OCBC Q2 profit falls 8%, hit by poor result of insurance unit

Oversea-Chinese Banking Corp (OCBC), Singapore's second-biggest bank, posted an 8 per cent drop in quarterly profit, a below-forecast result after it was hit by lower contributions from its insurance unit.

OCBC earned S$597 million in the three months ending in June, compared with S$648 million a year earlier. The profit was below the S$643 million average forecast of six analysts polled by Reuters.

The poll was taken before OCBC's insurance unit Great Eastern Holdings posted a 77 per cent drop in quarterly profit after it was hit by the second-quarter market volatility that drove its non-operating business to a loss of S$155.6 million.

OCBC underperformed its domestic rivals DBS Group Holdings and United Overseas Bank, which both beat market expectations by posting net profit growth of 10 per cent and 9.9 per cent respectively.

"Despite the partial erosion to our earnings in the second quarter from the unrealised mark-to-market losses at our subsidiary Great Eastern, the momentum in our customer flow business remains strong," chief executive Samuel Tsien said in a statement. - Reuters

US rate futures traders see first Fed rate hike in early 2015

TRADERS of short-term US interest rate futures do not expect the Federal Reserve to lift its target for short-term borrowing costs until early 2015 after the central bank said on Wednesday it would keep up its bond-buying programme to help the economy.

Fed funds futures contracts added to losses after the Fed issued its statement at the close of its regular two-day policy-setting meeting.

The Fed said it will continue buying assets until there is substantial improvement in the labor market outlook, and said it would keep rates low until unemployment falls to at least 6.5 per cent as long as inflation does not threaten to rise above 2.5 per cent.

Futures prices before the statement suggested traders saw about a 51 per cent chance of a rate hike in January 2015.

After the statement the figure stood at 52 per cent, according to CME Group's Fed Watch, which generates probabilities based on the price of fed fund futures traded at the Chicago Board of Trade. Traders gave a 42 per cent chance of a hike in December 2014.

The Fed has held its target rate for overnight lending between banks near zero since December 2008. -Reuters

NewSat flags interest in Singtel's sale of Optus unit

Australian satellite communications company NewSat has flagged its interest in Singapore Telecommunications Ltd's A$2 billion (US$1.88 billion) sale of its Australian unit, Optus Satellite.

NewSat chief executive Adrian Ballintine said a number of private equity firms and investment banks have approached the satellite operator about potential partnerships.

"There is an opportunity for us to be a participant," Mr Ballintine was quoted as saying in The Australian newspaper on Wednesday.

"It's fair to say that we have been approached by numerous PE firms and banks to partner up," Mr Ballintine said. "We could also manage the process too, which would be interesting."

Private equity firms KKR and Carlyle Group are among the suitors lining up bids for Optus, people familiar with the matter have previously told Reuters.

SingTel, Southeast Asia's largest telecom operator, is battling tepid growth in its key markets of Singapore and Australia, and the funds raised from the sale would help it plough cash into faster-growing businesses.

France's Eutelsat Communications SA, Blackstone Group BX.N and Providence Equity Partners are also expected to bid, sources have said. SingTel is inviting first round offers by June 14, one of the people said. -Reuters

SPH up 3.9% after REIT plan

Singapore Press Holdings Ltd shares rose as much as 3.9 per cent to a seven-week high of S$4.56 on Tuesday after it announced plans to establish and list a real estate investment trust.

SPH, which dominates newspaper publishing in Singapore, aims to make S$1.048 billion (US$829 million) by selling part of the REIT whose assets are two shopping malls, in what could be the city-state's third-biggest initial public offering this year.

SPH had said it would explore the possibility of setting up a REIT earlier this year but had not given any details until Monday's announcement.

SingTel’s Q4 profit falls 33% to $868mil on stake sale, taxes

Singapore Telecommunications, Southeast Asia’s biggest phone company, reported fourth-quarter profit fell 33% after taking a loss on a stake sale and paying higher taxes.

