DBS Equity Research: Wired Daily 29 Sep 2014

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Publish date: Tue, 30 Sep 2014, 09:44 AM

Nam Cheong - Sold three vessels worth US$41m; to invest about US$30.7m in Indonesian ship owning and chartering company

Nam Cheong has sold three vessels worth approximately US$41.0m to two customers based in Europe - Norway and the Netherlands and one vessel to repeat customer based in Asia. These three contract wins are on the back of five vessel sales to PT Pelayaran Nasional Bina Buana Raya tbk (BBR), secured during the same month, bringing the total orders in September 2014 to eight which are collectively worth approximately US$126.0m and will contribute positively to FY2014 and FY2015 earnings. The orders secured help boost cumulative order book to approximately RM1.9 bn. Separately, Nam Cheong has entered into a binding Heads Of Agreement with Marco Polo Marine (MPML) in relation to a proposed investment in MPML's indirect subsidiary, PT Pelayaran Nasional Bina Buana Raya Tbk (BBR). Nam Cheong may hold a stake of approximately 30% of the enlarged share capital of BBR for a total consideration of approximately US$30.7m. BBR is a reputable shipping company based in Indonesia and listed on the Bursa Efek Indonesia (Indonesia Stock Exchange), primarily engaged in the business of ship owning and chartering through its two divisions of Tugs and Barges Division, and Offshore Marine Division. BBR plans to utilise part of the proceeds by purchasing five OSVs worth

US$85.0m from Nam Cheong and lays groundwork for future purchases. This is the second significant initiative undertaken by Nam Cheong to further extend its interests in the attractive Indonesian oil and gas market.

Ziwo Holdings proposed to acquire 25% stake in Xisheng (Quanzhou) Investment for RMB160m. The proposed investment in Xisheng is viewed as building a strategic inroad into the industrial reconstruction industry, which is underpinned by a rising need to rezone and redevelop new industrial zones in Quanzhou city in Fujian Province, China. Xisheng, jointly with CMTCC Shanghai Shisanye Construction, had successfully bid in 2011 to develop the Infrastructure Construction Project of Guanqiao Park in Quanzhou Economic and Technological Development Zone, Quanzhou City, Fujian Province, China. Work has commenced on the Project, with phase 1 of the Project estimated to have a value of RMB 1.0bn.

IPS Securex Holdings proposes to place 6m new shares at a subscription price of S$0.42 per share, a discount of 6.4% to the last volume-weighted average price. The estimated net proceeds of approximately $2.5m will be used to fund potential businesses arising from signing of two Memorandum of Understanding (MOU) relating to 1) secured virtual healthcare systems and solutions and 2) service and repair work for the hyperspike acoustic hailing devices.

Libra Group announced placement of up to 15m new shares at S$0.20 per share to raise gross proceeds of S$3m. The issue price represents a discount of approximately 3.85% to the last volume weighted average price. Net procceds will be used to finance the Group's business expansion, to augment the general working capital of the Group and for potential investments and acquisitions.

Singapore's industrial output rose 4.2% y-o-y in August, mainly due to the increase in electronics and biomedical manufacturing output - which together make up over half of the industrial production index. The increase also helped to offset a decline in transport engineering activity. The overall pace of industrial production was slower than the market's estimate of a 4.9% rise in manufacturing output. Excluding the volatile biomedical sector - which grew 9.7% last month on increases in both pharmaceuticals and medical technology production - output would have risen by a smaller 3%. The electronics cluster, which retains the largest weight of 33.4% on the industrial production index, swung back into expansionary territory for the first time since March. Electronics production increased 7.2%, although the bulk of this increase was technical in nature - there was a low base last year when demand for the computer peripherals was weak, and so the segment surged 42.2% in August. The semiconductors segment increased 1.1% last month.

Source: DBS

Nam Cheong (N4E)Libra (5TR)

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