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How GIC and Temasek are managing your money
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SPH to restructure media business into not-for-profit entity to support quality journalism
Under the restructuring proposal, SPH Media will eventually be transferred to a not-for-profit entity for a nominal sum. ST PHOTO: GAVIN FOO
Grace Ho
May 6, 2021
SINGAPORE - Singapore Press Holdings (SPH), which publishes The Straits Times and Lianhe Zaobao, intends to transfer its media business to a not-for-profit company as part of a strategic review of its various businesses.
Announcing the move on Thursday (May 6), SPH chairman Lee Boon Yang said the transfer will enable the media business to focus on quality journalism and invest in talent and new technology to strengthen its digital capabilities.
The restructuring entails transferring all the media-related businesses, including relevant subsidiaries, employees, News Centre and Print Centre along with their respective leaseholds, and all related intellectual property and information technology assets, to a newly incorporated wholly-owned subsidiary, SPH Media Holdings Pte Ltd (SPH Media).
SPH will provide the initial resources and funding by capitalising SPH Media with a cash injection of $80 million, $30 million worth of SPH shares and SPH Reit units, and SPH's stakes in four of its digital media investments.
Under the restructuring proposal, SPH Media will eventually be transferred to a not-for-profit entity for a nominal sum. This will be a newly formed public company limited by guarantee, or CLG. A CLG is an entity that does not have share capital or shareholders but, instead, has members who act as guarantors of the company's liabilities.
More information on the CLG will be announced in due course, said SPH in a press statement on Thursday.
SPH said a not-for-profit structure will allow SPH Media to seek funding from public and private sources with a shared interest in supporting quality journalism.
After the transfer of SPH Media to the CLG, SPH will no longer be subject to shareholder and other relevant restrictions under the Newspaper and Printing Presses Act (NPPA).
The transfer of the media assets to the CLG is subject to SPH shareholders' approval at an extraordinary general meeting (EGM). At a press conference on Thursday, Dr Lee said the EGM would be called in early July and, upon shareholders' approval, the restructuring is expected to be completed by October or a bit earlier.
Credit Suisse (Singapore) is the appointed financial adviser for the review.
Tackling unprecedented industry disruption
The move is the most major restructuring in the industry since 1984, when SPH was formed through a merger of three organisations - the Straits Times Press group, Singapore News and Publications Limited, and Times Publishing Berhad.
That merger consolidated the flagship newspapers in different languages under one roof.
Explaining the rationale for the move, SPH said the media industry has faced "unprecedented disruption" in recent years, with SPH's operating revenue halving in the past five years largely due to a decline in print advertising and print subscription revenue.
SPH's media business recorded its first-ever loss of $11.4 million for the financial year that ended Aug 31, 2020.
"If not for the Jobs Support Scheme, the loss would have been a deeper $39.5 million," said Dr Lee.
"In recent years, we have right-sized the media operations in the sales and back-end support functions and cut costs without affecting our media capabilities. There remains little scope for further cost cuts without impairing the ability to maintain quality journalism."
Even with the resumption of activities after the circuit breaker last year, the decline in advertising revenue is expected to continue at a similar pace to that of the last five years.
Due to digital transformation efforts, SPH's average monthly unique audience across all its titles over the past two years has nearly doubled to a record 28 million, and digital circulation has surpassed print circulation.
But digital subscriptions and digital advertising have been unable to offset the decline in print advertising and print circulation revenues. The losses of the media business are likely to continue and widen.
SPH said that with the critical function the media business plays in providing quality news and information to the public, particularly in the vernacular languages, winding up the media business or selling it off is not a feasible option.
"However, remaining part of a publicly listed company where it is subject to expectations from shareholders of profitability and regular dividends is no longer a sustainable business model.
"Hence, a not-for-profit structure that allows SPH Media to seek funding from a range of public and private sources with a shared interest in supporting quality journalism and credible information is the optimal solution."
SPH chairman Lee Boon Yang's opening remarks on restructuring of media business
SPH had approached the Ministry of Communications and Information with a restructuring proposal to put the media business on a long-term sustainable financial footing. The ministry, which regulates SPH under the NPPA, has indicated its support for the restructuring. It has also given its in-principle approval for the shareholding and other relevant restrictions under the NPPA to be lifted from SPH upon the closing of the proposed restructuring.
The NPPA states that no person shall, without the approval of the Minister, become a substantial shareholder of SPH; or enter into any agreement or arrangement "to act together with any other person with respect to the acquisition, holding or the exercise of rights in relation to, in aggregate more than 5 per cent of the shares".
