Wednesday, October 1, 2014

SingTel refutes Straits Times article on dodging taxes

Singapore Telecommunications says The Straits Times article “Australia’s biggest firms found to have dodged taxes” dated Sept 30 wrongly singled out the company as having the second largest amount of “tax forgone”.

“The article has simply and incorrectly calculated tax foregone in Australia by applying the Australian 30% corporate tax rate to the accumulated total of SingTel Group profits,” SingTel says in a SGX press release clarifying the matter.

SingTel, which has businesses in 25 countries, adds that it Australian subsidiaries undertake all their legal and governance responsibilities diligently, including their Australian tax obligations.

SingTel is down 0.5% to $3.78 as at 2:13 p.m. Singapore time.

Genting Singapore shorts at highest in year as earnings weaken

Short-sellers are betting that Genting Singapore Plc, the worst-performing stock on the city’s benchmark equity index this year, has further to fall amid plunging earnings at Southeast Asia’s biggest casino operator.

Bearish bets on the stock climbed to the highest level in a year as Genting tumbled 11% since it announced in August that second-quarter profit dropped 27%. Brokers from Mizuho Securities Co. to Macquarie Group have cut their ratings on the company.

“Given the way earnings are being downgraded, it may be too early to buy the stock,” Alan Richardson, whose Samsung Asean Equity Fund outperformed 96% of peers tracked by Bloomberg during the past five years, said by phone from Hong Kong. “Genting is still trading at a premium over the Singapore stock market. Even if the shares fell another 20%, it will still be more or less trading at the market’s multiple.”

While most analysts recommend buying or holding Genting, the shares are currently trading at $1.14, a 19% discount to the consensus price target. The stock is the sixth most-shorted on the benchmark Straits Times Index, according to Markit Group data compiled by Bloomberg. Short interest climbed to 2.2% of freely-tradeable shares at the end of last week, the highest ratio since July 2013, the data show.

Samsung Asset Management Co. sold its Genting stock after the results announcement in August and may consider purchasing the company’s shares again should they fall to about $1, Richardson said. The South Korean money manager doesn’t use short-selling as an investment strategy, he said.

Genting slumped 24% this year through yesterday, making it the worst-performing stock on Singapore’s Straits Times Index and dragging valuations to about 20.7 times estimated earnings, according to data compiled by Bloomberg. That is still above a multiple of 14.5 for the city’s benchmark gauge. Company spokeswoman Lee Sin Yee declined to comment.

Tempering Expectations

“We think the stage is set for disappointment,” Somesh Kumar Agarwal, an analyst with Macquarie, wrote in a note published on Sept. 12 when the brokerage downgraded its rating on the stock to underperform from outperform and reduced its share-price forecast by 39% to $1. “We think the Singapore gaming market cannot grow and Genting will be pushed into extending more credit to VIP players to protect market share, leading to more bad debts and deterioration of returns.”

Analysts have been tempering their earnings estimates for Genting, with the average forecast by 18 brokerages predicting the company will post a profit of $680 million this year, according to data compiled by Bloomberg. Growth will remain weak, with a chance of further earnings downgrades given declining tourist arrivals in Singapore and rising risk of bad debts from gambling, Samsung’s Richardson said.

Tourism Decline

Visitors to Singapore declined 2.5% to 8.92 million in the seven months ended July 31 from a year earlier as arrivals from China plunged 29%, according to the Singapore Tourism Board. Chinese travelers have been deterred by political violence and the disappearance in March of a Malaysia Airlines plane bound for Beijing.

“We’re not optimistic about the Singapore gaming market,” Aaron Fischer, an analyst at CLSA Asia-Pacific Markets in Hong Kong, said by phone. “The key opportunity for Genting is really securing one of the gaming licenses in Japan.”

Japanese Prime Minister Shinzo Abe said in June his ruling party will seek to pass a law in the next session of parliament to legalize casinos as part of a plan to boost tourism before the Tokyo Olympics in 2020. The legislation may win lower-house approval this month, lawmaker Koichi Hagiuda said yesterday.

Japan Casino For MGM Resorts International, Japan’s casino market could be bigger than Macau, the world’s largest gambling destination, Chief Executive Officer James Murren, has said. MGM, Las Vegas Sands Corp. and Genting Singapore are among the best-positioned foreign companies to get a gaming license in Japan, CLSA said in August.

