News headlines

Ezion is issuing S$125m of 7.8% subordinated perpetual securities under its S$500m Multicurrency Debt Issuance Programme. Distributions are semi-annual, cumulative, and redeemable in 2015. A stepup in the interest rate will occur if the securities are not redeemed. This is a hybrid debt-equity instrument, and its classification as equity on the balance sheet will help to reduce current gearing and provide more headroom to finance growth in its lift-boat fleet. This is an essential step in financing the high pace of growth in Ezion's fleet to take advantage of the blue-ocean market environment today and extend its lead in its fleet of lift-boats before new entrants arrive. We believe that there is a strong likelihood of near-term share price catalysts in the form of new contracts following this development.

Cambridge Industrial Trust (CIT)

As previously announced on 2nd and 24th May 2012, Cambridge Industrial Trust (CIT) has joined with other owners of Lam Soon Industrial Building to undertake an ‘en-bloc’ sale of the entire property at an indicative pricing of S$330m (equivalent to an estimated S$950 psf) – 2.5x the valuation of the property on books. Located in Hillview, Upper Bukit Timah, Lam Soon Industrial is a 230,915 sq ft freehold site zoned for residential use with a gross plot ratio of 1.92x. With regards to this matter, CIT has just announced that despite good interests on the property, a mutually agreeable pricing could not be reached and hence the en-bloc sale would not be carried out. Although this is a freehold piece of land, the indicative price may be on the high side after taking the development cost into consideration. Although CIT could have greatly benefitted from this sale, we believe CIT would continue to grow via other acquisitions and AEIs going forward while the management awaits a better time before

carrying out another en-bloc sale. Maintain BUY on CIT with a DDM-based (COE: 9.8%, terminal growth: 1.0%) TP: S$0.660.

Selling price might be higher than what the developers are willing to pay. At S$330m, the indicative selling price translates to 2.5x the book value (for 79% ownership) of the property as per December 2011. Assuming a development cost of S$300-400 psf, the total cost of construction could add up to approximately c.S$1300-1400 psf. With the current selling price of S$1400-1600 psf for the residential development across the road of Lam Soon Industrial, coupled with uncertainty in the residential market, we believe the profit margin for developing this particular property may be too low for developers’ consideration.

CIT continues to remain attractive. With an estimated cap rate of 5.2% on this building, CIT could have greatly benefitted from this divestment. However, going forward, we expect CIT’s DPU to continue to remain strong from 1) additional contributions from its acquisitions, 2) resilient industrial rental rates coupled with average security deposits of 12.9 months, 3) the completion of the BTS project at Tuas View Circuit in August 2012 and 4) future AEIs in the pipeline. Maintain BUY on CIT with a DDM-based (COE: 10.7%, terminal growth: 1.0%) TP: S$0.660.

Ezra Holdings Limited on Thursday said its subsea construction division, EMAS AMC, had been awarded a contract by ABB, for the installation of subsea power cables at Troll in the North Sea. The contract is pursuant to an arrangement of strategic cooperation for subsea installation between the two companies and is part of ABB's second contract with Statoil, to supply subsea HVDC Light transmission systems to the Troll A platform in the North Sea.. (BT)

Singapore Technologies Engineering Ltd (ST Engineering) on Thursday said its marine unit has clinched shipbuilding and repair contracts worth about $179 million. The wins include a contract to build two additional offshore support vessels (OSVs) as well as a series of repair and upgrading projects. (BT)

CapitaMalls Asia Ltd on Thursday announced the acquisation of a new shopping mall in Wuhan, China - its third in the city. CapitaMalls Asia has signed an agreement to acquire the retail component of an integrated development (which also includes residential and office components), situated along Zhong Bei Road in Wuchang District. The shopping mall is acquired from a subsidiary of China Railway Construction Corporation (CRCC). On a completed basis, the total investment cost of the shopping mall is expected to be about 1.16 billion yuan (S$228.3 million), or about 16,354 yuan (S$3,229) per square metres (sq m) of gross floor area (GFA). Subject to planning approval, the eight-storey shopping mall will have a total GFA, excluding car park, of about 70,700 sq m. (BT)

The Singapore Exchange (SGX) has signed a memorandum of understanding with the Istanbul Menkul Kiymetler Borsasi (IMKB) to foster mutual cooperation towards the development of both exchanges and their respective markets. SGX said on Thursday that the MOU aims to foster closer collaboration in areas, such as promoting investment opportunities for market participants on both markets, and the sharing of knowledge, information and best practices. (BT)