SGX Stocks and Warrants
Yangzijiang Gets RMB 720mn Compensation
Warrants Highlight
Yangzijiang Gets RMB 720mn Compensation
| Code | Name | Type | Expiry | Exercise Price |
| QR1W | YangzijiMBeCW121203 | Call | 03-Dec-12 | 0.950 |
| O9LW | YangzijiMBeCW130102 | Call | 02-Jan-13 | 1.20 |
| Q0CW | YangzijiMBePW130103 | Put | 03-Jan-13 | 0.95 |
A sweet deal indeed
After the close of market on Wednesday, Yangzijiang Shipbuilding (YZJ) announced that its smallest yard, Jiangsu Yangzijiang, will have to end operations by end-September 2012 and relocate by March 2013. This relocation had been well flagged by management since last year, and Macquarie Equities Research (MER) believes the 17% capacity removal is very timely given the current overcapacity in shipbuilding.
Minimal disruption due to long lead time.
According to MER, this small yard accounts for 17% of YZJ’s total capacity, and the production area is only a tenth of its larger flagship yard, New Yangzi. Since starting relevant talks with the municipal government of Jiangyin City last year, MER understands that YZJ has been making relocation plans and will therefore see a smooth transition to operations at the Changbo yard.
Sizeable compensation.
YZJ will be entitled to compensation of RMB720m, MER thinks that although this is unlikely to accrue entirely in FY12 and will also be offset against expenses incurred during the relocation. Management will provide more clarity on the impact of this compensation in its upcoming quarterly updates. YZJ has also indicated that it could participate alongside the municipal government in redevelopment of the vacated land.
Capacity removal will ease overcapacity pressures.
Given the current overcapacity in shipbuilding (especially Chinese yards), MER believes the 17% capacity reduction is highly timely. As a result, YZJ will benefit from better adapting its operations to current industry conditions and reducing overhead from excess capacity.
* Excerpt from MER report dated 4th July.
Singapore Market Wrap
Hype on speculation over?
The Singapore and Hong Kong equity markets gapped up yesterday but failed to sustain their gains and closed flat day-on-day (dod). HSI closed at 19,709.75 falling 0.1%, while the STI closed at 2948.77 adding 0.1%. STI was trading in a tight range of only 16.11 points in spite of speculations that the central bank of China may ease monetary policy. Yesterday in China, disappointing HSBC PMI was reported and June figures fell to 52.3 as compared to 54.7 in May.
Call STI 2950MBeCW120831 (QE8W) exercise level 2,950.*
Put STI 2850MBePW120831 (QE9W) exercise level 2,850.*
OpenNet to speed up fibre broadband installations
More Singaporeans are looking to ditch their internet broadband for the ultra-fast fibre broadband, yet the wait can be daunting especially if it takes up to six weeks to be connected. To solve the problem, the Infocomm Development Authority asked OpenNet to increase installation quota by about 50% and if obligations are not met, they may face fines. Singtel is the key subcontractor for OpenNet and they also own a 30% stake in the company.
Despite this, Singtel was one of the better performers yesterday, closing at $3.34, up 0.9% dod.
Call warrant SingTelMBeCW130301 (PB6W) exercise price $3.30.*
Potential bidding war for Echo?
Malaysian gambling group Genting currently owns 9.9% stake in Brisbane-based Echo and the company applied for approval to increase shareholdings to above 10%. Genting disclosed this news after Crown made similar intentions to increase their stake to possibly beyond 25%. Echo holds a license granting monopoly in Sydney until 2019 and this offers the winning company an exposure into Australia as well as visitors from China. This is because Chinese gamblers are travelling to Australia in growing numbers.
Genting closed at $1.395, up 0.36% dod.
Call warrant GentingSMBeCW121105 (QK7W) exercise price $1.50.*
Put warrant GentingSMBePW130103 (QZ2W) exercise price $1.30.*
Long dated call warrant GentingSMBeCW130603 (L0QW) exercise price $1.45.*
Overnight Market Wrap
US Closed for Independence Day
European equities and the Euro fell as Germany's services industry unexpectedly droped to 49.9. A reading of below 50 implies a contraction. Investors are hopeful that ECB will cut rates today.
US equity markets were closed for Independence Day.
Overnight Markets
| Indices | Last | Change |
|---|---|---|
| STI | 2948.77 |
0.1%  |
| HSI | 19709.75 |
-0.1%  |
| DJIA | 12943.82 |
0.6% |
| S&P 500 | 1374.02 |
0.6% |
| Nasdaq | 2976.08 |
0.8% |
| China A50 | 7810.87 |
-0.1% |
Corporate News
Corporate Announcements
Results announcements:
Thu 19 Jul: Keppel Corp 2Q12
Wed 25 Jul: Biosensors 1Q13
Fri 27 Jul: SGX 4Q12
Thu 2 Aug: SembCorp Marine 2Q12
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| Chart | Stock Name | Last | Change | Volume |
|---|
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