Getting a gaming license in Japan will be a key catalyst for Genting, Morgan Stanley said on Sept. 23, when the brokerage raised its rating on the stock to overweight from equal-weight.

“Genting, along with U.S. players, is a front-runner and could outperform in the near term,” analyst Praveen Choudhary wrote in the note.

Genting and partner Landing International Development also are building a US$2.2 billion ($2.75 billion) casino resort on South Korea’s Jeju island to target Chinese bettors. This project won’t be significant enough to help counter sluggish growth from Singapore, Samsung’s Richardson said.

“Should Genting get a license to operate a casino in Japan, the earnings impact won’t be felt until at least 2018,” Carey Wong, an analyst at OCBC Securities Pte in Singapore, said by phone on Sept. 19. “There isn’t any catalyst for the stock in the near term.”

Linc Energy names new CEO, chairman

Linc Energy, whose shares started trading in Singapore last December, has a new CEO.Craig Ricato, 44, took the helm from today, replacing Peter Bond, 52, who has assumed the role of executive chairman.Bond took over as chairman from Ken Dark, 71, who will remain on the board as a non-executive director.

Ricato joined Linc Energy in 2008 as general counsel and company secretary, and became executive director in 2010.

“The demands of the last 10 years have required a tremendous sacrifice from both my family and me, so I am looking forward to now performing more of a strategic management role on my journey with Linc Energy,” Bond said in a statement today.

Linc Energy is an oil and gas producer. It also owns and operates the world’s only commercial underground coal gasification facility, in Uzbekistan.

Shares of Linc Energy traded at $1.125, down 0.4%, at 0303 GMT.

Hiap Hoe to sell 39 shop units

Mainboard-listed Hiap Hoe plans to sell 39 shop units, most of which are strata-titled units in Parklane Shopping Mall, in line with its plan to divest non-core assets even as it capitalises on healthy investor demand for retail space.

The property developer has hired consultancy firm JLL, which on Tuesday launched an expression-of-interest (EOI) exercise to sell the shops.

Tuesday, September 30, 2014

Tiong Seng wins $107.7 million PUB contract to construct Stamford diversion canal

Tiong Seng Holdings says wholly-owned subsidiary, Tiong Seng Contractors, has been awarded a contract from PUB, the national water agency, for the proposed construction of the Stamford Diversion Canal Phase 2.

The project involves the construction of the canal from Grange Road at the Orchard Boulevard junction to River Valley Road.

The contract is worth $107.7 million and will start in November.

Pek Lian Guan, CEO of Tiong Seng Holdings Limited said, “We are excited about winning this complex civil engineering project. It demonstrates our capabilities in performing a spectrum of construction projects. We are confident in leveraging on our expertise in civil engineering jobs to complete the project successfully.”

Tiong Seng is up 0.6% at 18.3 cents as of 1:07 p.m. Singapore time.

Temasek units invest in shoe retailer Star 360

Sports and fashion footwear retailer Star 360 Holdings said on Tuesday that it has received investments from two units of Singapore state investor Temasek Holdings (Private).

 Heliconia Capital Management and Pavilion Capital will jointly inject capital into Star 360, to help it expand its retail and distributor networks.

Singapore-based Star 360 distributes and sells footwear and accessories from brands including Nike, Birkenstock and Polo Ralph Lauren in 17 countries across Asia, Europe and the United States. The company did not disclose the size of the investments.

Noble Group shares tumble as CIC unloads

Shares of Noble Group fell as much as 9% in early trade today after China Investment Corp agreed to sell a stake in the commodities trader for as much as $405 million.

According to a term sheet seen by The Edge Markets, Best Investment Corp, a subsidiary of the Chinese sovereign wealth fund, will sell 300 million Noble shares at between $1.32 and $1.35 each.

The price range represents a discount of 3.2% to 5.4% to Noble’s closing price of $1.395 yesterday.

The block of shares is equivalent to a 4.5% stake in Noble. JP Morgan is sole book runner for the sale.Shares of Noble traded at $1.295, down 7.2%, at 0206 GMT.

The decline prompted the Singapore Exchange to query the company on the price movement.

Near-term support for the stock is seen at its 200-day moving average of $1.24.