Fraser and Neave posts 11.7% rise in H1 net profit to S$205m

Fraser and Neave posts 11.7% rise in H1 net profit to S$205m

 

SINGAPORE : Conglomerate Fraser and Neave (F&N) on Friday said it is looking to expand its food and beverage business in a bid to rebalance profit contributions from its other businesses.

 

For the half-year ended in March, F&N booked a nearly 12 percent rise in earnings on-year to S$205 million. Revenue rose by the same margin to S$2.5 billion.

 

The property business is driving growth for F&N. Commercial properties led the way, thanks mainly to higher management fee income, and strong occupancy and rental rates.

 

Hui Choon Kit, General Manager, Treasury and Budget, Fraser and Neave, said: “Not only is the commercial property business doing very well, but from the presales of projects, we will continue to be able to deliver good earnings.

 

“So now the property earnings are very strong; 55 percent of PBIT (profit before income tax) comes from property.”

 

Anthony Cheong, Group Company Secretary, Fraser and Neave, said: “This has been the result in property profits over the last few years, which has outstripped the performance of all our other business groups.

 

“Without wanting to hold back on property, we still see the need to rebalance the profit contributions from… the various core businesses, and one way of achieving a great leap must be through M&A.”

 

The food and beverage business is one segment that F&N intends to expand.

 

Mr Cheong said: “As you know, I think we’ve received S$900 million from Temasek about a year ago, principally for the development of the F&B business, and you can expect that there is quite a lot of focus in that area.”

 

F&N said that the current market presents excellent opportunities to make investments at more reasonable values. It is proposing to pay an interim dividend of 5 cents a share.

 

Meanwhile, the aftermath of Cyclone Nargis affected F&N’s operations in the outskirts of Yangon.

 

Mr Cheong said: “The brewery building was damaged slightly and one sales office in Yangon was wiped out, but none of our employees have been injured, although a few have lost their homes.

 

“Because electricity and communication lines are down, we have great difficulty trying to get an update of the situation. But I think, one can expect that not very much beer will be drunk in the coming months. I think sales will be affected – we expect that.

 

“But the principal concern of course is recovery efforts and… to try and alleviate the plight of all those affected. I think the brewery is trying to do that as well by supplying water trucks to nearby villages.” – CNA/ms

 

Source: Channel NewsAsia

A-REIT to buy business park building in Jurong for S$246.8m

A-REIT to buy business park building in Jurong for S$246.8m

 

SINGAPORE : Ascendas Real Estate Investment Trust (A-REIT) is buying a business park building in Jurong for S$246.8 million.

 

The property at 31 International Business Park is currently owned by multimedia firm Creative Technology.

 

It has a gross floor area of about 62,000 square metres and a net lettable area of some 50,000 square metres.

 

It includes three office towers, an auditorium and a 2,000-capacity outdoor amphitheatre.

 

The site has another 16 years left to its 30-year lease, but this could be extended for another 30 years.

 

A-REIT said the proposed acquisition, to be funded by debt or equity, is in line with its strategy of enhancing its portfolio over time. – CNA/ms

 

Source: Channel NewsAsia

She’s been sold – again

She’s been sold – again

 

Fairmont Raffles Hotel Int’l sells its stake in Raffles Hotel to ex-Credit Suisse banker

 

THE Grand Dame of Singapore will be getting a new master — yet again.

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Fairmont Raffles Hotel International — controlled by Saudi Arabian billionaire Prince Alwaleed bin Talal and United States-based private-equity company Colony Capital — is selling its stake in the 120-year-old Raffles Hotel.

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The buyer is a group led by a former investment banker of Credit Suisse Group, Mr Mark Pawley, Fairmont said in a statement yesterday.

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While it did not disclose the price or name the other buyers, The Business Times reported yesterday that the group would pay about $650 million for the acquisition.

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The transaction is part of the company’s strategy to “monetise” its investments in hotels and real estate and will provide the company with “significant capital for future growth”, it said.

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The 103-room Raffles Hotel will continue to be part of the Fairmont Raffles’ collection of hotels and the company will continue to run the property through a management contract, the statement said.

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This is the second time in less than three years that the iconic hotel — which is gazetted as a national monument — has changed hands. In 2005, Colony bought the hotel and the adjacent shopping arcade as part of the entire hotel business of the then-listed Raffles Holdings for a total of $1.7 billion.

