Warrants Highlight

Yangzijiang - diversification pushes share price higher

Macquarie is listing a new warrant over Yangzijiang (R3MW) this morning.

Macquarie’s Yangzijiang warrants

Profitable despite gloomy industry outlook
Earlier this month on 7th November, Yangzijiang (YZJ) announced their third quarter earnings, bringing in earnings of RMB877.2 million despite the industry downturn. This is a 14% decline compared to the same period last year, largely attributed to an increase in expenses.

In addition, YZJ said that revenue contribution was lower because of the lower vessel delivery which resulted from cessation of 8 shipbuilding contracts back in 1H2012. Thus, only 9 vessels delivery were recorded in 3Q. This was significantly lower than the 19 vessels delivered in 3Q2011.

Diversification to prepare for recovery
Executive Chairman, Mr Ren Yuanlin is confident of the Group’s financial performance for the full year 2012. However, he warned of the prevalent downtrend in the shipbuilding industry mentioning that the trend may continue for the near future. To prepare the Group for recovery, YZJ has taken a “proactive approach in diversifying its business model into an integrated marine service provider”.

+3.3% in a day
With the announcement of its quarterly financial statements, YZJ also took the opportunity to make known the acquisition of a new subsidiary, Jiangsu Huaxi Yangzi Real Estate Co Ltd (JHYRE). The subsidiary will be involved in developing high-end residential buildings on the land next to the coast.

Investors seemed satisfied with the new acquisition and the financial figures. On 7th November, YZJ gapped up 3.3% when the local bourse gained 0.8%.

+7.0% in less than 2 weeks
A week later, after the market closed on 15 November, YZJ went ahead and disclosed the incorporation of another new subsidiary, Jiangsu Zhuoran Yangzijiang Energy Equipment Co Lrd (JZYEE). The Board believes that JZYEE will enhance the steel fabrication capability of the Group.

These investments show the Group’s strategy to diversify its offerings beyond its core shipbuilding business and the counter rallied 7.1% as of yesterday (compared to the close on 15th November) while the STI added 2.0% for the same period.
 

Singapore Market Wrap

Singapore's Industrial Output falls in October

The industrial output for Singapore fell for the third month in October with manufacturers producing less electronics and pharmaceuticals. The Economic Development Board reported that industrial output dropped 2.1% against a year earlier. This news did not hamper the market though, as the STI rose 0.5% to close at 3,004.50 day-on-day (d.o.d).

Call STI 3100MBeCW130228 (RF9W) exercise level 3,100.*
Put STI 2950MBePW130228 (RG0W) exercise level 2,950.*

Ascott opens first premier serviced residence in Qatar
Capitaland's wholly owned-serviced residence unit, The Ascott Limited, has opened its first premier serviced residence in Qatar. The 229-unit Ascott Doha is a 10 minute drive from the city's business and financial centre as well as a stone's throw from Doha Exhibition Centre. Ascott now has over 1,000 apartment units across six properties in four countries in the Gulf region. Capitaland rose 0.6% to $3.43 for the trading session.

Call CapitalaMBeCW130204 (Q4HW) exercise price $3.40.*
Call CapitalaMBeCW130603 (L0SW) exercise price $4.27.*

Noble the outperformer in the commodities sector
Noble outperformed in the commodities sector by closing 2.8% at $1.105 d.o.d as a report by Bloomberg indicated that Oil price fell for the first time in three days as tension eased in the Middle East. Wilmar remained flat at $3.15 as Olam closed marginally higher at 0.3% to $1.66, with investors waiting for the official report on Olam by Muddy Waters.

Call Wilmar MBeCW130102 (Q5QW) exercise price $3.15.*
Put Wilmar MBePW130701 (R0NW) exercise price $3.10.*

Call NobleGrpMBeCW130401 (Q8AW) exercise price $1.20.*
Put NobleGrpMBePW130103 (QZ6W) exercise price $1.10.*

Call Olam MB eCW130603 (R3LW) exercise price $1.80.*

Overnight Market Wrap

S&P breaks five-day rally

After a 3.6% gain last week, the S&P slid 0.2% yesterday.

With slightly more than a month left to the fiscal cliff, investors will be more attentive to developments in the Congress. While the Democrats are for raising income tax by increasing the tax rates on the upper class, the Republicans are looking towards limiting deductions instead.

In Europe, the Euro finance ministers started their third meeting this month in an attempt to plug Greece's funding shortfall. The EuroStoxx 600 fell 0.5% after a week of gains.

Overnight Markets

Indices	Last	Change
STI	3004.50	0.5%
HSI	21861.80	-0.2%
DJIA	12967.40	-0.3%
S&P 500	1406.29	-0.2%
Nasdaq	2976.78	0.3%
China A50	6997.99	-0.5%

Corporate News

Corporate Announcements

Capitaland's wholly owned-serviced residence business unit, Ascott, has opened its first premier serviced residence in Qatar, Ascott Doha.

Ex-dividend dates:
Fri 7 Dec: SPH ($0.17)