Net income declined to $868 million in the three months ended March from $1.29 billion a year earlier, Singapore-based SingTel said in a statement today. Sales fell 6.3% to $4.5 billion.

Higher earnings from SingTel’s affiliates in Indonesia and Thailand limited the impact of a falling contribution from Bharti Airtel in India, which posted a 49% drop in profit on higher interest and network costs. The Singapore phone company expanded fourth-generation services in the city-state in April and its Optus unit bought airwaves in Australia last week as they expand mobile networks to compete better.

The company said revenue this year will be little changed while earnings before interest, tax, depreciation and amortisation will rise by a “low single digit level”.

SingTel shares gained 1.8% to close at $3.99 in Singapore yesterday. The stock has climbed 21% this year, compared with a 8.4% advance in the benchmark Straits Times Index.

SingTel in March completed the sale of its 30% stake in Warid Telecom (Private) for US$150 million ($186 million) and will receive a 7.5% share of the net proceeds from any future sale, public offering or merger. It took a loss of $225 million from the deal.

The company had a one-time tax credit of $270 million last year from recognising an increase in the value of an asset transferred to an associate.

Del Monte buys 125,000 own shares

Del Monte Pacific Limited said on Wednesday that it has bought 125,000 of the company shares at 81.5 cents each yesterday.

The open market purchase, which cost about S$102,145, boosted the total number of shares purchased since the share buyback mandate was obtained, to 379,000 shares. This is about 0.029 per cent.

In April, the company announced plans to seek a dual listing in the Philippines.

The shares ended at 83.5 cents, up 3 cents on Tuesday.

Singpost full year earning drops

Singapore Post on Monday posted a 14.6 per cent year-on-year drop in net profit attributable to equity holders to S$26.1 million for its fourth quarter ended March 31, 2013.

This was despite a 25 per cent increase in revenue to S$182.5 million from a year ago. The boost resulted from the consolidation of newly acquired subsidiaries as well as contributions from e-commerce related activities across all business segments. Its new units included General Storage Company from February 2013 and Famous Holdings in March 2013.

However, operating profit still fell due to higher corporate costs for the group's transformation, higher property-related expenses and a one-off write-off of an intangible asset.

Excluding one-off items, namely the write-off of intangible asset, SingPost recorded an 18.7 per cent growth in underlying net profit from S$26.8 million to S$31.8 million for the quarter.

OCBC's Q1 net profit down 16% at S$696m

OCBC Group on Tuesday posted first-quarter net profit of S$696 million for the period ended March 31, 2013, 16 per cent lower from S$832 million a year ago.

Excluding gains from the divestment of non-core assets, core net profit after tax of S$696 million was 12 per cent lower year-on-year, compared to S$790 million in 1Q12.

The corresponding quarter a year ago had included significantly higher trading income and mark-to-market investment gains from the insurance business, OCBC said.

Net interest income of S$912 million fell 4 per cent from S$951 million a year ago, as revenue from asset growth was offset by the impact of lower net interest margin.

Non-bank customer loans grew 10 per cent from a year ago, with broad-based growth across consumer, corporate and SME segments in most key markets, it said.

Asset quality remained strong. The non performing loan rate was 0.7 per cent at end-March, an improvement from 1.0 per cent a year ago.

Annualised return on equity, based on core earnings, was 11.7 per cent, a drop from 14.7 per cent a year earlier.

Tiger's sale to Virgin gets nod, shares soar

After six months of suspense, Tiger Airways has finally got the green light to sell 60 per cent of its loss-making Tiger Australia to Brisbane-based Virgin Australia for A$35 million (S$44.5 million).

Australia's regulator, the Australian Competition and Consumer Commission (ACCC), yesterday gave the nod, saying "it will not oppose the proposed acquisition by Virgin Australia", and noting that Tiger Australia is unlikely to remain in the local market without the Virgin investment.