Dr Lee said: "Without the encumbrances of the NPPA, SPH will have greater financial flexibility to tailor its capital and shareholding structure to pursue strategic growth opportunities across its other businesses and maximise returns for shareholders."
While a not-for-profit model may be "unfamiliar" in Singapore, SPH said that many news organisations overseas operate under similar funding structures, including the Guardian, which is controlled by the Scott Trust, in Britain, and the Tampa Bay Times, which is owned by the non-profit Poynter Institute, in the United States.
Dr Lee said the fundamental issue that needs to be addressed is the long-term viability of SPH Media in its present structure, that is subject to market pressures.
"SPH shareholders are not likely to tolerate the continued negative impact that the media business has on the company's financial prospects. On the other hand, we cannot allow a functioning, trusted and respected media organisation to be whittled down over time by market pressure and commercial constraints.
"In the context of Singapore's multiracial society, SPH serves a crucial function by providing news and information in vernacular languages to serve Singapore's diverse ethnic communities."
Considering these important roles, he said, winding up or selling off the media business is not an option for the group, as it will affect access to quality news and undermine media diversity and competition in Singapore. Either option would also require regulatory approval.
Responding to questions about whether employees face wage and bonus cuts now that SPH Media will be a non-profit-making entity, SPH chief executive officer Ng Yat Chung said there is no further scope for costs cuts without impairing the quality of journalism that SPH Media provides.
"The exercise is to make sure that we can preserve the fine bowl of china. The intention is not to do anything that will impair the ability of SPH Media to continue to provide quality journalism."
He was referring to what founding prime minister Lee Kuan Yew said to late president S R Nathan when the latter was appointed executive chairman of the Straits Times Press, a few years before the formation of SPH.
Mr Lee had told Mr Nathan: "Nathan, I am giving you The Straits Times. It has 150 years of history. It has been a good paper. It is like a bowl of china. If you break it, I can piece it together. But it will never be the same. Try not to destroy it."
Dr Lee said that he could not speak for the CLG, as the intent of the restructuring is for it to operate independently. But the restructuring exercise is to ensure that the media capability in SPH Media is in no way disadvantaged or undermined by the transfer.
"The CLG is fully aware of this intention and fully cognisant of the fact that it has now taken on the responsibility of caring for this china bowl. It will then continue to nurture and strengthen this previous legacy, rather than undermine it - whether by further right-sizing or wage adjustments. It would have to be very careful in ensuring that media capabilities are in no way adversely affected as a result of this transfer."
SPH called for a halt in the trading of its shares at 7.37am on Thursday morning before the stock market opened.
Shares of SPH closed two cents or 1.1 per cent lower at $1.79 on Wednesday.
SPH posted a net profit of $97.9 million for the first half of the financial year that ended on Feb 28 - a 26.1 per cent rise. The company remains operationally profitable at $119.8 million.
The media segment posted a profit of $3.1 million, down 70.9 per cent year on year. Excluding grants from the Jobs Support Scheme, it recognised a pre-tax loss of $9.7 million.
SPH's core business is in the publishing of newspapers, magazines and books, in both print and digital editions. The company also owns about 66 per cent of SPH Reit.
SPH owns and operates The Seletar Mall, and is developing an integrated development consisting of The Woodleigh Residences and The Woodleigh Mall. In addition, it owns purpose-built student accommodation in Britain and Germany.
The company also owns Orange Valley, one of Singapore's largest nursing homes, and has investments in motoring portal sgCarMart, job platform FastJobs, telco M1 and South Korean e-commerce giant Coupang.
It had 3,875 employees in financial year 2020.
Here is MCI's statement in full:
HELPING OUR NEWS MEDIA INDUSTRY BUILD CAPABILITIES TO THRIVE IN A DIGITAL WORLD
The Ministry of Communications and Information (MCI) has considered and supports the proposal by Singapore Press Holdings Limited (SPH Limited) to restructure itself and transfer its media business (SPH Media) to a company limited by guarantee (CLG), pending shareholder approval. To help SPH Media accelerate its digital transformation and build capabilities for the future, the Government is prepared to provide funding support to the CLG.
Financial realities of the global print news media business
2. SPH's newsroom and its publications in the four official languages have been trusted sources of news for much of Singapore's history. Amidst growing fragmentation of the information landscape, their role in providing Singaporeans with timely, accurate and credible information is even more critical. The importance of a reliable and credible local media has been especially evident in Singapore's fight against Covid-19. According to a YouGov study, seven in 10 Singaporeans said they trusted the local media's reporting on Covid-19. The continued growth of SPH Media's reach and readership confirms that its platforms remain valued news sources for Singapore residents.
