Straits Asia (9 Feb 2009)

By Carmen Lee
Mon, 9 Feb 2009, 09:15:39 SGT

Market Pulse: Straits Asia (9 Feb 2009)

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Straits Asia Resources: Courtship in the works?

Summary: Straits Resources Ltd’s (SRL) divestment of its 47.1% stake in Straits Asia Resources Ltd (SAR) had led to speculation over a possible takeover offer for SAR. Press reports have alluded to possible interest from several strategic investors, including Noble Group Ltd and Indika Energy. Our preliminary assessment of SRL’s short term debt profile suggests that it has no need to sell its entire 47.1% stake in SAR in order to meet its near term debt repayment obligations. Nevertheless, we view the keen interest from strategic investors as a testimony of SAR’s attractive valuations and viable assets. We maintain our BUY rating on SAR with S$1.35 fair value estimate. As for Noble, it is moving from an “asset-light” business model to an “asset-medium” model and could use present depressed valuations to execute its plans. Historically, it has taken up only minority interests in its investments and is likely to continue with this approach. As such, even if Noble emerges as a potential investor in SAR, we do not expect it to launch a takeover offer. We have a BUY rating on Noble with S$1.58 fair value estimate. (Lee Wen Ching)

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NEWS HEADLINES

- Keppel FELS has completed the Development Driller III, an ultra-deepwater drilling rig for Transocean and has delivered the jackup drilling rig, Deep Driller 8, to Aban Singapore.

- The exit offer for SP Chemicals closed last Friday with shares owned by the offerer and acceptances for it amounting to around 98%.

- Guocoland reported a 55% YoY fall in revenue to S$94.6m and a 94% fall in net profit to S$1.9m for 2Q09.

- Foundation and geotechnical engineering specialist CSC Holdings posted a 36.5% YoY fall in net profit to S$7.5m for 3Q09 while revenue fell 6% to S$123.1m.

- Total Access Communication posted a 3.3% rise in revenue to 67.7bTHB and a 59.6% rise in net profit to 9.3bTHB for FY08.

- Auric Pacific Group said its FY08 results are expected to decline compared to FY07, likely to be reflected in the unrealized loss on valuation of investments, operating loss from lower food retail sales and impairment loss of intangibles.

- Fragrance Group reported a 58.2% rise in turnover to S$215.3m and a 82.8% increase in net profit to S$55.6m for FY08.

- Pacific Healthcare expects to report a loss for FY08, partly due to a provision for impairment of its investment in a subsidiary.

- Jadason Enterprises expects to incur a loss for 4Q08, mainly due to weak demand for its printed circuit board drilling and mass lamination services.

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