The carrier's stock jumped on the news, rallying as much as 12 per cent to 73.5 cents, before ending the day at 68.5 cents, up 4.6 per cent. Some 14 million shares changed hands.

Singapore trust tests investor appetite for $1bil IPO

Asian Pay Television Trust, an investment vehicle for one of Taiwan’s biggest pay-TV operators, has started testing appetite for an up to 1 billion dollar listing that is set to be the city’s second-biggest flotation so far this year.

The Taiwanese company plans to list in the form of a trust, people with knowledge of the deal said Wednesday. Singapore is a hub for trust listings, which appeal to investors seeking assured yields from investments rather than short-term capital gains. The planned initial public offering comes as several companies are considering relaunching IPOs in Singapore, encouraged by large share sales in Southeast Asia in recent months.

Taiwan Broadband Communications is owned by two funds managed by Australia’s Macquarie Group --the Macquarie International Infrastructure Fund, known as MIIF, and Macquarie Korea Opportunities Fund-- which plan to sell their stakes to Asian Pay Television Trust.

The trust has received listing approval from Singapore Exchange, and plans to release a preliminary IPO prospectus by mid-May, according to one of the people with knowledge of the deal. The trust would then start taking orders from institutional investors, ahead of a planned listing at the end of May, the person added.

A Macquarie spokeswoman declined to comment.

Established in 1999, Taiwan Broadband Communications is one of Taiwan’s biggest pay-TV operators and has an interest in five cable television networks in northern and central Taiwan, broadcasting to more than 1 million homes. The group also sells services like broadband internet access.

Singapore-listed MIIF said this month it plans to inject its 47.5% stake in Taiwan Broadband Communications into Asian Pay Television Trust for a minimum of $469.5 million. The fund will seek shareholders’ approval for the sale on April 30.

MIIF’s shareholders would stand to receive at least $0.408 per share if the fund successfully sells its stake. As of Dec. 31, Taiwan Broadband Communications accounted for 61% of MIIF’s portfolio value.

MIIF bought an initial 20% stake in Taiwan Broadband Communications in July 2007 and has spent $479.2 million to more than double its interest, according to its website. Macquarie Korea Opportunities Fund acquired a 60% stake in June 2008 from the formerly listed Macquarie Media Group for 392 million Australian dollars (US$506 million), and later sold part of its interest.

J.P. Morgan Chase & Co., DBS Group Holdings, CIMB Group Holdings and Macquarie are joint lead managers for the planned IPO.

Apart from Asian Pay Television Trust, several other companies are also pushing for listings in Singapore, encouraged by strong demand for multi-billion-dollar listings in the region earlier this year. Mapletree Investments. --a unit of Singaporean state-investment firm Temasek Holdings.--completed in March a US$1.3 billion IPO for a China-focused real-estate investment trust, and BTS Group Holdings PCL raised US$2.13 billion ($2.62 billion) via listing its skytrain business in Thailand earlier this month. Mapletree Greater China Commercial Trust’s offering was nearly 30 times subscribed, while BTS Rail Mass Transit Growth Infrastructure Fund’s IPO was also oversubscribed by multiple times.

U.K.-listed fund management and banking group Investec PLC plans to raise up to US$500 million by June through an IPO of an aircraft-leasing trust, while Japan’s Croesus Retail Trust is seeking to raise about US$300 million by listing some shopping malls, also by June, people with knowledge of the deals said earlier. The companies had planned listings last year, but pulled their deals because of weak market conditions and tepid investor demand.

Small cap rally, credentials boost SGX Q3 profit by 26%

SINGAPORE Exchange (SGX) is reaping the benefits of a small-cap rally and its growing reputation as a safe and efficient marketplace, posting its best quarter since the global financial crisis.

"The open interest in our derivatives business is a very good example of how the trust of the way we run a clearing house, the trust of the regulatory environment we're in, is starting to pay off," chief executive Magnus Bocker said yesterday. "It's more attractive to have your open interest here than some of the other markets that those products are trading."