3. However, the global print media industry has been severely disrupted. With the advent of the Internet and social media, it has come under immense stress. Competition for consumers' attention has also increased significantly.
4. Print advertising revenue has therefore been steadily declining as advertisers shift towards digital advertising. The challenge is most acute in small markets with high Internet penetration. Our local print media has moved decisively online, and succeeded in garnering high and growing page views. But it is a challenge to convert that into a viable revenue-generating model because on the Internet, information is largely free, and Internet platforms like Google and Facebook take the lion's share of online advertising revenue.
5. This is a structural issue faced by media companies worldwide. The financial viability and profitability of print media have been severely affected, a trend exacerbated by Covid-19. This has immediate and severe impact on the ability to sustain the quality of journalism.
6. SPH Media's financial performance and outlook reflect these secular trends. Despite total circulation holding steady, with digital circulation growing to offset the fall in print circulation, its profit margins have narrowed considerably over the years.
7. Under SPH Limited, SPH Media has over the years made substantial progress transforming itself for the digital era. However, SPH Limited's obligations as a listed company will constrain its ability to continue investing in the media business, given the adverse financial outlook for the industry. To ensure SPH Media's long-term viability, SPH Limited has proposed to transfer it to a CLG, which will no longer be managed by nor part of SPH Limited, the listed company.
Government's support for our local print media business
8. MCI supports SPH Limited's proposal. It is in the interest of Singapore and Singaporeans that our local media continues to thrive and deliver quality journalism. We note that the transfer is subject to shareholder approval. MCI will be consulting SPH Limited's management shareholders, who have long served as the custodians of SPH Media on behalf of Singapore and Singaporeans, on the next steps, including the formation of the CLG. After SPH Media is transferred to a CLG, MCI is prepared to provide it with funding support to help it build capabilities for the future.
9. Mr S. Iswaran, Minister for Communications and Information, said: "A professional, capable and respected local news media is critical to our national interest. They must continue to be trusted by Singaporeans as a reliable and objective source of news, reporting on domestic and overseas events, as well as on the diversity of views that Singaporeans hold. They report through a Singaporean lens, so that our citizens have a good understanding of the opportunities and challenges facing our country, the choices we need to make, and our place in the world. The Government therefore supports high-quality, credible journalism in our local news media.
SPH Board and management have concluded that the current media business model within a listed company structure is not viable, given global technology and industry trends, and the need for significant investments in digitalisation and capability development.
The Government agrees with this assessment. We are supportive of SPH's proposal to restructure and transfer SPH Media to the CLG. Our goal is to help the local news media and our journalists adapt and thrive in the digital era while maintaining the high professional standards we expect and value. The Government is also prepared to provide SPH Media with funding support, with fiscal discipline and accountability for outcomes in areas like digital innovation and capability development, as part of a long-term sustainable business plan.
This restructuring of SPH Media, and future government support for it, will help to strengthen SPH Media in continuing its important role in Singapore's media scene."
10. The Minister for Communications and Information will deliver a ministerial statement on this subject at the next Parliament sitting on May 10.
Under the restructuring proposal, SPH Media will eventually be transferred to a not-for-profit entity for a nominal sum. ST PHOTO: GAVIN FOO
Grace Ho
May 6, 2021
SINGAPORE - Singapore Press Holdings (SPH), which publishes The Straits Times and Lianhe Zaobao, intends to transfer its media business to a not-for-profit company as part of a strategic review of its various businesses.
Announcing the move on Thursday (May 6), SPH chairman Lee Boon Yang said the transfer will enable the media business to focus on quality journalism and invest in talent and new technology to strengthen its digital capabilities.
The restructuring entails transferring all the media-related businesses, including relevant subsidiaries, employees, News Centre and Print Centre along with their respective leaseholds, and all related intellectual property and information technology assets, to a newly incorporated wholly-owned subsidiary, SPH Media Holdings Pte Ltd (SPH Media).
SPH will provide the initial resources and funding by capitalising SPH Media with a cash injection of $80 million, $30 million worth of SPH shares and SPH Reit units, and SPH's stakes in four of its digital media investments.
Under the restructuring proposal, SPH Media will eventually be transferred to a not-for-profit entity for a nominal sum. This will be a newly formed public company limited by guarantee, or CLG. A CLG is an entity that does not have share capital or shareholders but, instead, has members who act as guarantors of the company's liabilities.
More information on the CLG will be announced in due course, said SPH in a press statement on Thursday.
SPH said a not-for-profit structure will allow SPH Media to seek funding from public and private sources with a shared interest in supporting quality journalism.
