SIA is proposing to subscribe for 10% of Virgin Australia Holdings for A$105.3m or A$0.4288 per share. The proposed investment fills significant gaps in each of their networks. It provides SIA with an Australian partner, and it provides Virgin Australia access to global markets.

Separately, Tiger Airways is set to strengthen its Australia business through the sale of 60% of its wholly-owned subsidiary, Tiger Airways Australia (Tiger Australia), to Virgin Australia Holdings for a cash consideration of A$35m. Tiger Airways will also receive an annual license fee from Tiger Australia plus a A$5m payment once it reaches certain performance targets in future. We believe the price paid by Virgin for the 60% stake is reasonably fair, as book value of Tiger Australia is a negative S$222m as of 30 Sep 2012, and while we forecast Tiger Australia is on its way to breaking even in future, it is still recording losses amidst ongoing fare war in Australia, and hence earnings visibility is clouded. Tiger Airways will be booking a net gain of about S$120m from the transaction, which boosts its NTA per share by about 60% to 42Scts per share. Tiger Airways will be reinvesting up to A$20-25m of the proceeds back into Tiger Australia, while the remaining will help bolster working capital.

This agreement augurs well for the expansion of the Tiger brand in Australia, as it will now be positioned as the budget/ leisure arm of Virgin Australia and fleet is planned to grow from 11 to 38 by 2018. This includes 8 aircraft from Tiger Airways' existing order with Airbus, paving way for more deployment options. We will be revising our earnings estimates and target price to take into account the above, but will likely maintain our BUY call. 2Q-FY13 results for Tiger came largely in line with expectations. For SIA, we believe the impact will be muted as the new investment is not significant to its balance sheet size.

3Q12 core profit for GMG Global came in at S$12.2m (-53% y-o-y), below expectations. GMG is expected to report another set of weak results in 4Q12F (lagged impact from fall in rubber prices over 3Q12). FY12F-14F profit cut by 19-23% as we impute lower rubber price expectations and reduce associate earnings. Maintain HOLD and TP of S$0.125 after rolling over valuation base to FY13.

Starhil Global Reitresults in line, 9M DPU makes up 76% of our forecast. We expect rising contribution from Wisma Atria, more upside after adjusting tenancy mix and upgrading works. Maintain BUY, TP adjusted higher to S$0.84 (Prev S$ 0.81), to account for higher rental income following the shop reconfiguration, as well as adjustments to Wisma Atria's lease profile.

Ho Bee Investment will book a net gain of about $25.9m from its $163m sale of Hotel Windsor at MacPherson Road when the transaction is completed. Hotel Windsor is on a 54,418 sq ft site zoned for hotel use. The $163m pricing reflects around $1,042 psf. The completion is expected to take place by May 13 next year. The buyer is LVND Homes Pte Ltd, the consortium that is developing One Dusun Residences in the Balestier area which recently sold very well. The consortium's members are Nobel Design Holdings, Lian Huat Group (controlled by the Kho family), Expand Group (headed by Von Lee) and Steel Industries (headed by David Ong).

Sound Global has won the bid for the sewage treatment plant network project located in 14 rural areas in Siyang County, Jiangsu Province, PRC. The project has a licensed operating term of 30 years with total investments amounting to approximately RMB240m. The term of construction is around 13 months. It is expected that the construction will be completed and operation will commence by the end of November 2013. Following the Changsha Project, Fushun Project and Jiangyan Project, the Siyang Project will increase Sound Global's number of rural sewage treatment projects in the PRC to 4.

Mirach Energy is proposing to place out 38.3m new shares and an option to place another 19.2m shares at S$0.12 per share. The issue price represents a premium of approximately 138% to the last volume weighted average price. The net proceeds of about S$4.5m will be mainly used for exploration and development of oil fields.

Prices of resale flats stayed at a record high in the third quarter, after having grown at the fastest pace of the year. The Resale Price Index (RPI) for Q3 stood at 197.9, an increase of 2% over the previous quarter, data from the Housing and Development Board (HDB) showed yesterday. This was in line with earlier official estimates. Resale prices had grown at 1.3% in the second quarter, and 0.6% in the first quarter. For the first nine months of the year, prices have gone up 3.9%, the HDB said. The number of resale transactions, however, fell 6% to 6,560 from Q2, after surging 19% in the previous quarter.

Separately, data released by the URA shows the number of new private properties in the pipeline ballooning to more than 100,000 units at the end of 3Q. This is the highest-ever total recorded since data was collected in 2001. This news raises the concern of oversupply and could dampen interest for potential property buyers looking for investment and leasing purposes. The upcoming private home supply comprises 83,975 private residential units, 9,824 executive condominiums and 10,070 units from land sites that the Government has sold or that are slated for sale. In addition, HDB announced yesterday it will roll out another 6,400 BTO flats next month to bring its crop of new flats this year to 27,000, which is also a record high.

US markets were closed yesterday as Hurricane Sandy, which has since been downgraded to a tropical storm, approached the East coast. While the storm is still expected to cause damage, any negative US equity market reaction from it should be short-lived. After all, reconstruction follows destruction. Of more interest will be this week's data heavy releases that end with Friday's employment figure. Consensus calls for non-farm payrolls of 125k (previous 114k) with the unemployment rate expected at 7.9% (consensus 7.8%). The Case-Shiller home price index is on tap today. Investors expect the figure to rise again for an 8th consecutive increase. We keep our view for a near-term technical rebound in the Dow off 13000 but cap at 13275.

Source: DBSV