DBS Equity Research: Wired Daily 30 Sep 2015

kiasutrader

Publish date: Wed, 30 Sep 2015, 02:53 PM

Plantation Companies - Indonesian overseas-listed planters may be forced to list in IDX

Indonesia Stock Exchange (IDX) may require overseas-listed Indonesian planters to list in Indonesia. Details of the proposal remain unclear. Our assessment shows at least 6 companies may be affected. In our assessment, the listed plantation companies that may be affected are: Wilmar International, First Resources, Bumitama Agri, Golden Agri Resources, Sime Darby (listed on KLSE) and KL Kepong (listed on KLSE). Given current weakness in CPO prices, we doubt any of the listed companies would be prepared to undertake public offering in the near term.

Ezra has entered into a joint-venture agreement with Japanese engineering giant Chiyoda. Under the share sale and subscription agreement involving the joint venture, Chiyoda is effectively offering US$180m in cash for a 50% stake in the subsea services business. This will be by way of a restructuring to put the business under a joint-venture company. Chiyoda will buy shares in the joint-venture company from Emas AMC and subscribe for new shares for the half stake. Emas AMC accounts for 70% of the group revenue for FY Aug14.

Financial markets face a higher risk of liquidity squeezes in a sell-off due to the effects of the long period of low interest rates, the International Monetary Fund said. In a semi-annual report on global financial stability, the IMF said that markets for trading equities, bonds, currencies and other instruments generally appear liquid at the moment. But that liquidity could be more "prone to evaporate" in the current environment, causing more volatility and undermining financial stability.

The Singapore bond market is holding up rather well amid a stockmarket sell-off and curency jitters. The Singapore Fixed Income index (SFI) rose 0.31 to 120.06. Year-to-Sept 28, the Singapore Fixed Income index (SFI) outperforms the Straits Times Index by 17.5% (+0.45% vs -17.0%). Over two-thirds of SME chief financial officers (CFOs) here say they face a moderate to significant risk of failure in the next three to five years, according to the American Express CFO Future Proofing Survey. Key concerns of CFOs include labour and government regulations (85%), with changing economic conditions as the biggest macro concern (93%).

The Singapore property auction market picked up in the third quarter of the year compared to the second, said property consultant JLL. Deals worth S$27.6m were done, more than double the S$10m seen in the second quarter. However, the third quarter auction value was slightly below the S$31.7m done a year ago.

Source: DBS

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