Wilmar International :Foray Into China’s Real Estate Business

Wilmar International has entered into a master JV agreement with Kerry Properties Ltd and Shangri-la Asia for real estate development, operation, sale, leasing, property management and hotel development, operation and management in Bayuquan, Yingkou City in China’s Liaoning Province. The JV parties have successfully bid for three sites totaling 200k square metres in Bayuguan for USD36m. The total project cost is estimated at USD386m, of which Wilmar’s portion is USD134m by virtue of the group’s 35% stake in the venture.

Comments
We are negative on Wilmar’s entry into the property market. The investment amount of USD134m is small relative to the size of Wilmar’s balance sheet, which boasts of shareholders funds of USD11.5bn, and we have no doubt about the eventual profitability of the project given Kerry Properties and Shangri-la’s knowledge of the property market.
Nevertheless, the entry into the real estate business represents Wilmar’s first ever deviation from its core agribusiness. In the past several years, all of Wilmar’s expansions have been in related businesses such as sugar, rice, flour and mineral water, which leverage on its vast distribution network. We fear this foray into property could mark the start of Wilmar’s loss of business focus and corporate discipline, and do not think that this venture will be well received by the market.

We are maintaining our Buy call, however, as we view Wilmar as being inexpensive at 13.5x CY11 earnings.

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How APPLE become most valuable company in America?

Apple (NASDAQ: AAPL) is the second largest company in America based on its market value after oil giant Exxon Mobil (NYSE: XOM). Apple is ahead of other public corporations with higher revenue, including Wal-Mart (NYSE: WMT), Procter & Gamble (NYSE: PG), Berkshire Hathaway (NYSE: BRK.B) and AT&T (NASDAQ: T). Wall Street analysts say that Apple’s value is based on its rapid growth which is not matched by any other huge US company. The extremely brisk sales of Macs, iPhones, and iPad are likely to accelerate as Apple picks up more sales overseas and takes market share in the US from companies such as Research In Motion (NASDAQ: RIMM), maker of the Blackberry, and Dell (NASDAQ: DELL).
The case for a continued rise in the value of Apple’s shares is compelling. It posted record revenue of $20.34 billion and net quarterly profit of $4.31 billion, or $4.64 per diluted share in the quarter that ended September 25. Revenue was up 66% from the same quarter a year ago. iPhone sales rose 91% to 14.1 million. Many analysts who cover Apple’s stock believe that the iPhone growth rate will continue at a similar pace.
The total value of Exxon Mobil’s shares creates a market cap of $362 billion. Apple’s is $284 billion. Exxon’s quarterly revenue is over $90 billion, but that figure is not growing very fast. Neither is the world’s largest company’s stock price. It has risen by 5% in the last year. Apple’s stock is up 65% over the same period.
Apple’s share price is $321, very near an all-time high. A number of analysts who cover the stock say it will go higher. Research firm Piper Jaffray recently raised its price target for Apple to $438, about 36% above its share price today. Apple’s market cap would eclipse Exxon’s if its shares hit that level.
Piper is not alone in its aggressive prediction about Apple’s share price. Goldman Sachs recently set a $430 target. Stifel Nicolaus & Co. has a target price of $390. Caris & Company’s target is $400. Many of these price forecasts are raised often as Apple’s sales numbers seem to rise sharply from earlier predictions.
Apple is expected to post a extremely good quarter for the holiday season. That, by itself, may push its stock high enough to make it the most valuable company in America.

Genting Singapore Plc : Project Debt Refinancing

Refinancing project debt.

Genting Singapore has recently signed a commitment letter to refinance S$4.1925bn of RWS project debt facilities obtained in 2008. The proposed refinancing is for the exact similar amount, comprising of S$3.5bn of term loans, S$0.5bn in revolving credit facilities and S$192.5m banker's guarantee facility. Tenure of the term loan remains 7-year, i.e.,from 2011-2018 (previously 2008-2015).

The refinancing exercise aimed to achieve the followings:-

(1) Lower funding cost to Singapore Dollar Swap Offer Rate (SOR) + 1.2% to 1.6% (depending on the debt/EBITDA ratio) from SOR +1.75% currently. However, given existing interest rate swap arrangement, RWS effective funding cost for its loan averages at about 4.75%. There will be an associated cost to unwind the SWAP and any interest savings is only expected to kick in from FY12 onwards. Assuming effective funding cost of 2.4%, the refinancing savings could enhance FY12E PBT projection by 3.7%.

(2) Remove/ease stringent project debt restrictions imposed on RWS

(3) To stretch out last repayment in 2015 to progressive payment over 2015-2018. The progressive repayment for 2011 to 2014 remains the same. The exact repayment structure was not disclosed.

Given that near term debt repayment structure remains the same and with Genting Singapore eyeing for Integrated Resort investment opportunity in Japan, we do not think the above refinancing would significantly change the company's dividend policy. Maintain buy and TP of S$2.60 on 14x 2011 EV/EBITDA. Key risks: prolong delay in junket licensing, regulatory changes and lower than expected gaming market share.

(Source : DB Research)

Marc Faber : Recovery

Marc Faber : “The Europe and US stabilizes and also recovers somewhat, in which case the demand for oil will go up and drive up prices,”


“If I look around markets, we had a very negative sentiment about the euro six months ago. Recently, we had a very negative sentiment about the US dollar. From this very low sentiment level for the US dollar where everybody hated the US dollar, in other words we can have somewhat of a recovery.” Marc Faber told India’s CNBC TV channel recently.

US: Job openings in US rise, pointing to payroll gains

Job openings in the US rose in October for the first time in three months, a sign gains in payrolls will accelerate in early 2011. The number of positions waiting to be filled increased by 351,000 to 3.36 million, the most since Aug 2008, the Labor Department said. Excluding a drop among government agencies, the 369,000 increase in openings at companies was the biggest in four years. Combined with declining claims for jobless benefits and surveys showing hiring at manufactures and service providers is picking up, report may help ease concern the labor market lost momentum in November. The government reported last week that the world’s largest economy created 39,000 jobs for the month, fewer than the most pessimistic forecast of economists surveyed by Bloomberg News. (Bloomberg)

Daily Commodities

COMMODITIES


Crude Oil prices (January contract) dropped below $89 a barrel after an intraday high above $90. The EIA said supplies from countries outside the OPEC are seen rising by 1 million barrels a day in 2011.

Gold declined below $1405 an ounce after a new record high just above $1430 while Silver came back below $30 an ounce as a firm U.S. dollar sparked a profit taking move on precious metals.

Copper (March contract) rose above $4.04 a pound. A strike in a Chilean mine that lasted more than 30 days has ended.