After the transfer of SPH Media to the CLG, SPH will no longer be subject to shareholder and other relevant restrictions under the Newspaper and Printing Presses Act (NPPA).
The transfer of the media assets to the CLG is subject to SPH shareholders' approval at an extraordinary general meeting (EGM). At a press conference on Thursday, Dr Lee said the EGM would be called in early July and, upon shareholders' approval, the restructuring is expected to be completed by October or a bit earlier.
Credit Suisse (Singapore) is the appointed financial adviser for the review.
Tackling unprecedented industry disruption
The move is the most major restructuring in the industry since 1984, when SPH was formed through a merger of three organisations - the Straits Times Press group, Singapore News and Publications Limited, and Times Publishing Berhad.
That merger consolidated the flagship newspapers in different languages under one roof.
Explaining the rationale for the move, SPH said the media industry has faced "unprecedented disruption" in recent years, with SPH's operating revenue halving in the past five years largely due to a decline in print advertising and print subscription revenue.
SPH's media business recorded its first-ever loss of $11.4 million for the financial year that ended Aug 31, 2020.
"If not for the Jobs Support Scheme, the loss would have been a deeper $39.5 million," said Dr Lee.
"In recent years, we have right-sized the media operations in the sales and back-end support functions and cut costs without affecting our media capabilities. There remains little scope for further cost cuts without impairing the ability to maintain quality journalism."
Even with the resumption of activities after the circuit breaker last year, the decline in advertising revenue is expected to continue at a similar pace to that of the last five years.
Due to digital transformation efforts, SPH's average monthly unique audience across all its titles over the past two years has nearly doubled to a record 28 million, and digital circulation has surpassed print circulation.
But digital subscriptions and digital advertising have been unable to offset the decline in print advertising and print circulation revenues. The losses of the media business are likely to continue and widen.
SPH said that with the critical function the media business plays in providing quality news and information to the public, particularly in the vernacular languages, winding up the media business or selling it off is not a feasible option.
"However, remaining part of a publicly listed company where it is subject to expectations from shareholders of profitability and regular dividends is no longer a sustainable business model.
"Hence, a not-for-profit structure that allows SPH Media to seek funding from a range of public and private sources with a shared interest in supporting quality journalism and credible information is the optimal solution."
SPH chairman Lee Boon Yang's opening remarks on restructuring of media business
SPH had approached the Ministry of Communications and Information with a restructuring proposal to put the media business on a long-term sustainable financial footing. The ministry, which regulates SPH under the NPPA, has indicated its support for the restructuring. It has also given its in-principle approval for the shareholding and other relevant restrictions under the NPPA to be lifted from SPH upon the closing of the proposed restructuring.
The NPPA states that no person shall, without the approval of the Minister, become a substantial shareholder of SPH; or enter into any agreement or arrangement "to act together with any other person with respect to the acquisition, holding or the exercise of rights in relation to, in aggregate more than 5 per cent of the shares".
Dr Lee said: "Without the encumbrances of the NPPA, SPH will have greater financial flexibility to tailor its capital and shareholding structure to pursue strategic growth opportunities across its other businesses and maximise returns for shareholders."
While a not-for-profit model may be "unfamiliar" in Singapore, SPH said that many news organisations overseas operate under similar funding structures, including the Guardian, which is controlled by the Scott Trust, in Britain, and the Tampa Bay Times, which is owned by the non-profit Poynter Institute, in the United States.
Dr Lee said the fundamental issue that needs to be addressed is the long-term viability of SPH Media in its present structure, that is subject to market pressures.
"SPH shareholders are not likely to tolerate the continued negative impact that the media business has on the company's financial prospects. On the other hand, we cannot allow a functioning, trusted and respected media organisation to be whittled down over time by market pressure and commercial constraints.
"In the context of Singapore's multiracial society, SPH serves a crucial function by providing news and information in vernacular languages to serve Singapore's diverse ethnic communities."
Considering these important roles, he said, winding up or selling off the media business is not an option for the group, as it will affect access to quality news and undermine media diversity and competition in Singapore. Either option would also require regulatory approval.
Responding to questions about whether employees face wage and bonus cuts now that SPH Media will be a non-profit-making entity, SPH chief executive officer Ng Yat Chung said there is no further scope for costs cuts without impairing the quality of journalism that SPH Media provides.
"The exercise is to make sure that we can preserve the fine bowl of china. The intention is not to do anything that will impair the ability of SPH Media to continue to provide quality journalism."
He was referring to what founding prime minister Lee Kuan Yew said to late president S R Nathan when the latter was appointed executive chairman of the Straits Times Press, a few years before the formation of SPH.
