22 April 2014

Genting Singapore AGM - April 2014

Today I attended Genting Singapore AGM held at Resort World Sentosa Convention Center. Below are some of the keynotes taken from AGM:

  1. Jeju Integrated Resort is the next major project the group is working on. It is targeting more than 800 million population within 1 hour flight. The site of the Jeju integrated resort is 2.5 times bigger than Resort World Sentosa. It is expected to be funded through internal funding (about US$300 Million - US$500 Million) as well as the cash flow from residential project. According to the group, it is very hard to get onshore financing from Korea. It is coincidence with the proposed 1 cent dividend. 
  2. Chairman Tan Sri Lim mentioned that Genting Singapore is a growing company and hence it is necessary to retain earnings for future investment. He mentioned that the dividend payout will grow as and when the company financial condition is improved. 
  3. There are about 60 thousand members under the loyalty program. Currently the group is promoting the annual membership fees at S$150 per year. So it is another way for the group to receive additional cash flow as well as parts of the branding & customer loyalty efforts. 
  4. Chairman and CEO shared that it is part of the business requirement to set aside bad debt provision, especially for VIP customers division which taken into account for 50% of total revenue. It seems that the VIP customers would have a upper hand when they could actually receive preferable credits from most of the casino operators as they contribute the most of the total revenue of the group. Nonetheless, CEO stressed that they have certain credit risk policies (e.g. Know Your Client etc) to manage the risks.
  5. Jurong Hotel is targeted to be completed by 2015. 
  6. The reasons given by CEO that the remuneration were increased by more than 30% due to:
    • It is necessary to form and retain a sold team to manage the company in well condition, in long run
    • Tighter rules & regulation set by CRA  that require the board of directors to comply with, hence it is harder for BOD to follow it completely
  7. Universal Studio Singapore is currently fully managed by the company based on franchise model. The franchise term is 15 years and renewable after that. 
  8. The group is currently in preparation to participate in the bid of Japan casino license as Japan market is estimated 2 - 3 times bigger than Singapore market. 

My View
It is good time to buy if you are a long term investor who is targeting for long term growth instead of high dividend payout. However, you have to think twice if you are investor who targets on high dividend yield as it is lower than bank saving rate currently. As the company is investing heavily in Jeju IR project, I think the earnings would definitely grow and higher dividend payout would come later after the whole IR project is completed. 

Japan casino license is a big catalyst for the company. Nonetheless, it is too early to take it into consideration as it is still not in confirmed yet. 

As Singapore environment is different from Macau, hence it is difficult to compare Genting Singapore against its peers. Overall, I am still satisfied with company performance but it could always do it better. 

19 April 2014

Keong Hong - JV to develop hotel land (April 2014)

The Board of Directors of Keong Hong Holdings Limited (“Keong Hong” or the “Company” and together with its subsidiaries, the “Group”) is pleased to announce that Keong Hong Construction Pte Ltd (“KHC”), a wholly-owned subsidiary of the Company had entered into a joint venture agreement (“JV Agreement”) dated 11 April 2014 with Master Contract Services Pte. Ltd (“MCSPL”) and Asia Development Pte. Ltd. (“ADPL”) for the joint development of a hotel (the “Project”) located at ML/TS No.26 Lot No.: 10171P PL/PT/Parcel no: 883 East Coast Road (the “Land Parcel”).

MCSPL commenced its business in the facilities maintenance sector in 1993 and subsequently moved into the building and construction sector. It was awarded the highest grade of A1 in General Building (CW01) in 2009 which has allowed it to undertake larger and more complex projects. In 2011, MCSPL ventured into property development sector as a property developer of several projects. Some of its recent property development projects include Skies Miltonia (a joint venture with TG Development Pte Ltd), semi-detached houses at Wak Hassan Drive and a freehold industrial property at Upper Thomson.

ADPL commenced its business in the construction sector since 2006. They are involved in a wide range of projects, including purchase and developing of lands, construction of single and multi-family residences and renovation works. They are currently building and developing landed houses at Sophia Road, Springleaf Lane, Woo Mon Chew Road, Lorong Marzuki, Meng Suan Road, Berwick Drive, Moonstone Lane, Mayflower Avenue, Puay Hee Avenue and Carnation Drive.

Joint Venture Company

Pursuant to the JV Agreement, a joint venture company known as Katong Holdings Pte. Ltd. (the “JVC”) has been set up by the Joint Venture Partners (as defined below) with an issued and paid-up share capital of S$10 comprising 10 ordinary shares to undertake the development of the Project. The issued and paid-up share capital of the JVC will be increased to S$1,000,000 comprising 1,000,000 ordinary shares to be held by MCSPL, KHC and ADPL (collectively, “Joint Venture Partners”) in the following proportion:

- MSCPL 70%
- KHC      20%
- ADPL    10%

The Land Parcel was awarded by the Urban Redevelopment Authority (“URA”) to KHC and MCSPL
on 24 January 2014 for a tender price of S$352.8 million (“Tender Price”). Pursuant to the terms of
the JV Agreement, the Land Parcel will be assigned to the JVC. 75% of the Tender Price amounting
to S$264.6 million will be funded by bank loan(s) while the remaining 25% of the Tender Price has
been funded by shareholders' loans from the Joint Venture Partners in proportion to their equity.
Under the JV Agreement, MCSPL and KHC shall jointly appoint the project manager, main contractor,
and hotel manager, as well as establish a project group for the Project. The Project is planned to be
developed into a 500 to 600-room hotel with commercial space housing medical suites, offices as well
as retail and F&B space.

