Warrants Highlight

Olam - Rapid expansions the past month

In such tepid markets, good economic data and better-than-expected earnings from the US on Monday and Tuesday drove optimism among investors. The MSCI Asia Pacific index had gained 1.8% across two days. However, the STI underperformed, climbing less than 0.1% as compared to Monday’s close. Still, there were a few counters which did well such as Olam, which rallied 3.6% across the same period.

Macquarie’s Olam warrants

Olam adopts low costs strategy
Olam, the world’s largest supplier of robusta coffee acquired Northern Coffee Corporation, the largest coffee estate in Zambia on 18 Sept, for approximately US$6.15 million. The acquisition forms part of its strategy to invest in plantations with low costs of production so that plantations remain profitable even in a low price environment.

Managing Director and Global Head of Coffee, Vivek Verma is pleased with the acquisition and said that “investments in upstream as well as in processing coupled with the company’s strong and growing supply chain business gives them a uniquely balanced portfolio”. With that, the company is “well-positioned for continued sustainable growth with consistent earnings in all price scenarios.”

On 3 Oct, Olam announced its intention to fully take control of NZ Farming Systems Uruguay Limited. Currently, it owns 86% of the company and its offer to takeover the rest of the 14% was blocked by the minority shareholders last year. It has raised its offer to NZ$0.75 claiming that it is a fair price and that the offer price will not be revised further. Olam said it expects to dispatch an offer document within 14 to 30 days, including plans to delist the company if the takeover is successful.

Not resting on its laurels
While waiting to conclude the offer, Olam continued its expansion by acquiring 50% of Acacia Investments (AI) for US$35 million on 5 Oct. AI is a group with significant presence in edible oil refining and distribution in East Africa.

Managing Director and Global Head of Palm, Ranveer Chauhan explained the synergy of the joint venture (JV). He said that while AI had a “strong brand franchise”, Olam had “a strong distribution network”. Given its sourcing capability, “Olam aims to be a competitive and preferred supplier of crude palm oil to the JV”.

Whilst the acquisitions did little for Olam’s share price, Olam started trading above $2 yesterday after the issuance of S$400 million 10-year notes. The last time Olam traded at $2 was two weeks ago.

This issuance is the longest tenor and the largest issue size achieved by Olam in the SGD bond market, helping to boost the company’s liquidity position and debt maturity profile. The exercise had an oversubscribed order book in excess of S$1.4 billion.

Singapore Market Wrap

Singapore September exports drop

Singapore reported a surprise drop in non-oil domestic exports in September. Non-oil exports fell 3.4% on a year-on-year basis, with electronic shipments dropping 16.4%. This caused the STI to close down marginally at 0.04% to 3045.67 day-on-day (d.o.d).

Call STI 3250MBeCW121231 (Q4OW) exercise level 3,250.*
Put STI 3100MBePW121231 (Q4PW) exercise level 3,100.*

Capitaland secures residential site in Shanghai
Capitaland announced that its wholly-owned subsidiary CapitaValue Homes has secured its second residential site in Shanghao's Pudong District. This government land tender is approximately 36,920 square metres worth RMB166.29 million (Approximately S$33.26 million). Capitaland jumped 1.89% to $3.24 d.o.d.

Call CapitalaMB eCW130204 (Q4HW) exercise price $3.40.*
Call CapitalaMBeCW130103 (Q0MW) exercise price $3.00.*
Put CapitalaMB ePW130103 (Q4EW) exercise price $3.00.*
Long Dated Call CapitalaMBeCW131202 (Q7YW) exercise price $3.60.*

Olam issues S$400 million Note
Olam will be issuing its longest and largest SGD bond. The 10 year 6% fixed rate note is expected to be issued on 25 October 2012 and due 25 October 2022. Olam jumped 2.55% to $2.01 for the trading session.

Call OLAM MB eCW130201 (Q4MW) exercise level 2.00.*

Overnight Market Wrap

Housing starts at a 4-year high

First we had phenomenal employment data and now, amazing housing numbers. Housing starts rose to a 4-year high, increasing 15% to 82,000.

These numbers overshadowed disappointing company earnings and the S&P gained 0.4%, closing at 1460.91. Two of the largest technology firms, IBM and Intel missed estimates hence it was not surprising that the technological firms were the weakest sector in the S&P last night.

In Europe, Spain maintained its investment grade rating from credit-rating agency Moody's, who said that "there's less risk of losing market access because of the European Central Bank's willingness to buy the country's debt".

Overnight Markets

Indices	Last	Change
STI	3045.67	-0.0%
HSI	21416.60	1.0%
DJIA	13557.00	0.0%
S&P 500	1460.91	0.4%
Nasdaq	3104.12	0.1%
China A50	7294.10	0.1%

Corporate News

Corporate Announcements

Capitaland announced that it has secured its 2nd residential site of approximately 36,920 square metres in Shanghjai Pudong District for RMB166.29 (approximately S$33.26 million).

Earnings release dates:
Wed 17 Oct: Ascendas REIT (2Q13)
Wed 17 Oct: Kepland (3Q12)
Thu 18 Oct: SGX (1Q13)
Thu 18 Oct: Keppel Corp (3Q12)
Fri 19 Oct: CapitaMall Trust (3Q12)
Tues 23 Oct: Mapletree Industrial Trust (2Q13)
Thu 25 Oct: NOL (3Q12)
Thu 25 Oct: CapitaCommercial Trust (3Q12)
Thu 25 Oct: CapitaMalls Asia (3Q12)
Tues 30 Oct: Capitaland (3Q12)
Fri 2 Nov: SIA (2Q12)
Mon 5 Nov: SembCorp Marine (3Q12)
Wed 7 Nov: UOB (3Q12)
Wed 7 Nov: Biosensors (2Q13)
Thurs 8 Nov: Noble (3Q12)
Fri 9 Nov: SembCorp Industries (3Q12)
Fri 9 Nov: OCBC (3Q12)
Fri 14 Nov: GLP (2Q13)
Fri 14 Nov: City Dev (3Q12)

Ex-dividend dates:
Tue 6 Nov: Olam ($0.05)