Mr Lee had told Mr Nathan: "Nathan, I am giving you The Straits Times. It has 150 years of history. It has been a good paper. It is like a bowl of china. If you break it, I can piece it together. But it will never be the same. Try not to destroy it."
Dr Lee said that he could not speak for the CLG, as the intent of the restructuring is for it to operate independently. But the restructuring exercise is to ensure that the media capability in SPH Media is in no way disadvantaged or undermined by the transfer.
"The CLG is fully aware of this intention and fully cognisant of the fact that it has now taken on the responsibility of caring for this china bowl. It will then continue to nurture and strengthen this previous legacy, rather than undermine it - whether by further right-sizing or wage adjustments. It would have to be very careful in ensuring that media capabilities are in no way adversely affected as a result of this transfer."
SPH called for a halt in the trading of its shares at 7.37am on Thursday morning before the stock market opened.
Shares of SPH closed two cents or 1.1 per cent lower at $1.79 on Wednesday.
SPH posted a net profit of $97.9 million for the first half of the financial year that ended on Feb 28 - a 26.1 per cent rise. The company remains operationally profitable at $119.8 million.
The media segment posted a profit of $3.1 million, down 70.9 per cent year on year. Excluding grants from the Jobs Support Scheme, it recognised a pre-tax loss of $9.7 million.
SPH's core business is in the publishing of newspapers, magazines and books, in both print and digital editions. The company also owns about 66 per cent of SPH Reit.
SPH owns and operates The Seletar Mall, and is developing an integrated development consisting of The Woodleigh Residences and The Woodleigh Mall. In addition, it owns purpose-built student accommodation in Britain and Germany.
The company also owns Orange Valley, one of Singapore's largest nursing homes, and has investments in motoring portal sgCarMart, job platform FastJobs, telco M1 and South Korean e-commerce giant Coupang.
It had 3,875 employees in financial year 2020.
Here is MCI's statement in full:
HELPING OUR NEWS MEDIA INDUSTRY BUILD CAPABILITIES TO THRIVE IN A DIGITAL WORLD
The Ministry of Communications and Information (MCI) has considered and supports the proposal by Singapore Press Holdings Limited (SPH Limited) to restructure itself and transfer its media business (SPH Media) to a company limited by guarantee (CLG), pending shareholder approval. To help SPH Media accelerate its digital transformation and build capabilities for the future, the Government is prepared to provide funding support to the CLG.
Financial realities of the global print news media business
2. SPH's newsroom and its publications in the four official languages have been trusted sources of news for much of Singapore's history. Amidst growing fragmentation of the information landscape, their role in providing Singaporeans with timely, accurate and credible information is even more critical. The importance of a reliable and credible local media has been especially evident in Singapore's fight against Covid-19. According to a YouGov study, seven in 10 Singaporeans said they trusted the local media's reporting on Covid-19. The continued growth of SPH Media's reach and readership confirms that its platforms remain valued news sources for Singapore residents.
3. However, the global print media industry has been severely disrupted. With the advent of the Internet and social media, it has come under immense stress. Competition for consumers' attention has also increased significantly.
4. Print advertising revenue has therefore been steadily declining as advertisers shift towards digital advertising. The challenge is most acute in small markets with high Internet penetration. Our local print media has moved decisively online, and succeeded in garnering high and growing page views. But it is a challenge to convert that into a viable revenue-generating model because on the Internet, information is largely free, and Internet platforms like Google and Facebook take the lion's share of online advertising revenue.
5. This is a structural issue faced by media companies worldwide. The financial viability and profitability of print media have been severely affected, a trend exacerbated by Covid-19. This has immediate and severe impact on the ability to sustain the quality of journalism.
6. SPH Media's financial performance and outlook reflect these secular trends. Despite total circulation holding steady, with digital circulation growing to offset the fall in print circulation, its profit margins have narrowed considerably over the years.
7. Under SPH Limited, SPH Media has over the years made substantial progress transforming itself for the digital era. However, SPH Limited's obligations as a listed company will constrain its ability to continue investing in the media business, given the adverse financial outlook for the industry. To ensure SPH Media's long-term viability, SPH Limited has proposed to transfer it to a CLG, which will no longer be managed by nor part of SPH Limited, the listed company.
Government's support for our local print media business
8. MCI supports SPH Limited's proposal. It is in the interest of Singapore and Singaporeans that our local media continues to thrive and deliver quality journalism. We note that the transfer is subject to shareholder approval. MCI will be consulting SPH Limited's management shareholders, who have long served as the custodians of SPH Media on behalf of Singapore and Singaporeans, on the next steps, including the formation of the CLG. After SPH Media is transferred to a CLG, MCI is prepared to provide it with funding support to help it build capabilities for the future.
