Summary: Cougar Logistics Corporation Ltd (CLC) released a mixed set of 1H08 results recently. Revenue fell 7.1% YoY from S$23.6m to S$21.9m due to the disposal of Cougar Holdings Group to Menlo Worldwide LLC. While net profit jumped from S$1.6m to S$23.6m, this was inflated by S$21.3m from divestment gain. CLC has announced a payout via capital reduction worth about S$0.19/share. With no debt, we do not expect CLC to finance the latest payout with cash. We believe CLC may partially debt fund this payment and see 37% gearing or S$5m as likely. In terms of ratings, with the recent disposal, CLC's asset base has been markedly reduced. Its NTA of S$0.44/share (end Sept 07) is now almost entirely supported by cash. As such we are now valuing CLC based on 1.0x book value and post the Oct payout of S$0.13/share, we estimate CLC's NTA to be at about S$0.31/share (and S$0.12/share ex capital reduction). CLC last traded at S$0.66, we therefore reiterate our SELL rating (Selena Leong)
SembCorp Marine – Statutory demand from BNP on JSPL
Summary: SembCorp Marine (SMM) announced that BNP Paribas has served a statutory demand dated 20 November 2007 on its wholly owned subsidiary, Jurong Shipyard Pte Ltd (JSPL) for a payment of a sum of US$50.7m within 21 days from yesterday. This amount demanded is part of the loss of US$303m from the unauthorized transactions which JSPL maintains are not valid and binding. JSPL has instructed its solicitors, Drew & Napier LLC, to vigorously oppose BNP Paribas' action and to apply to the High Court, before the expiry of the 21 days stipulated in the demand, for an injunction to restrain BNP Paribas from filing a winding-up application. On Nov 19, SMM increased its interests in JSPL by S$300m through the subscription of 300 million redeemable preference shares at an issue price of S$1.00 each. Part of the funds from the recapitalization will be used by JSPL to make a conditional payment to Societe Generale in the sum of US$115.4m. Pending more details from SMM on this issue, we maintain our HOLD rating, as we believe the confidence level may be affected by the latest development. (Serene Lim)
For more information on the above, visit www.ocbcresearch.com for the detailed report.
NEWS HEADLINES
- Ferrochina Limited has inked two MOUs to invest in Richsun Steel (HK) Ltd in Guangdong, China and in Zhong Yue Steel Ltd in Vietnam, which are expected to add 200k tonnes and 418k tonnes to its annual steel production capacity for FY08 and FY09 respectively.
- CapitaCommercial Trust has established an S$1b multi-currency medium-term note programme, allowing it to issue notes in series or tranches in any currency agreed between CCT and DBS Bank. The programme has been given a 'Baa1' rating by Moody's Investors Service.
- Singapore Exchange Limited has introduced a new section on its website, which lists the companies with primary listings outside of Singapore, to aid investors in identifying those that comply with listing rules other than SGX's.
- GuocoLand Limited is set to develop its maiden project in Vietnam with The Canary - a 17.5 ha integrated development housing some 1,200 residential apartments, a hotel, a retail mall and an international school. Scheduled to be completed in 5 - 6 years' time, it will cost US$58m.
- United Overseas Bank Limited will have to cease the usage of a currency identification system which is used by 180 merchants here, following the Court of Appeal ruling that the technology infringes a patent by an Irish company - Main-Line Corporate Holdings.
- Radiance Electronics Limited has proposed to write down its investment in its wholly owned subsidiary Xiptech Holdings Pte Ltd, resulting in an S$3.8m impairment charge and a goodwill write-off of S$5.8m.
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