Warrants Highlight

NOL - first net profit since 4Q2010

Before the Singapore’s market was shut for a public holiday last Thursday, NOL group announced their third quarter results for financial year 2012. The group reported a net profit of US$50 million, an increase of US$141 million as compared to the same period one year ago. This breaks the company’s consecutive six quarters of losses.

Government owned investment company, Temasek Holdings, is the largest shareholder of NOL, holding about two thirds of the company’s equity.

Macquarie’s NOL warrants 

Cost efficiencies, stable rates and volume growth
NOL attributed their improved financial performance to increased cost efficiencies, stable rates and volume growth. CEO Ng Yat Chung said that “our efforts to improve the Group’s competitive position are paying off” and that the company will maintain “focus on the fundamentals of the business – service quality, operational efficiency and cost discipline”.

In the statement released on SGX, the group mentioned about its different business segments which contributed to the profit.

1. Liner shipping business (APL)
The business unit reported an earning before interest and tax profit of US$55 million this quarter, compared to a loss of US$88 million in the same period a year ago. APL President Kenneth Glenn said that this is possible because of efficiency gains in its operational network. “We are able to move more with a smaller fleet capacity, and reduced bunker fuel consumption” and “these efficiency gains, coupled with our fleet modernization programme, are the reasons our unit costs have improved significantly”. He believes that these initiatives will “position the business well into the future”.

2. Supply chain management business (APL Logistics)
The business unit reported an earning before interest and tax profit of US$19 million this quarter, an improvement of 19% from the same quarter a year ago mainly due to strong demand for rail and land-based logistics services. APL Logistics President Jim McAdam said that the business is “expanding our market footprint through strategic investments”. For example, the acquisition of APLL-Zhiqin Group “will significantly” increase the business’ footprint in China.

Shipping environment – soft
Despite a good third quarter result, the year to date profit is still negative because of losses in the earlier quarters and Mr Ng predicts that the company may post a full year of loss as the overall shipping environment is “soft”. However, the group is “on target for achieving US$500 million in savings this year”.

Other transactions
On the same day NOL released its earnings, it also announced the sale of its head office to Fragrance Group for S$380 million. The divestment will “release capital for strategic investments”.

In other means of raising capital for general corporate funding purposes and investments, NOL proposed an issue of Singapore dollar-denominated notes under the US$1500 million euro medium term note programme yesterday.

Singapore Market Wrap

A red start to the week

The STI fell with the blue chips being hit hard as the Singapore market resumed after a long weekend. Sentiments were aggravated by US' Hurricane Sandy, which could potentially affect 60 million people in New Jersey, as well as a slump in Spain's retail sales, falling 11% against the previous 2.1% fall. The STI fell 0.91% to 3029.61 day-on-day (d.o.d).

Call STI 3100MBeCW130131 (PA7W) exercise level 3,100.*
Put STI 2800MBePW130131 (PA8W) exercise level 2,800.*

Wilmar establishes Joint Venture with Clariant
Wilmar has signed an agreement to establish a 50-50 joint venture ("JV") with Clariant, a leader in specialty chemicals. This venture will be headquartered in Singapore with global sales, distribution and production affiliates for the production, sales of amines and selected amines derivatives. Subject to regulatory approvals, the JV is expected to be operational in 2013. Wilmar dropped 0.95% to $3.12 for the trading session.

Call Wilmar MBeCW130102 (Q5QW) exercise price $3.15.*
Put Wilmar MBePW130116 (Q5RW) exercise price $3.15.*

Capitaland's Ascott expands in Vietnam
Ascott Limited, a wholly-owned serviced residence business unit of Capitaland has been awarded a contract to manage a 100-unit serviced residence in Vietnam's Ho Chi Minh City. Ascott is the largest international serviced residence operator in Vietnam with 1,600 apartments units in 11 properties across 4 cities. Capitaland fell 1.8% to $3.27 d.o.d.

Call CapitalaMBeCW130204 (Q4HW) exercise price $3.40.*
Put CapitalaMBePW130103 (Q4EW) exercise price $3.00.*

Overnight Market Wrap

US exchanges close due to Hurricane

Due to bad weather conditions, the US exchange was closed yesterday and officials say that they aim to reopen the exchange on 31 October.

Nevertheless, economic data was announced according to schedule. Both consumer spending and personal income in the US climbed in the month of September. Although spending and income rose, consumer savings fell, indicating that a larger gain in income is necessary for spending to be sustainable.

In addition, the nation's economy is facing a slowdown in exports and business investments and coupled with a slack in global growth, investors are concerned about the so-called ‘fiscal cliff'.

Overnight Markets

Indices	Last	Change
STI	3029.61	-0.9%
HSI	21511.10	-0.2%
DJIA	13107.20	0.0%
S&P 500	1411.94	-0.1%
Nasdaq	2987.95	0.1%
China A50	7087.19	-0.9%

Corporate News

Corporate Announcements

GLP leases 21,000 square metres in Japan to H&M.

Capitaland's Ascott expands with new properties in Vietnam's Ho Chi Minh City.

NOL announced the successful pricing of their S$300 million, 4.4% p.a. notes due 2019.

Earnings release dates:
Tues 30 Oct: Capitaland (3Q12)
Wed 31 Oct: IndoFood Argi (3Q12)
Thurs 1 Nov: DBS (3Q12)
Fri 2 Nov: SIA (2Q12)
Fri 2 Nov: Starhub (3Q12)
Fri 2 Nov: Cosco (3Q12)
Mon 5 Nov: SembCorp Marine (3Q12)
Tues 6 Nov: Ezion (3Q12)
Tues 6 Nov: SATS (2Q13)
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 9 Nov: Wilmar (3Q12)
Mon 12 Nov: Genting (3Q12)
Wed 14 Nov: GLP (2Q13)
Wed 14 Nov: City Dev (3Q12)
Wed 14 Nov: STX OSV (3Q12)

Ex-dividend dates:
Tue 6 Nov: Olam ($0.05)
Fri 7 Dec: SPH ($0.17)