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Author: kimeng   |   Latest post: Thu, 24 Apr 11:51

 

Ezra - The Small Cap Dominating a Quiet Market

Author: kimeng   |   Publish date: Wed, 29 Aug 10:15


Warrants Highlight

Ezra - The Small Cap Dominating a Quiet Market

Yesterday, the STI saw another low volume day, complete with a flat finish, as uninspired investors stay on the sidelines while awaiting the meeting of central bankers and economists later this week.

One stock however, traded more than twice its average volume this month. With 11.1mn shares changing hands, Ezra shares spiked another 2.8% yesterday to its highest close since July 12 at $1.09, bringing its returns in two days to 4.8%.

Macquarie’s Ezra warrants

Code Name Type Expiry Exercise Price
QD8W Ezra MBeCW121101 Call 01-Nov-12 1.10


Plans to list engineering and fabrication division
Interest in the stock soared after the company announced on Monday morning its plan to list its engineering and fabrication division, Triyards Holdings on the Singapore exchange.

Ezra is proposing to distribute Triyards shares by way of dividend in specie to Ezra shareholders. 107.2mn, or 33% of Triyard’s shares, will be issued to Ezra shareholders on the basis of one Triyards share for every 10 Ezra shares held. If the listing is approved and completed, Ezra will retain a 67% control in Triyards.

The listing will allow Ezra to focus on its subsea and offshore support services divisions while Triyards focuses on engineering and fabrication, enabling both companies to pursue growth opportunities separately.

In a different SGX announcement, Ezra said this morning that it has established a US$500mn multicurrency debt issuance programme. Net proceeds from the issue will be used to refinance existing borrowings, capital expenditure purposes as well as to finance general working capital.

What happens to Ezra warrants?
In the event Ezra pays out the 1-per-10 dividend in specie, Macquarie will make adjustments to all Ezra warrants so as not to disadvantage the warrant holder. As Macquarie buys Ezra shares as a hedge when investors buy Ezra call warrants, the exercise price and warrants per share for Macquarie’s Ezra call warrants will thence be adjusted to reflect the value from Macquarie’s sale of its received Triyards shares in the open market.

Singapore Market Wrap

IMF said, "let inflation rise..."

The International Monetary Fund (IMF) said that Singapore should let its inflation rate rise temporarily "to accommodate the increase in relative prices of labour-intensive products resulting from the tighter labour conditions".

Singapore has trimmed its forecast for an expansion from 3% to 1.5%-2% this year and analysts are forecasting GDP to fall this year to 2.9%. With the global slump, there is increasing pressure on the MAS to ease monetary policy and the good news is, "Singapore has ample policy space and large buffers to mitigate the effects of a steeper global growth slowdown or financial turmoil", the IMF said.

In another part of Asia, Japan's government downgraded its forecast of the country's economy yesterday. The Cabinet Office said that "further slowing down of overseas economy and sharp fluctuations in the financial and capital markets" are risks considered. Their finance minister, Jun Azumi, added that government funds may "dry up" and the government has to "consider how to save money while trying to avoid affecting its people's lives as much as possible".

The STI closed at 3040.07, down 0.2% dod while the HSI closed at 19811.8, up 0.1% dod.

STI 3100MBeCW121031 (Q1AW) exercise level 3,100.*
STI 2950MBePW121031 (Q0ZW) exercise level 2,950.*

HSI19800MBeCW120927 (Q1DW) exercise level 19,800.*
HSI20400MBePW120927 (Q1SW) exercise level 20,400.*

Olam releases financial results for FY2012
Olam's revenue increased 8.2% year on year, but profit after tax fell 9.2%. Their CEO, Sunny Verghese commented that although results were marginally lower than the previous year, results still "demonstrate the resilience of Olam's business model and an ability to deliver across volatile commodity and economic cycles".

Olam has a goal to reach US$1bil in after-tax profits by FY2016 and "from a strategic perspective, the company is making substantial progress towards the goal". In their press release, Olam's commented on the outlook of the company going forward and mentioned that "Olam remains positive about the long-term fundamentals of the industry, as well as the overall business model and will continue to execute on the strategy to grow long term intrinsic value across all existing business segments"

Olam closed at $1.99, up 0.3% dod.

Call warrant OLAM MB eCW130201 (Q4MW) exercise price $2.00.*
Call warrant Olam MB eCW130103 (Q0KW) exercise price $2.20.*

Sembcorp Marine to incorporate subsidiaries
Sembcorp Marine announced on the SGX that they wish to incorporate 2 wholly-owned subsidiaries, Jurong Solutions Pte Ltd and Dolphin Rig 7 Pte Ltd. Jurong Solutions provide management and technical services while the main activities of Dolphin Rig 7 Pte Ltd are in the marine/offshore engineering and shipbuilding services.

Sembcorp Marine closed at $5.00, up 0.2% dod.

Call warrant SembMar MBeCW121203 (Q0OW) exercise price $5.00.*
Call warrant SembMar MBeCW130104 (Q4NW) exercise price $5.50.*
Put warrant SembMar MBePW130103 (Q4GW) exercise price $4.70.*
Long dated call warrant SembMar MBeCW130603 (M8NW) exercise price $5.59.*

Overnight Market Wrap

Catalonia, third region in Spain to request bailout

Following Valencia and Murcia requesting a bailout last month, Catalonia, traditionally the most prosperous and industrial region of Spain requested for emergency funding of more than 5bil euro from the Spanish government yesterday.

Spanish prime minister, Mariano Rajoy commented that the fact a region like Catalonia cannot meet its debt obligations, "is a big problem in this country at the moment". However, Investors can find some comfort that Spanish economic minister, Luis de Guindos said last week that "at the end of the day, they are not going to let any region go down". Also, the European Union president, Herman Van Rumpoy said that Greece's future is in the Euro and rescue fund is ready for rapid action to aid Spanish banks.

Spain's index IBEX35 fell 0.9% dod while the region's index, Stoxx50 fell 0.8%. ECB's Chairman, Mario Draghi, cancelled his trip to Jackson Hole, citing other engagements.

US investors are anticipating Fed's Chairman Ben Bernanke annual speech at Jackson Hole this Friday and they are staying out of the markets meanwhile. Yesterday's trading volume was the lowest this year.

Although consumer confidence fell in August, the S&P closed at 1409.30, down 0.1% dod.

Overnight Markets

Indices Last Change
STI 3040.07 -0.1%
HSI 19811.80 0.1%
DJIA 13103.00 -0.2%
S&P 500 1409.30 -0.1%
Nasdaq 3077.14 0.1%
China A50 7108.85 0.8%

Corporate News

Corporate Announcements

IHH 2Q12 net profit increased to RM403mn.

Semb Marine secured a contract worth US$674mn for modules construction and integration.

Thai Beverage boosted its holdings in F&N to 29%.

Olam 4Q12 net profit fell 14% year-on-year to S$109.5mn


Ex-dividend dates:
Thu 30 Aug: Sakari ($0.02), UOB ($0.20)
Wed 26 Sep: SGX ($0.15)
Tue 6 Nov: Olam ($0.05)

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Labels: Ezra

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Chart Stock Name Last Change Volume 
Ezra 1.07 -0.01 (0.93%) 3,509,000 

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