Funding and Financial Effects
The provision of the shareholders' loan by KHC was, and the setting-up of the JVC and the
subscription of shares in the JVC by KHC will be, funded through the Group’s internal resources
and/or bank financing, and are not expected to have any material impact on the consolidated net
tangible assets per share and consolidated earnings per share of the Group for the financial year
ending 30 September 2014.

Interests of Directors and Controlling Shareholders
None of the Directors or controlling shareholders of the Company has any interest, direct or indirect,
in the JV Agreement, other than through their respective shareholding interests in the Company.
None of the Directors or substantial shareholders of the Company and their respective associates are
related to MCSPL and ADPL.

My Notes
As Keong Hong is holding 20% of the JV, it needs to fund about S$18m in JV, and may provide loan to JV later on as and when the development kicks off. I believe that the gross development value would exceed S$1.0B as the land value is already at S$352.8M. This is the first JV Keong Hong involve in hospitality development and I think it is a good move for Keong Hong to tap on the strength of the JV partners to grow together in property development.

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16 April 2014

Yang Zi Jiang - Transformation in Progress - Apr 2014

I believe that some investors would still shy away from S-Chip, however, as one of the most established Chinese companies under Chinese businessman Mr. Ren with proven financial record since listed in SGX for more than 5 years, I do believe that Yang Zi Jiang is still one of the good companies listed here.

The company revealed its long term plan to diversify its business to real estate and logistic during AGM this year. I believe that this is a good move as it is having a huge cash piles and it could use it wisely on growing this money in longer run. Nonetheless, as this is a new venture, I believe the underlying business risk is higher as compared to its core business - Ship building.

Nonetheless, I believe that it can still maintain its 5 cents dividend for long run. Given the current share price of around S$1.10, it implies to about 4.5% dividend yield. I will keep it in my watch list for monitoring purpose.

Ezion - 100M shares placement - April 2014

Singapore, 16 April 2014 – Ezion Holdings Limited (“Ezion” and together with its subsidiaries the “Group”), a leading Singapore headquartered, Liftboat developer, owner and operator as well as offshore logistics support service provider, announced the subscription of 100 million new ordinary shares (the “New Shares”) by Asia Fountain Investment Company Limited, an indirect wholly owned subsidiary of Guoco Group Limited and GuoLine Capital Limited, an indirect wholly owned subsidiary of Hong Leong Company (Malaysia) Berhad for approximately USD155 million (the “Proposed Subscription”).

Owning one of the largest and most sophisticated class of Multi-Purpose Self Propelled Jack-up Rigs liftboats”) globally, Ezion today has operations around the world. It is one of the first to promote the usage of Liftboats in Asia, Middle East and West Africa. Ezion is also the market leader in Southeast Asia and Australia to have the experience and track record to handle offshore logistics projects in environmentally challenging conditions. Ezion expects to grow its fleet and capabilities significantly as it strives to achieve its vision to be a world-class corporation and the market leader in Asia Pacific.

Mr Chew Thiam Keng, Group CEO of Ezion said: “We are most happy to have the privilege of working with Tan Sri Quek Leng Chan, an esteemed and most well regarded global investor. On behalf of the Board and management of Ezion, I warmly welcome his investment. This investment will allow Ezion to leverage on our new shareholders’ extensive network of resources and vast experience, in particular in Asia, and to further expand our business in the vibrant offshore Oil and Gas industry. We also believe that the proceeds received from this investment will allow us to better position ourselves to meet the strong demand of clients for our product and services, balance our capital structure and allow us to keep up with the growth without having to raise further equity for at least the next 12 months based on current business prospects.

My Notes

This is a good move for Ezion management to further strengthen its leadership in niche lift-boat market in Asia market. This news followed the charter contract of US$82M yesterday. I believe that with Ezion fully utilizing its MTN programme, the last choice is private placement, which will dilute the EPS in future.

However, with Tan Sri Quek as substantial shareholder of Ezion, I believe Ezion's longer term outlook would be improved. I still believe that the company could achieve US$300M net profit by FY2016 with more projects on hand. Let's see if the company could clinch more projects for the rest of the year.

08 April 2014

3 Locations is considered for SG-KL high-speed rail terminal in Singapore - April 2014

Tuas West or Jurong East is likely to be one end of the Singapore-Kuala Lumpur high-speed rail that is due to roll out in 2020, Prime Minister Lee Hsien Loong said on Monday.

The city centre will also be considered as an alternative terminal station for the S$15.6 billion ($12.38 billion) project that is tipped to cut land travel time between Singapore and Malaysia to just 90 minutes, though it is a less likely option.
Source: http://link.reuters.com/fer38v

My View

This is good news for Singapore as well as Malaysia. I hope that Jurong East would be the terminal for high speed rail in Singapore as it is envisaged to be another "Tampines" in east side and it definitely would bring value to both citizens.

However, I hope that both governments could quickly give a confirmation of RTS system as it supposed to be confirmed the detailed plan by last year but postponed to this year. I personally think that it may take at least 4 years to build the link from Johor Bahru to Singapore (e.g. look at the example of KLIA2).

As the security check is getting stricter after some incidents lately, it takes at least 1 hour to clear both customs during peak hours.
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