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According to BT, Colony later merged these assets with Fairmont Hotels and Resorts after Fairmont was acquired by Colony and Prince Alwaleed’s Kingdom Hotels International to create a single hotel enterprise, Fairmont Raffles Hotel International.

 

Source: Today Newspaper

S’pore homes to be wired up with fibre optic link

S’pore homes to be wired up with fibre optic link

 

Both bidders for next-gen broadband network propose this lightning-speed technology

 

By Alfred Siew

 

BESIDES phone and cable points, Singapore homes will soon get one more jack in the wall – for a thin fibre optic cable to hook up to ultra-fast broadband.

 

The technology, called Fibre To The Home (FTTH), has been proposed by the two consortia bidding to build the island’s new cyber highways. When ready in as early as two years, it promises an almost infinite speed boost for years to come, enabling people to enjoy ‘life-like’ video-conferencing or download a movie in mere minutes.

 

In the past two years, several technologies have been put up as possible upgrades to Singapore’s existing broadband networks.

 

But fibre optics now appear to be the way forward, going by what both bidders for the Next Generation National Broadband Network submitted in their bids on Monday.

 

The new network, first announced two years ago, is expected to shake up the market and offer users faster speeds at a lower price.

 

While existing wall jacks will remain in place, the new fibre optic link will open up a world of offerings via new, ultra-fast broadband. Each fibre optic cable, no thicker than a piece of thread, has the capacity to deliver services such as phone calls, high-definition TV programmes and tele-medicine.

 

To hook up, users have to attach a modem similar to what they have now. Both bidders for the project promise that the new cables will be installed with minimal disruption.

 

The OpenNet group, made up of Axia NetMedia, SingTel, Singapore Press Holdings and SP Telecommunications, says it will use underground ducts which hold existing cables. This means there would be no need to dig up so many roads.

 

Mr Allen Lew, SingTel’s chief executive officer for Singapore, said it also helps that telecom risers – the vertical shafts in buildings used for running cables – already exist in many apartment blocks here. This means the cables can be run throughout a building without fuss.

 

Rival bidder Infinity Consortium also promises to keep disruption to a minimum. Comprising City Telecom, StarHub and MobileOne, the group says people will be able to plug in the same way as they do now with the phone and cable TV jacks. ‘This would pave the way for large-scale high-definition TV and medical services,’ said a spokesman.

 

Already rolled out in Hong Kong, Japan and the United States, FTTH makes use of light signals to transmit information.

 

An almost unlimited amount of data can be pumped through by simply upgrading network equipment to alter how the light is transmitted.

 

Copper cables that deliver data with electrical pulses are reaching the limit on how much they can carry.

 

SingTel’s Mr Lew said its system now offers up to 25 megabits per second (Mbps), but the new, much faster technology will bring services such as more high-definition channels.

 

While StarHub offers a faster 100Mbps service using current technology, it has also decided to invest in a future network that can be used many decades down the road. Experts say the upgrade will put Singapore up there with the most wired-up countries in the world.

 

 

——————————————————————————–

 

FASTER AND CHEAPER

 

‘Basically, they (broadband users) will get faster and cheaper broadband. Who would want 3Mbps in future when you’ve got 1,000Mbps?’

 

MR MARC EINSTEIN, from research firm Frost & Sullivan

 

Source: Straits Times

US sub-prime crisis far from over, warns Jim Rogers

US sub-prime crisis far from over, warns Jim Rogers

 

By Grace Ng

 

THE United States sub-prime crisis rocking world financial markets is not over by a long shot, warns investment guru Jim Rogers.

 

‘I doubt that we’re halfway through,’ he said yesterday, adding that he expects more write-downs from European and US banks for their investments linked to delinquent US mortgages.

 

‘We certainly haven’t hit the bottom as far as I’m concerned.’

 

He is also pessimistic about oil prices, tipping that crude can ‘go much, much higher’, even passing the US$200-per-barrel- mark some pundits have predicted.

 

Oil hit about US$123 a barrel yesterday.

 

Mr Rogers, chairman of investment group Rogers Holdings, was speaking at the launch of the Barclays Global Agriculture Delta Fund.

 

The fund gives investors direct exposure to the performance of the Rogers International Commodity Index – Agriculture, which represents the value of 20 agricultural commodities futures contracts, including grain and cotton.

