SINGAPORE, April 10 (Reuters) - Singapore-listed United Fiber System (Unifiber) (UFSL.SI: Quote, Profile, Research) plans to raise about $225 million for expansion by selling convertible bonds and shares in its Indonesian unit, a source close to the deal said on Thursday.
The source, speaking to Reuters on condition of anonymity, said the funds raised would cover 25 percent of the cost of building a pulp mill in Indonesia.
The source did not give details on the convertible bonds issue and share sale.
Unifiber, which does construction and forestry, said in February it had entered into an agreement with China MCC20 Construction (MCC20), a unit of state-owned investment firm China Metallurgical Group Corp, to build a $863 million pulp mill in Indonesia.
But the cost of the mill has increased to $900 million, due to the euro's appreciation against the U.S. dollar, as most of the equipment was purchased from Europe, the source said.
Unifiber would obtain the remaining $675 million from MCC20 in the form of a cash loan to be repaid over 10 years, the source added.
The proposed bleached hardwood kraft pulp mill in South Kalimantan has a production capacity of 600,000 air dry tonnes per year, the company said. (Editing by Jennifer Tan)
Friday, April 11, 2008
Thursday, April 10, 2008
Cosco Corporation (S) Ltd - The good and the bad : CIMB
10 April 2008
Cosco Corporation (S) Ltd (COS SP / COSC.SI, OUTPERFORM - Maintained,
S$3.36, Target: S$5.55)
Quick takes - The good and the bad
by LIM Siew Khee
Cosco has won contracts worth US$292.3m, comprising a US$131.8m
semi-submersible production unit hull and two 59,000dwt shuttle tankers
(US$160.5m). The contracts are scheduled for delivery in 2010 and June 2011
respectively. However, the above is countered by the lapse of a GM5000
semi-submersible rig hull contract awarded in May 07 worth US$202m, due to
the failure of deposit payment. No work has been done for this project. We
believe work on the other offshore projects for which deposits have been
paid has begun, including the GM4000 (US$200m), which is planned for
delivery in 4Q09. Maintain Outperform and target price of S$5.55, based on
sum-of-the-parts valuation.
Cosco Corporation (S) Ltd (COS SP / COSC.SI, OUTPERFORM - Maintained,
S$3.36, Target: S$5.55)
Quick takes - The good and the bad
by LIM Siew Khee
Cosco has won contracts worth US$292.3m, comprising a US$131.8m
semi-submersible production unit hull and two 59,000dwt shuttle tankers
(US$160.5m). The contracts are scheduled for delivery in 2010 and June 2011
respectively. However, the above is countered by the lapse of a GM5000
semi-submersible rig hull contract awarded in May 07 worth US$202m, due to
the failure of deposit payment. No work has been done for this project. We
believe work on the other offshore projects for which deposits have been
paid has begun, including the GM4000 (US$200m), which is planned for
delivery in 4Q09. Maintain Outperform and target price of S$5.55, based on
sum-of-the-parts valuation.
Wednesday, April 9, 2008
Make The Most Of The Best And The Least Of The Worst....
What’s the difference between reckless gambling and professional trading? For many, the answer is risk management. Many traders view risk management as critical to long-term success. You can have a crummy trading strategy, but if you have good money management, you can make money. If you have poor money management, it doesn't matter how good the trading strategy is. You're going to lose in the end. Similarly, You must have a survivability element so that if you literally wished to select stocks by throwing darts at a board, you would continue to survive market to market.
Tuesday, April 8, 2008
United Fiber surges as stalled mill gets going
New Chinese partner set to sign turnkey contract for pulp mill
SHARES in United Fiber System surged as much as 15 per cent in trading yesterday as a long held-up billion-dollar pulp-mill project looks set to start taking shape with the expected signing this week of a turnkey contract with a new Chinese partner.
The stock of the forestry, pulp and construction company closed trading at 29.5 cents, up 13.5 per cent or 3.5 cents, after hitting an intra-day high of 30 cents. Some 153.7 million shares changed hands for the day.
Since end-February, the counter has been on an upward trajectory on the back of record order books for its wholly owned subsidiary Poh Lian Construction. The unit saw a 58 per cent surge in its order books to $550 million after winning a $202 million building contract from UOL, which was expected to contribute positively to group revenue this year.
United Fiber has also seen a substantial shareholder gradually raising its stake in the company. On Thursday last week, Lee Pineapple Co - through wholly owned subsidiary Paramount Assets Investments Pte Ltd - raised its holding to 7.14 per cent.
'I believe the Lee family will continue to buy after becoming a substantial shareholder (in March). They are not the only ones who look like they'll be increasing their stake. I suspect there will be more,' a local house trader was quoted as saying by Dow Jones Newswire yesterday.
This stake increase also came ahead of the finalisation this week of the turnkey contract to build a US$863 million (S$1.19 billion) greenfield pulp mill in South Kalimantan in Indonesia - a tie-up between United Fiber's unit PT Marga Buana Bumi Mulia and China MCC20 Construction Co Ltd.
China MCC20 will be responsible for the design, procurement and supply of all machinery and equipment, civil work, and the installation work as well as providing supplier's credit for the project.
The contract with the new Chinese partner, which was announced on Feb 24, helped allay investor concerns about the project which was long held-up over regulatory clearance by both the Indonesian and the Chinese governments.
The delay led to the earlier contract with China National Machinery & Equipment Import & Export Corp being aborted and the new contract with China MCC20.
United Fiber and China MCC20 have targeted to execute the engineering, procurement and construction contract and the supplier's credit agreement before Friday this week.