9. Mr S. Iswaran, Minister for Communications and Information, said: "A professional, capable and respected local news media is critical to our national interest. They must continue to be trusted by Singaporeans as a reliable and objective source of news, reporting on domestic and overseas events, as well as on the diversity of views that Singaporeans hold. They report through a Singaporean lens, so that our citizens have a good understanding of the opportunities and challenges facing our country, the choices we need to make, and our place in the world. The Government therefore supports high-quality, credible journalism in our local news media.
SPH Board and management have concluded that the current media business model within a listed company structure is not viable, given global technology and industry trends, and the need for significant investments in digitalisation and capability development.
The Government agrees with this assessment. We are supportive of SPH's proposal to restructure and transfer SPH Media to the CLG. Our goal is to help the local news media and our journalists adapt and thrive in the digital era while maintaining the high professional standards we expect and value. The Government is also prepared to provide SPH Media with funding support, with fiscal discipline and accountability for outcomes in areas like digital innovation and capability development, as part of a long-term sustainable business plan.
This restructuring of SPH Media, and future government support for it, will help to strengthen SPH Media in continuing its important role in Singapore's media scene."
10. The Minister for Communications and Information will deliver a ministerial statement on this subject at the next Parliament sitting on May 10.
When it comes to give/temasek investing, it really is just gambling.
For whorejinx, it's worse when she buys high and sell low.
For whorejinx, it's worse when she buys high and sell low.
DBS putting $2.7 billion (of which a big portion is the reserves of Singapore citizens) into a country that blames Singapore for the Singapore virus.
It's a case of "either go big or go home" for DBS to further expand in India.PHOTO: ST FILE
May 20, 2021
SINGAPORE (BLOOMBERG) - DBS Group Holdings has sufficient capital to bid for Citigroup's consumer assets in India valued at S$2.7 billion without needing to raise additional funds, Sanford C Bernstein & Co analysts said.
It's a case of "either go big or go home" for DBS to further expand in India where the Singapore-based bank also acquired Lakshmi Vilas Bank in November, Bernstein analysts led by Kevin Kwek wrote in a report on Thursday. DBS chief executive officer Piyush Gupta last month said he is interested in the US bank's assets that are for sale in the South Asian country, as well as in China, Taiwan and Indonesia.
A takeover of Citi's India unit would be DBS's largest acquisition since 2001, when the Singapore firm spent US$5.4 billion buying the Hong Kong unit formerly known as Dao Heng Bank Group. Among the US bank's assets for sale, India stands out as "the crown jewel", Mr Kwek wrote. Its credit card and wealth business would be attractive to any bidder given the country's economic growth rate and population size, he added.
DBS has pledged to make more income outside its home turf, where the bank derived 70 per cent of its S$4.7 billion profit in 2020.
DBS remains very disciplined on acquisitions and wouldn't be drawn into any "bidding frenzy", Mr Gupta said on April 30 when asked about his interest in Citi's asset sale.
In April, DBS said it would pay S$1.1 billion for a 13 per cent chunk in China's Shenzhen Rural Commercial Bank Corp, and Mr Gupta has indicated an interest to raise the size of that stake.
Including the amount spent on the Chinese bank, the Bernstein analysts assumed a total budget of S$4 billion for acquisitions this year, which would bring the bank's common equity Tier 1 ratio down to 13.1 per cent, from 14.3 per cent as at March 30. While that would still be above the regulatory minimum requirements, it may impact the firm's dividend payout for 2021, Mr Kwek said.
"But to be fair, earnings momentum this year looks promising, and management rhetoric will likely be that it comes back later by way of earnings, and subsequently higher payouts," Mr Kwek said. "Investors should ask: what does DBS believe it can do better than Citi?"
DBS can fund S$2.7b bid for Citi India unit, says Bernstein
It's a case of "either go big or go home" for DBS to further expand in India.PHOTO: ST FILE
May 20, 2021
SINGAPORE (BLOOMBERG) - DBS Group Holdings has sufficient capital to bid for Citigroup's consumer assets in India valued at S$2.7 billion without needing to raise additional funds, Sanford C Bernstein & Co analysts said.
It's a case of "either go big or go home" for DBS to further expand in India where the Singapore-based bank also acquired Lakshmi Vilas Bank in November, Bernstein analysts led by Kevin Kwek wrote in a report on Thursday. DBS chief executive officer Piyush Gupta last month said he is interested in the US bank's assets that are for sale in the South Asian country, as well as in China, Taiwan and Indonesia.
