JES diversifying Into Surface Mining

VALUATION
• JES International (JES) is currently trading at an FY11 PE of 4.9x and P/B of 0.7x (as of end-Sep 13), based on Bloomberg. Its historical average PE and P/B since its listing in 2007 is 7.5x and 0.7x respectively.

INVESTMENT HIGHLIGHTS
• Potential investment of up to 30% stake in Mineriver Pte Ltd (Mineriver), a Singapore-based company that is the sole shareholder of Xinjiang Feng Li De Yuan Trading Co. Ltd, which holds mineral exploration rights in Xinjiang region in China. The concession area is approximately 21.5 km² with mineral assets that include magnesium oxide, silicon dioxide, iron (III) oxide and nickel. Surface mining (vs underground mining) on this area implies reduced extraction costs and a shorter extraction time.

• Independent report estimates 4.2b tonnes of mineral resources (measured and indicated) based on studies conducted on a 5 km² area. The in-situ value is estimated to exceed

Company highlights

Shareholders at an extraordinary general meeting unanimously approved Tiger Airways' sale of a 60% stake in the lossmaking Tiger Airways Australia to Virgin Australia for A$35m in cash. The deal now awaits an opinion, expected next week, by the Australian Competition and Consumer Commission (ACCC).

Rotary Engineering has clinched a $300m expansion project for Singapore oil trader Kuo Oil's Tankstore oilfarm here. It expects to start work immediately on the two-year project on Pulau Busing, located off south-west Singapore. The new win brings its current order book to approximately $750m.

 JES International is expected to incur a loss for FY2012. The Group has made prudent charges and provision for liquidated and ascertained damages over late delivery of some vessels and reduced contract prices for certain vessels.