 

The index is reviewed annually by a committee chaired by Mr Rogers.

 

The Singapore-based American, who gained fame and fortune by co-founding the Quantum Fund with billionaire George Soros, is staking ‘all his new money on commodities and China plays’, and shunning the more traditional sectors amid the global financial turmoil.

 

He noted that agriculture is the ‘most promising area of the commodities sector’, as people are consuming more, but the supply and inventory levels of some agricultural products are at historic lows.

 

Mr Rogers is also bullish on China plays, particularly those listed in Singapore and Hong Kong, which are ‘cheaper to buy’ than those in China. He added that he bought some China stocks in Singapore yesterday .

 

He also observed that high-yielding commodity currencies like the Australian and New Zealand dollars remain good bets to hold, as he expects them to ‘to do well’.

 

While the US dollar is losing its status as the world’s reserve currency, Mr Rogers also noted that many investors are too pessimistic about the greenback, which he expects to rally

 

Source: Straits Times

MANDARIN GARDENS EN-BLOC SALE

MANDARIN GARDENS EN-BLOC SALE

 

Committee not involved in AGM

 

PLEASE refer to Monday’s article, ‘En-bloc uproar at Bayshore Park, Mandarin Gardens’ by Ms Jessica Cheam, and the letter by Mr Augustine Cheah, ‘En-bloc system needs relook, as Bayshore shows’.

 

The Mandarin Gardens collective sale committee would like to clarify that it was not involved in the proceedings of the annual general meeting on April 27.

 

However, we know of members who attended as legal owners or subsidiary proprietors. One of our members present at the AGM declared that none of us would stand for election to the council.

 

We certainly did not organise any collection of proxies, although some subsidiary proprietors may have approached committee members in their capacity as neighbours.

 

Tan Kok Khoon

 

Source: Straits Times

Banks aren’t out of the woods yet

Banks aren’t out of the woods yet

 

By CHOW PENN NEE

 

DOGGED by a multitude of problems stemming from the sub-prime mortgage crisis in the US, banks here are not having it easy. Nor will it become easier as the year progresses. Last year saw them dogged by writedowns on their holdings in collateralised debt obligations (CDOs). Yes, they suffered from provisions made on their CDO holdings; but no, the crisis did not bring them to the point of near-collapse, as it did some of their European and US counterparts.

 

Investors focused on how much writedowns the local banks had, largely ignoring the other positive parts of the bank’s earnings such as their tremendous loans growth and strong fee income. The CDO issue has largely been laid to rest, but banks aren’t out of the woods yet. They still have to contend with the fallout from the sub-prime turmoil in the financial markets in terms of widening credit spreads, high inflation, slower growth and compression of their interest margins.

 

A proxy for the local economy, banks have been pummelled on several fronts – by the volatility in global financial markets and a softening property market. Collectively, their Q1 earnings dipped from a year ago as all three banks suffered marked-to-market losses on their investment portfolio. And even though net interest income – or profits from loans – are still holding up, the banks have warned that the over 20 per cent growth in loans seen in the preceding quarters will not continue.

 

Loans growth will be moderated in the coming year, and OCBC Bank CEO David Conner even noted that industry loans growth is likely to come in at the ‘low double-digit range’.

 

So are banking stocks worth a buy now? With no clear profit drivers and a US recession looming in the background (and what shocks that may produce for the domestic economy), the market generally has a ‘hold’ call on the banks.

 

Operationally, a mixed set of results makes it difficult to pin down bright spots in revenue. On the one hand, a surprising jump in interest margins means banks are earning more on their loans. That, however, will be mitigated by the lower trading and investment income, as well as lower wealth management sales, as customers shy away from buying investment products.

 

Net interest income will be adversely affected amid continued swings in the markets. Analysts have also pointed to higher impairment charges on loans – a function of swelling loan books and economic activity – in the coming quarters, which will take a toll on the banks’ bottom lines. Add to that mix burgeoning expenses from rising inflation, ballooning staff costs and rentals for their premises, and you have a recipe for little profit growth.

 

Judging from how revenue is coming under pressure, grand plans for regional expansion through mergers and acquisitions might have to take a back seat, as the local banks deal with problems on the home turf first. With Singapore accounting for the lion’s share of the banks’ profits, fixing domestic leaks would take priority over overseas pursuits.

