Singapore Pre-Market Thursday: Noble, Courts Asia, CapitaLand Mall Trust

Singapore 50 dollar bill

Singapore’s shares on Thursday got a middling lead from Wall Street, where markets were mixed.

The Dow Jones Industrial Average slipped 0.16 percent, while the S&P 500 edged up 0.8 percent and the tech-heavy Nasdaq added 0.19 percent. But analysts pointed to IBM’s more than 7 percent drop as dragging the S&P 500 index after its guidance disappointed even though its earnings beat expectations.

But regional markets offered a slightly more positive tone, with the Nikkei 225 up 0.29 percent and Australia’s All Ordinaries up 0.37 percent in early trade on Thursday.

Markets got some hopeful signs that at least some trade war rhetoric may ease soon, amid reports that the U.S. hopes to reach a NAFTA deal soon.

But sterling tumbled, with the pound fetching US$1.4203 at 7:52 A.M. SGT after falling as low as US$1.4172 overnight.

Kathy Lien, managing director for foreign-exchange strategy at BK Asset Management, said that was after disappointing data weighed on gilt yields and rate-hike expectations.

“If Thursday’s retail sales report shows consumer spending contracting more than expected, you can officially kiss the rally in GBP/USD goodbye,” she said in a note on Thursday. “With consumer price growth slowing to 0.1 percent in March from 0.4 percent and average weekly earnings growth holding steady at 2.8 percent instead of rising, a contraction in retail sales in excess of 0.6 percent could encourage the Bank of England to postpone a rate hike. Inflation is now at its lowest level in a year.”

Lien also noted that the U.S. dollar rose against its major rivals after the Beige Book release. The dollar index, which measures the greenback against a basket of currencies, was at 89.622 at 7:52 A.M. SGT on Thursday, up from around 89.516 on Wednesday.

“The Beige Book was positive with the Fed districts citing more price pressures, real estate activity, loan growth, consumer spending increases, tight labor markets and a generally modest to moderate expansion in activity,” she noted. “However businesses voiced concerns about tariffs and the districts reported only modest wage gains despite widespread job growth.”

CapitaLand Mall Trust

CapitaLand Mall Trust inked a deal to sell the Sembawang Shopping Centre to a joint venture between Lian Beng Group and Apricot Capital for S$248.0 million, the REIT manager said in an SGX filing on Thursday. It noted the latest independent valuation at end-2017 had valued the property at S$126.0 million and a net gain of around S$119.6 million was expected.

Colliers International, which brokered the deal, said the pricing was one of the highest in recent years for a stand-alone retail mall with a 999-year leasehold tenure.

“There is strong interest and healthy appetite among both local and regional investors for Singapore suburban retail properties that offer stable recurring income. Sembawang Shopping Centre also offers inherent investment potential that will benefit from the future growth of the surrounding precinct,” Terence Tang, managing director of Asia capital markets and investment services at Colliers, said in a statement on Thursday.

SPH

SPH announced a tie-up with Google on Wednesday, during trading hours. The deal will allow users of “smart speaker” Google Home to access content from The Business Times, The Straits Times and SPH Radio’s Money FM 89.3, according to a Business Times report. The stock ended Wednesday up 4.23 percent at S$2.71.

Courts Asia

Courts Asia issued an earnings warning on Wednesday, saying in an SGX filing after the market close that its fiscal fourth quarter ended March 31 would see “significantly reduced” earnings, with the possibility of a quarterly loss. But it added that the full fiscal year was expected to show a profit.

The consumer electronics and appliance retailer attributed the warning to Malaysian revenue declines after the introduction of the Consumer Protection (Credit Sale) Regulations 2017 led to interest rates being capped at 15 percent per annum in the country.

“Coupled with a more prudent approach towards sanctioning credit sales and a challenging collections environment, profitability was further impacted,” the SGX filing said. The results were due on or before May 30.

Olam

Olam said it paid around 1.88 million euros for a 29 percent state in new Spanish joint venture Guzman Coffee & Nuts, with Guzman Global holding the remainder. The JV will import and distribute coffee and edible nuts into Spain and Portugal, Olam said in a statement after the market close on Wednesday.

Noble

Noble Chairman Paul Brough released a letter to SGX late on Wednesday detailing the reasoning for the company’s restructuring and urging creditors, shareholders and perpetual security holders to vote for the offer.

“The restructuring provides an economic return for ALL stakeholders,” said the statement, which included the emphasis. “The restructuring also allows New Noble to continue as a going concern and will allow stakeholders to capture economic upside as the business of New Noble recovers over time,” the statement said.

Brough clarified changes to the restructuring proposal, including the decision to amend some controversial plans.

One of those controversial measures had said that if a majority of shareholders voted against the restructuring plan, the minority who voted for it would receive the same stake in New Noble as if the resolution had passed, he noted. But he added, SGX had objected and the company will now treat all shareholders equally if more than half vote in favor of the proposal, no matter how they voted.

Brough noted that senior creditors representing around 83 percent of the company’s existing senior claims have signed on to the deal, but that shareholder support was still needed. He said that if a majority of shareholders don’t support the deal, the restructuring would be implemented via a pre-packaged administration process in the U.K. Additionally, if creditors withdraw their support, the board would likely have no alternative but to put Noble through a bankruptcy process, he said.

“In both scenarios above, perpetual securities holders and shareholders will receive nothing,” he said.