The market operator posted a 25.6 per cent year-on-year jump in net profit to $97.7 million, or 9.13 cents per share, in the fiscal third quarter ended March. For the nine months to March, net profit rose 7.6 per cent to $248.3 million, or 23.24 cents per share.

SGX is recommending a dividend of 4 cents per share.

HSBC upgrades Singapore's market to Overweight

HSBC upgrades to Singapore's stock market to Overweight from Neutral for the second quarter. "With markets across the region stuck in a holding pattern, we believe Singapore provides a relatively safe haven," it says.

"Singapore is one of the more stable, low beta Asian markets with very low earnings volatility. The expected 2013 dividend yield of 3.5% -- with an appreciating Singapore dollar -- is in the upper end of the region's range, and one of the main attractions of the market."

HSBC notes mutual-fund investors have rotated to underweight Singapore equities in relative terms, with their exposure at a five-year low and sell-side analysts are increasingly bearish on Singapore equities.

It notes the market trades at 14.3x 12-month forward P/E, a 1% discount to the 10-year average; with the consensus EPS growth estimates at just 2.1% for MSCI Singapore, high risks to earnings appear priced in, it says. It has an end-2013 STI target of 3,800.

China Fishery raises takeover offer for Copeinca to match rival's bid

China Fishery Group on Thursday said it will up its offer price for Norwegian-listed Copeinca from 53.85 Norwegian krone to 59.7 krone, in order to match rival Cermaq ASA's competing bid of the same value.

China Fishery has also decided to extend the acceptance period of the voluntary cash offer to expire on May 10, 2013 at 21:00 (Central European time). It expects to settle the cash offer in early June this year.

The group's revised offer price extends also to the 11.7 million Copeinca shares newly issued to Cermaq.

China Fishery said it has received pre-acceptances and entered into call-option agreements for a total of 16.9 million Copeinca shares, or 24.1 per cent of Copeinca post-share-issuance to Cermaq.

ComfortDelgro acquires London Bus Business

ComfortDelGro is flat at $1.915, barely reacting to news it plans to acquire part of FirstGroup PLC's London bus business and assets for around $109.0 million.

An analyst notes the deal isn't really big enough to move the needle, with a likely 2%-3% impact to ebitda.He says the acquisition is in line with CDG's strategy to grow its overseas operations.

"They are already the fifth largest operator (in the UK). Acquiring more buses will improve economies of scale," he notes. Orderbook quotes suggest the stock isn't likely to break out of its $1.905-$1.915 intraday range amid relatively slim volume and as traders are shunning defensive dividend plays for the session.

Midas unit wins $17.3mil supply contract for new MRT trains

Midas Holdings says its subsidiary, Jilin Midas Aluminium Industries Co., has been awarded orders totalling $17.3 million from Alstom Transport S.A. to supply train car body module components for new trains on the Singapore North East Line (NEL) and Circle Line (CCL).

According to the orders, Midas will supply train car body module components for 18 train sets (1 train set = 6 train cars), or 108 train cars for the NEL, and 24 train sets (1 train set = 3 train cars), or 72 train cars for the CCL.

Patrick Chew, Chief Executive Officer of Midas, said, “Since 2004, we have successfully secured contracts to supply large section aluminium alloy profiles to manufacture body frames for the Singapore Downtown Line Project and Circle Line Project amongst others. We are pleased to have been awarded these orders from our long-standing major customer Alstom, testament to Jilin Midas’ technical capabilities both at home and abroad.”

In February 2013, Singapore’s Transport Minister announced that transport operator, SMRT Corporation, will spend about $1.75 billion from 2013 to 2019 to upgrade and purchase assets for its rail network. As part of this upgrade, SMRT will spend $750 million to purchase additional trains for its Mass Railway Transit and Light Rail Transit lines, including 24 new trains for the Circle line.

Delivery is slated to take place progressively from 2013 to 2015. These orders are expected to contribute positively to the Group’s financial performance for the financial years ending 2013 to 2015.