 

The banking heads, though honest about the challenges ahead, are quick to point out that opportunities still abound in Singapore and the Asian region. They point to the upcoming integrated resorts, the Formula One race in September, and the still red-hot economies of China and India. But with banks so inextricably linked to the fortunes of the economy, which is heavily affected by what happens in the US, it is fair to expect fewer reasons for cheer when the next earnings season rolls around.

 

Source: Business Times

US banks clamping down on loans

US banks clamping down on loans

 

This suggests that Wall Street’s recovery rally is overly optimistic

 

(WASHINGTON) Wall Street seems to have concluded that the worst of the credit crisis is over and investors are looking to better economic times ahead, but Main Street is sending the opposite signal.

 

While banks have raised cash by the billions to shore up balance sheets that were battered by bad bets on mortgages and other loans, the front-line staff in charge of doling out that money to consumers and companies remain downbeat, suggesting that the US economy may stay in the doldrums for some time.

 

The US Federal Reserve’s quarterly survey of senior loan officers, released this week, showed widespread tightening of credit.

 

The percentage of banks reporting tougher lending standards was close to, or above, historical highs for nearly all loan categories in the survey.

 

Banks clamped down on loans to companies large and small, to prime and sub-prime mortgage holders, and on credit cards, home equity lines and other consumer credit. Most banks blamed a less favourable economic outlook for the tightening terms rather than their own bruised balance sheets.

 

That does not bode well for spending, which accounts for the bulk of the US economy, or for corporate profits.

 

‘Main Street has just entered the act. The peak of the pain is not visible yet,’ said Asha Bangalore, an economist with Northern Trust in Chicago.

 

The consumer strains are well-documented. Aside from the credit contraction, petrol and grocery prices are on the rise, the housing market remains distressed, and consumer confidence is at recessionary levels. Tax rebate cheques are in the mail, but that alone cannot compensate for the credit clampdown and inflation pressure.

 

‘Given that households are strapped financially, it is far-fetched, even with the stimulus cheques, to expect a sharp increase in consumer spending,’ Ms Bangalore said. ‘You have seen auto sales numbers for April – they posted a sharp drop.’

 

Meanwhile, the Standard & Poor’s 500 index is up nearly 13 per cent since mid-March as investors look beyond the current troubles.

 

Stock markets are forward-looking by nature, so it is not surprising that investors would think about how the economy might look in the coming months.

 

To say that Wall Street expects a second-half recovery would be an understatement. According to Thomson Reuters research, analysts are expecting fourth-quarter earnings growth of 62 per cent for the S&P 500.

 

Granted, that is a comparison with a disastrous fourth quarter of 2007, when earnings were down some 25 per cent. In the current quarter, S&P 500 earnings are expected to be down 6 per cent.

 

Not only is the market anticipating a swift recovery, but the earnings forecasts suggest that analysts think it will be lasting. For next year, they expect earnings will be up 18 per cent, twice the growth they are predicting for 2008.

 

They see particularly strong growth for consumer discretionary companies, beginning with the next quarter.

 

Earnings for that sector are expected to jump by 41 per cent in the fourth quarter, and 24 per cent next year.

 

But if banks remain reluctant to lend, spending will likely be sluggish. The head of Wal-Mart’s US stores division said last month that consumers appeared to be ‘topped out’ and unable to obtain any more credit.

 

Deutsche Bank economists said that if banks stay as stingy as they are now for a few more quarters, it could shave one-half of a percentage point from consumer spending. Considering that consumer spending rose by a slim one per cent in the first quarter, that would be a significant blow.

 

Northern Trust’s Ms Bangalore said that in past recessions, it took several quarters for credit conditions to improve. With banks staring at losses in the US$400 billion range just from bad mortgage-related assets, it could be even longer this time.

 

Jack Ablin, chief investment officer at Harris Private Bank, pointed to another sign that Wall Street’s recovery rally may be getting ahead of itself.

 

The Dow Jones index of transportation stocks has jumped 20 per cent from a March 10 low, hitting an all-time high on April 30, he said. Transportation stocks are often seen as early indicators of economic strength.

 

‘While I’m encouraged by the move, the surge in transports runs completely counter to the spike in crude oil,’ he said, noting that until March, the transport sector had consistently taken its cues from oil prices over the last two years.

