “strategically positive overseas endeavour.”
Stake buy is SATS’ first major M&A in recent years in in-flight catering segment, should provide entry into Japanese airline catering market, provide synergies with culinary operations, “which we think is a long-term positive for the group.”
SATS says wholly-owned subsidiary, SATS Investments, has entered into an agreement to purchase Japan Airlines International Co.’s (JALI) entire stake of 50.7% in TFK Corporation (TFK) for ¥7.8 billion ($122 million).
SATS (S58.SG) –0.7% at $2.84 in thin trade, hardly swayed by company’s decision to buy Japan Airlines’ entire 50.7% stake in airline caterer TFK Corp for $122 million.
Purchase marks SATS’ entry into Japan, in line with company’s active bid to develop presence beyond core Singapore, UK markets.
SATS (S58.SG) +1.8% at $2.84 vs STI +0.7, likely getting lift from Nikkei report company in final negotiations to buy Japan Airlines’ in-flight catering subsidiary, TFK Corp.
UOB KayHian, which has Buy rating, $3.07 target, says “SATS already has strong exposure to north Asia and if it manages to acquire TFK, it will reap substantial synergy and cement its status as Asia’s leading in-flight caterer.”
Adds, if reported Y10 billion buy price correct, would translate to around 0.5x sales, even 49% stake would be attractive 1x sales; SATS currently trades at 1.8x sales.
“If deal goes through, SATS would be re-rated upwards, could command a higher valuation than the ascribed 16x P/E.” SATS spokesman couldn’t be reached for comment; intraday high of $2.85, also 30-day moving average may cap for now; any further upside likely to hinge on confirmation of deal talks, pricing, likely synergies.
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Singapore shares may open higher today after Wall Street rallied overnight, as investors put aside worries about swirling global problems and focused on an improvement in the labour market and consumer sentiment. The following companies may have unusual price changes in Singapore trading today, say Bloomberg and Thomson Reuters. Share prices are from the previous close. Singapore’s Straits Times Index gained 0.3% to 3,137.01.
Palm-oil producers: Crude palm oil for February delivery rose 1.7% in Kuala Lumpur yesterday, snapping its two-day drop of 6.3%. Golden Agri-Resources (GGR SP), the world’s second- biggest palm-oil producer, advanced 3.7% to 71 cents. Indofood Agri Resources (IFAR SP), the palm-oil unit of Indonesia’s biggest noodle maker, jumped 4.7% to $2.65. Wilmar International (WIL SP), the world’s largest palm-oil trader, rose 0.2% to $6.03.
Notes EBIT off 4%, EBIT margin down 1.6 ppt on year, due to higher raw materials cost as food prices up due to poorer harvest, natural disasters; this mitigated by stronger Associates/JV contribution of $15.9 million (+51% on year).
Low volume suggests selling pressure not major, stock likely seeing some minor profit-taking after 5-day, 4.0% winning streak to yesterday; while solid outlook for aviation, tourism industry likely to underpin shares medium-term.
Singapore shares may rise on Wednesday, following gains on Wall Street overnight after a swing towards the Republicans in US elections lifted investor sentiment. But gains may be subdued ahead of the US Federal Reserve’s decision on further quantitative easing to boost the flagging economy.
Singapore’s benchmark Straits Times Index <.FTSTI> rose 0.41% on Tuesday to 3,205.28 points. Here are some stocks to watch according to Thomson Reuters and Bloomberg.
Marina Bay Sands and SATS have jointly introduced a new city check-in and baggage acceptance service – the first of its kind in Singapore – for hotel guests and visitors heading to Changi Airport.
With the launch of the Baggage Express service, Marina Bay Sands’ guests and customers departing on Singapore Airlines (SIA) and SilkAir flights can enjoy the convenience of checking-in at least three hours before their flights depart. They can receive their boarding passes and baggage claim tags at Marina Bay Sands. Checked-in guests can also proceed directly to clear immigration at Singapore Changi Airport and be at the boarding gate before it closes.
Singapore Airport Terminal Services (S58.SG) off 1.7% at $2.91 as investors sell on strength, with improvement in June-quarter results validating sustained share price run-up over last six sessions, says Dow Jones.
Stock still +5.3% month to date, holding close to yesterday’s 52-week high of $2.97. Support tipped at 10-day moving average, last at $2.85. Earnings for fiscal 1Q11 ended June +9.7% on-year at $44.3 million on higher revenue from both aviation, food businesses, as well as increased contributions from overseas associates.
SIA Engineering (S59.SG) poses biggest threat to Singapore Airport Terminal Services (S58.SG) if it secures ground-handling licence at Singapore’s Changi Airport, but overall impact on latter’s earnings could still be minimal, says UOB KayHian, according to Dow Jones.
UOB KayHian notes SIA Engineering, one of four companies short-listed for Changi’s third ground-handling licence, may be keen to expand into aircraft interior cleaning, area which SATS specialises in and accounts for $40–$50 million of SATS’ revenue, with Singapore Airlines (C6L.SG) accounting for bulk of this amount.
Singapore Airport Terminal Services (S58.SG) +0.7% at $2.81, hardly fazed by prospect of increased competition as Singapore launches second stage of two-phase tender to award third ground-handling licence for Changi Airport, says Dow Jones.
Changi Airport Group has shortlisted four companies — AirAsia (5099.KU), Aircraft Service International (ARI.XX), Jetstar, SIA Engineering (S59.SG) — to submit detailed bids. Tender closes Sep 17, with winner expected to start operation under 10-year licence in 1H11.
Phillip Securities upgrades Singapore Airport Terminal Services (S58.SG) to Buy from Hold to reflect improved outlook as tourist-arrivals to Singapore continue to increase, says Dow Jones.
Phillip notes: “With the opening of Resorts World Sentosa and Marina Bay Sands in February and April respectively, Singapore has entered into a new phase of growth as a tourism hub.”