A takeover of Citi's India unit would be DBS's largest acquisition since 2001, when the Singapore firm spent US$5.4 billion buying the Hong Kong unit formerly known as Dao Heng Bank Group. Among the US bank's assets for sale, India stands out as "the crown jewel", Mr Kwek wrote. Its credit card and wealth business would be attractive to any bidder given the country's economic growth rate and population size, he added.
DBS has pledged to make more income outside its home turf, where the bank derived 70 per cent of its S$4.7 billion profit in 2020.
DBS remains very disciplined on acquisitions and wouldn't be drawn into any "bidding frenzy", Mr Gupta said on April 30 when asked about his interest in Citi's asset sale.
In April, DBS said it would pay S$1.1 billion for a 13 per cent chunk in China's Shenzhen Rural Commercial Bank Corp, and Mr Gupta has indicated an interest to raise the size of that stake.
Including the amount spent on the Chinese bank, the Bernstein analysts assumed a total budget of S$4 billion for acquisitions this year, which would bring the bank's common equity Tier 1 ratio down to 13.1 per cent, from 14.3 per cent as at March 30. While that would still be above the regulatory minimum requirements, it may impact the firm's dividend payout for 2021, Mr Kwek said.
"But to be fair, earnings momentum this year looks promising, and management rhetoric will likely be that it comes back later by way of earnings, and subsequently higher payouts," Mr Kwek said. "Investors should ask: what does DBS believe it can do better than Citi?"
In the vault got money or not nobody know ?I'll believe the 'privatisation' when I actually see it. See who controls the majority of the shares. Also, using shell companies is the oldest trick in the book.
Forum: How has Temasek done compared with others?
JUL 17, 2021
I refer to the article, "Temasek's 24.5% shareholder return highest since 2010" (July 14).
A one-year return of 24.5 per cent sounds impressive until one realises that, over the same one-year period to March 31, the MSCI World Index went up by about 45 per cent.
The world markets have recovered massively over the past year or so and, as they say, a rising tide lifts all boats.
What was also interesting was that Temasek's total shareholder return for the 10 years to end-March last year was 5 per cent per annum.
Over this same period, the MSCI World Index went up by an average of about 7 per cent per annum.
The questions I would like to ask are: "How well has Temasek really been doing over the years? Is it reasonable to expect Temasek to at least beat the relevant market indices over the long run?"
I hope there can be more public discourse on these questions.
Alfred Chan Hock Yuen
The hypocrisy and double-standard of the PAP government and Temasek Holdings.
Temasek Holdings not under scrutiny by the government and all the ESG entities in Singapore.
Why? Because the citizens' monies are being used to support and bail out Singapore Airlines, Sembcorp Marine.
If these companies fail, Temasek's investment performance also drop.
Temasek has pledged to halve the net carbon emissions of its portfolio compared with 2010 levels by 2030, and reach net-zero by 2050.
July 22, 2021
SINGAPORE (BLOOMBERG) - It might seem contradictory to invest in carbon-emitting polluters while pledging to be an eco-trailblazer, but that's exactly what Singapore's investment company, Temasek, is attempting to do.
As one of the world's largest institutional investors, its US$282 billion (S$385 billion) portfolio is replete with businesses that contribute to global warming - from Singapore Airlines to Sembcorp Marine, a supplier of offshore rigs.
While peers like Norway's sovereign wealth fund have used hard targets and the sale of assets to improve their green credentials, Temasek is taking a different path.
"We never said we will not invest in an emitter of carbon - as long as this emitter is on a journey, a path and we can be helpful in terms of how we can shift them," said Mr Nagi Hamiyeh, Temasek International's joint head of investments.
Temasek's approach is emblematic of the delicate dance many global investors face, especially those laden with legacy assets that once belonged to the state.
The pressure of maintaining returns without causing social upheaval and job losses while pledging to be green can be hard to reconcile, especially in a city-state where refined fuels and chemicals accounted for almost a quarter of merchandise trade in 2019.
Temasek has pledged to halve the net carbon emissions of its portfolio compared with 2010 levels by 2030, and reach net-zero by 2050. It's ramped up the amount of money it allocates to impact investment and environmental, social and governance funds.
In April, it teamed up with BlackRock to form Decarbonization Partners, aiming for a US$1 billion initial fund to back start-ups that can cut the world's reliance on fossil fuels. It's also backed an Indian renewable energy investment vehicle and a carbon trading platform.
But Temasek remains the biggest investor in two of the world's biggest oil rig builders - Keppel Corp and Sembcorp Marine.
Last month, its unit signed an agreement to help Keppel sell its built and uncompleted rigs, some of which could be used to mine fossil fuels.