 

‘The move in transports suggests that our economic downturn will be short-lived and mild. The challenges facing homeowners and consumers these days make this view overly optimistic,’ he said\. \– Reuters.

 

Source: Business Times

Soros says impact of crisis on US economy just starting

Soros says impact of crisis on US economy just starting

 

(WASHINGTON) Billionaire investor George Soros believes that the ‘acute phase’ of the financial crisis is ‘largely behind us’, even as the US economy is only now starting to feel the effect.

 

The damage done to the global financial system ‘has to affect, in my opinion, the real economy’, Mr Soros, 77, said in a question-and- answer session in Washington on Wednesday. ‘The effect of that is only beginning to be felt. There is a certain time lag.’ Just as housing prices ‘overshot on the upside’, they will overshoot on the way down, Mr Soros said.

 

The US is in the ‘very beginning of an uptrend’ in foreclosures, he said at an event hosted by the Council on Foreign Relations. With home prices declining, ‘to expect that by the end of the year you will have passed through that’ is unrealistic, he said.

 

The US dollar ‘would certainly come under renewed pressure’ if the Federal Reserve were to further reduce interest rates, Mr Soros said. The Fed cut its benchmark interest rate by a quarter- percentage point to 2 per cent on April 30.

 

‘The fact that they stopped at 2 per cent is now giving the dollar a breathing space,’ Mr Soros said. ‘So the dollar has stabilised as a result.’

 

Sovereign wealth funds have been a ‘positive factor’ in stabilising US financial companies, Mr Soros said. Certain standards need to be set for the funds because they could come under political influence, he said.

 

The funds, owned and controlled by foreign governments, have bought stakes in financial institutions including Citigroup, Merrill Lynch & Co, UBS AG and Morgan Stanley, after the banks suffered losses on securities linked to sub-prime mortgages. The funds’ assets may increase four-fold to US$12 trillion by 2015, according to Morgan Stanley estimates. — Bloomberg.

 

Source: Business Times

Test of Singapore’s economic resilience

Test of Singapore’s economic resilience

 

MUCH has been written about the nature of the beast, about whether it’s shaped like a U, V, L or even W. We’re talking of course about the impending – or, as oracles like former US Federal Reserve chief Alan Greenspan and Berkshire Hathaway’s Warren Buffett contend, the ongoing – US recession. What’s clear is that the world’s largest economy, hammered by a massive financial crisis that has reverberated across the globe and further weakened by ever-rising oil prices, is on the ropes. And the impact of a US economy brought to its knees by a recession, whatever the shape, is bound to shake national economies everywhere.

 

Singapore awaits with concern, but also a measure of quiet assurance. It’s a beast we’ve faced before, this spectre of global slowdown, and the painful lessons have been well learnt. The first hard lesson is that a small and open economy like Singapore’s can never be fully shielded or buffered from external tremors. The corollary, though, is that the right preparation can make all the difference between holding firm in the storm and being blown away.

 

Thus Prime Minister Lee Hsien Loong’s assurance in his May Day message that ‘however the US financial problems play out, I am confident of our ability to cope’. Earlier this week, in a dialogue with over 100 business and financial leaders, PM Lee expanded on that premise. If things do get significantly worse – and at this point that’s a big ‘if’ – the government has several possible options, he noted. Fiscal policy measures would be one such option. There could be directed assistance to help lower-income workers. Or the government could resuscitate construction projects that had been put on hold. ‘We have the resources, we have the wherewithal,’ Mr Lee noted.

 

Significantly, the savvy audience would have noted that the options he mentioned were not being pulled out of a vacuum. The global situation is being closely tracked by the country’s planners, and Singapore’s own economic performance is comprehensively monitored. Scenarios have been drawn up to cover the spectrum of possibilities. Any urgent or emergency measures would thus be as apt for the situation as is humanly possible.

 

However, true economic resilience is not just holding firm in the short term, but growing in strength through adversity over the long term. That is why the longer-term initiatives to keep this island-nation globally competitive and relevant must continue apace.

 

The hardware is being upgraded on schedule, from airports to highways and the MRT system, to a national ultra high-speed infocomm infrastructure that will spark a whole new panoply of high-tech products and services. As important will be developing the ’software’, a new generation of world-class, world-conscious Singaporeans. Get the formula right and the world will beat a path to Singapore’s door, recession or no recession.

 

 

Source: Business Times