Tuesday, January 7, 2014

OCBC Report 8 Jan 14

KEY IDEA

Raffles Medical Group: Focus remains on Singapore

Raffles Medical Group (RMG) recently proposed to acquire a property which is located adjacent to Holland Village MRT station for a purchase consideration of S$54.8m. RMG intends to redevelop the property into a purpose-built five storey commercial building (expected total floor area of 62,720 sf), of which it will occupy 9,000 sf of space for its own outpatient medical and specialist clinics. We believe this will enable RMG to target the Holland Village community, which is largely made up of expatriates and the more affluent local population.  The total redevelopment cost is estimated to reach ~S$65m and we believe construction will take approximately two years. This acquisition will be financed with RMG’s internal resources (bolstered by its strong net cash of S$141.7m as at 30 Sep 2013 and recent asset sale) and bank borrowings. Maintain BUY and S$3.61 fair value estimate on RMG. (Wong Teck Ching Andy)

MORE REPORTS


Tiger Airways: Proposed sale of Tigerair Philippines stake

Tiger Airways Holdings (TR) has entered into a binding offer letter to sell its entire 40% stake in Southeaset Asian Airlines (SEAir), which has been operated as Tigerair Philippines (TRP), to Cebu Air for a consideration of US$7m (~S$8.9m). The proposed sale is conditional upon the sale by the other shareholders of SEAir of their stakes to Cebu Air. Based on the unaudited financial results for the six-month period from 1 Apr 2013 to 30 Sep 2013, the book value of TR’s investment in SEAir as at 30 Sep 2013 is nil. The excess of the consideration over the book value of SEAir is US$7m. Assuming that the proposed sale had completed on 30 Sep 2013, the estimated net loss arising from the proposed sale is S$13.5m, subject to any other accounting adjustments which may be necessary. The estimated net loss is derived by deducting the consideration of S$8.9m and the translation gain of S$2.0m from the amount required to settle the SEAir liabilities, forward sales and transaction cost aggregating S$24.4m. The estimated loss is roughly equivalent to less than two quarter’s losses from TRP’s operations, and we view the sale as an overall positive for TRP. We maintain our HOLDrating and fair value rating of S$0.55 on TR. (Sarah Ong)

For more information on the above, visit
www.ocbcresearch.comfor the detailed report.


NEWS HEADLINES


- US stocks rallied on Tue, helped by data showing a smaller-than-expected trade gap and gains by health-care stocks following an upgrade for UnitedHealth Group Inc.


- Singapore's container throughput hit a record last year, shrugging off another sluggish year for the industry.


- The distributor group behind the Lamborghini and Alfa Romeo brands is seeking a Catalist listing to raise about S$8.46m to expand its automotive and lifestyle businesses.


- Hiap Hoe is proceeding with its planned acquisition of SuperBowl Holdings at 75 S cents a share, with a view to taking it private.

- Long House Food Centre, a popular food centre along Upper Thomson Road, has a new owner, after being sold for S$45.2m.


- Teledata (Singapore) Limited is placing out up to 240m new shares in an exercise that will raise net proceeds of about S$2.33m.

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