Tiger Airways'turnaround story is intact. Operations in Australia are turning around as daily sectors rebound to pre-suspension levels. Singapore was already back in the black last quarter but Australia's financial recovery will be dampened by ongoing price war. Our analyst now expects a larger net loss of S$7m in FY13, and lowered FY14F net profit by 7% to S$61m. Maintain BUY, TP S$0.90 (Prev S$ 0.92). The appointment of new CEO, Mr. Koay is a positive. Mr. Koay highlighted that Tiger Airways should be flexible in exploring new growth avenues, including introducing new products and services and offering enhanced connectivity to improve customer experience. Given Tiger's recent history, fresh ideas could help to spur the Group's expansion prospects.

AusGroup is proposing to :-

1) Demerge all of its subsidiaries into a group headed by its wholly-owned subsidiary, AGC Australia (AGC). AGC will then seek a sole listing on the ASX, instead of a dual listing previously considered.

2) Enter into a reverse takeover and acquire suitable assets from investor(s) who are yet to be identified. If the proposed transactions are completed, shareholders of AusGroup will receive shares in AGC under the distribution in-specie and still retain their shares in AusGroup, although their shareholdings in the company will be heavily diluted following the completion of the reverse takeover. AusGroup will remain listed on the SGX.

Overall, existing AusGroup shareholders will still own the same business as they will hold 100% of the shares in AGC, and also retain their shares in AusGroup (which will be injected with suitable assets), but their shareholdings in AusGroup will be diluted.

Wilmar will establish a 50:50 joint venture with Kellogg Company for the manufacture, sale and distribution of cereal, wholesome snacks and savory snacks in China. Wilmar will contribute infrastructure, supply chain scale, an extensive sales and distribution network in China, as well as local China market expertise to the joint venture, while Kellogg will contribute a portfolio of globally recognized brands and products, along with deep cereal and snacks category expertise.

Rotary Engineeringis expected to record a net loss for coming quarter and nine months ending 30 September 2012. Accordingly, the group is also expected to record a net loss for FY12, mainly due to a project in Saudi Arabia, which has experienced problems and resulted in the recognition of additional cost that significantly impacted the gross margin.

Chasen Holdingshad secured its first purified water (PWT) and wastewater treatment (WWT) Transfer-Operate-Transfer (TOT) project in Jilin Province, China. The total investment for acquiring the 30 years concession rights for both plants is up to RMB300m. The design capacity of the PWT plant is 200,000 cubic metres/day and 60,000 cubic metres/day for the WWT plant. The PWT plant is expected to start operation in stages by early 2013 and the WWT plant is expected to start operation in stages by second quarter of 2013.

Consumer prices rose 3.9% y-o-y in August, faster than consensus forecast of 3.6%. Inflation in August was the lowest Singapore has seen since November 2010 after edging down from July's 4%. Core inflation (excludes accommodation and private road transport) fell to 2.2% in August from 2.4% in July, due to slightly lower services inflation. This was better than the 2.3% market had expected. Accommodation cost inflation slowed to 7.4% y-o-y from 7.8% in July, as residential property rentals rose at a more moderate pace. But private road transport cost inflation accelerated to 6.3% from 5.9% in July, as a slower increase in car prices was offset by a rebound in petrol prices.

Gross average monthly rentals in CBD locations such as Marina Bay and Shenton Way, fell roughly 4% q-o-q in Q3. Further out, in addresses such as Marina Centre (including Suntec City and Millennia and Centennial towers), North Bridge Road/Beach Road, Bras Basah and Orchard Road, rents held pretty firm, according to DTZ. One reason is that the fringe locations have a more diversified tenant profile; unlike the tenant profile in Raffles Place and Marina Bay, where more than half the occupiers are in banking and finance, the sector feeling the most heat from the ongoing debt crisis in Europe. Another reason is that the supply of new offices is much tighter in the fringe areas than in the CBD.

US markets fell modestly with investors starting to shift towards the sidelines following recent stock market gains ahead of the upcoming 3Q results season, after US bellwethers Federal Express and Caterpillar lowered their earnings forecast. Meanwhile, Chancellor Angela Merkel and French President Francois Hollande disagreed on a timetable for starting joint oversight of Europe's banking sector while German business confidence unexpectedly fell in September. 

Source: DBSV