SHARES in United Fiber System surged as much as 15 per cent in trading yesterday as a long held-up billion-dollar pulp-mill project looks set to start taking shape with the expected signing this week of a turnkey contract with a new Chinese partner.
The stock of the forestry, pulp and construction company closed trading at 29.5 cents, up 13.5 per cent or 3.5 cents, after hitting an intra-day high of 30 cents. Some 153.7 million shares changed hands for the day.
Since end-February, the counter has been on an upward trajectory on the back of record order books for its wholly owned subsidiary Poh Lian Construction. The unit saw a 58 per cent surge in its order books to $550 million after winning a $202 million building contract from UOL, which was expected to contribute positively to group revenue this year.
United Fiber has also seen a substantial shareholder gradually raising its stake in the company. On Thursday last week, Lee Pineapple Co - through wholly owned subsidiary Paramount Assets Investments Pte Ltd - raised its holding to 7.14 per cent.
'I believe the Lee family will continue to buy after becoming a substantial shareholder (in March). They are not the only ones who look like they'll be increasing their stake. I suspect there will be more,' a local house trader was quoted as saying by Dow Jones Newswire yesterday.
This stake increase also came ahead of the finalisation this week of the turnkey contract to build a US$863 million (S$1.19 billion) greenfield pulp mill in South Kalimantan in Indonesia - a tie-up between United Fiber's unit PT Marga Buana Bumi Mulia and China MCC20 Construction Co Ltd.
China MCC20 will be responsible for the design, procurement and supply of all machinery and equipment, civil work, and the installation work as well as providing supplier's credit for the project.
The contract with the new Chinese partner, which was announced on Feb 24, helped allay investor concerns about the project which was long held-up over regulatory clearance by both the Indonesian and the Chinese governments.
The delay led to the earlier contract with China National Machinery & Equipment Import & Export Corp being aborted and the new contract with China MCC20.
United Fiber and China MCC20 have targeted to execute the engineering, procurement and construction contract and the supplier's credit agreement before Friday this week.
Straits Asia Resources - DBS Vickers
BUY S$3.07 FSSTI : 3,046.54
(Initiating Coverage)
Price Target : 12-Month S$ 3.89
Reason for Report : Initiating Coverage
Potential Catalyst: Mining license to exploit norther part and extension
of Sebuku mining concession area, acquisition of coal mining
Sizing up
Story: Straits Asia’s aggressive expansion has paid off.
The acquisition of Jembayan mine and expansion of
Sebuku mine boosted Straits Asia’s volume of resources
by almost three-fold to 387m tonnes, from 103m
previously. Accordingly, production is set to surge to
record levels of 9.5m tonnes in FY08, 10m tonnes in
FY09, then 11m tonnes by FY10. The recent rally in
international spot price for coal will directly benefit the
company’s performance. Supply constraints and growing
demand will keep prices at high levels. We foresee that
by 2009, infrastructure problems occurred in some
major coal exporting countries will be alleviated, hence
we might see spot prices eased but robust demand will
keep it at high levels above its historical average. We
estimate coal prices of US$100/tonne for FY08,
US$90/tonne for FY09, and US$80/tonne for FY10.
Point: Increasing expenditures on new infrastructure to
achieve its production target and strong international
coal spot prices would translate to buoyant performance
for the company in the coming years. We expect
revenue to grow 143% and 42% and bottom-line by
541% and 95% for FY08 and FY09 respectively.
Exploiting resources will be key, as a large portion of the
resources (over 80%) is located on mining concession
area where the mining licence is still being processed.
Relevance: Our DCF-based valuation is premised on
WACC of 9.35%, debt-to-equity ratio of 35% and
terminal growth of 0%. Our target price of S$3.89
implies PEs of 16.7x and 8.6x for FY08 and FY09
respectively. We initiate coverage on the counter with a
BUY call.
(Initiating Coverage)
Price Target : 12-Month S$ 3.89
Reason for Report : Initiating Coverage
Potential Catalyst: Mining license to exploit norther part and extension
of Sebuku mining concession area, acquisition of coal mining
Sizing up
Story: Straits Asia’s aggressive expansion has paid off.
The acquisition of Jembayan mine and expansion of
Sebuku mine boosted Straits Asia’s volume of resources
by almost three-fold to 387m tonnes, from 103m
previously. Accordingly, production is set to surge to
record levels of 9.5m tonnes in FY08, 10m tonnes in
FY09, then 11m tonnes by FY10. The recent rally in
international spot price for coal will directly benefit the
company’s performance. Supply constraints and growing
demand will keep prices at high levels. We foresee that
by 2009, infrastructure problems occurred in some
major coal exporting countries will be alleviated, hence
we might see spot prices eased but robust demand will
keep it at high levels above its historical average. We
estimate coal prices of US$100/tonne for FY08,
US$90/tonne for FY09, and US$80/tonne for FY10.
Point: Increasing expenditures on new infrastructure to
achieve its production target and strong international
coal spot prices would translate to buoyant performance
for the company in the coming years. We expect
revenue to grow 143% and 42% and bottom-line by
541% and 95% for FY08 and FY09 respectively.
Exploiting resources will be key, as a large portion of the
resources (over 80%) is located on mining concession
area where the mining licence is still being processed.
Relevance: Our DCF-based valuation is premised on
WACC of 9.35%, debt-to-equity ratio of 35% and
terminal growth of 0%. Our target price of S$3.89
implies PEs of 16.7x and 8.6x for FY08 and FY09
respectively. We initiate coverage on the counter with a
BUY call.
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