And in February, its wholly owned subsidiary Heliconia Capital Management helped fund a US$600 million rescue package for the country's biggest shipper, known as Pacific International Lines. Other holdings include Pavilion Energy and PSA International, a port service company.
The firm has also pumped billions of dollars into Singapore Airlines, a major global carrier.
Mr Hamiyeh said that unlike peers, the airline has not cancelled new aircraft purchases, allowing it to upgrade to models that emit less carbon. The carrier has pledged to hit net zero by 2050.
The emissions attributable to Temasek's portfolio jumped 36 per cent to 30 million tonnes of carbon dioxide equivalent this year, from 22 million tonnes in 2011, according to the investor's annual report.
Some of these energy and transportation stocks have been a drag on performance for Temasek, which last week reported a 10-year annualised gain of 7 per cent. Over the same period, Singapore Airlines' annual decline was 2.1 per cent, while Sembcorp Marine's was 25 per cent and Keppel's 3.2 per cent.
In the meantime, Temasek is influencing how corporations around the world think and invest in environmental sustainability.
Its staff participate in public forums, it's a member of Singapore's Green Finance Working Group and it takes part in dialogues with bodies like the Sustainability Accounting Standards Board.
Temasek's narrative is shared by many peers, particularly in countries that produce fossil fuels or are still heavily reliant on coal or natural gas as power sources.
Australia's UniSuper Management is the biggest shareholder of gas distributor APA Group even while it has more than 12 per cent of its US$75 billion in assets in sustainable investments.
Canada's US$400 billion national pension fund still holds large stakes in energy stocks like Canadian Natural Resources.
In Temasek's view, rather than palming off a polluting asset to a third party or shutting it down, it's better to fund their adaptation.
"We much prefer to work with our investee companies: Can you reduce your emissions? Can you replace your emissions with a different technology," Ms Neo Gim Huay, Temasek International's climate change strategy managing director, told reporters last week. "It is a global problem and we prefer not to pass the problem to someone else."
Mr Christoph Klein, founder and managing partner at ESG Portfolio Management - a Frankfurt-based asset manager with funds targeting sustainable outcomes - uses the example of a hypothetical renewable energy investment in Norway.
"You'd make a much bigger difference helping an Indian coal company to change its energy mix and to significantly reduce emissions," he said. "But there's a risk that some investors can say they're helping a coal company transition without really pushing hard for change."
Critics say carbon abatement is almost never as good as avoiding the emission in the first place.
If Keppel's uncompleted rigs were off the market, they could not be used to pump oil or gas and the price of offshore exploration may increase. And if a lack of capital forced Singapore Airlines to slash services, then higher prices would potentially curb travel.
"Temasek should no longer be supporting any sector that's strongly connected to or supports fossil-fuel burning and deforestation," said Ms Hindun Mulaika, a climate and energy campaign manager for Greenpeace in Indonesia. "Considering carbon offset options without pushing hard to divest from highly polluting sectors is just not enough."
Temasek Holdings not under scrutiny by the government and all the ESG entities in Singapore.
Why? Because the citizens' monies are being used to support and bail out Singapore Airlines, Sembcorp Marine.
If these companies fail, Temasek's investment performance also drop.
Temasek defends green goals as it backs Singapore Airlines, Sembcorp Marine
Temasek has pledged to halve the net carbon emissions of its portfolio compared with 2010 levels by 2030, and reach net-zero by 2050.
July 22, 2021
SINGAPORE (BLOOMBERG) - It might seem contradictory to invest in carbon-emitting polluters while pledging to be an eco-trailblazer, but that's exactly what Singapore's investment company, Temasek, is attempting to do.
As one of the world's largest institutional investors, its US$282 billion (S$385 billion) portfolio is replete with businesses that contribute to global warming - from Singapore Airlines to Sembcorp Marine, a supplier of offshore rigs.
While peers like Norway's sovereign wealth fund have used hard targets and the sale of assets to improve their green credentials, Temasek is taking a different path.
"We never said we will not invest in an emitter of carbon - as long as this emitter is on a journey, a path and we can be helpful in terms of how we can shift them," said Mr Nagi Hamiyeh, Temasek International's joint head of investments.
Temasek's approach is emblematic of the delicate dance many global investors face, especially those laden with legacy assets that once belonged to the state.
The pressure of maintaining returns without causing social upheaval and job losses while pledging to be green can be hard to reconcile, especially in a city-state where refined fuels and chemicals accounted for almost a quarter of merchandise trade in 2019.
Temasek has pledged to halve the net carbon emissions of its portfolio compared with 2010 levels by 2030, and reach net-zero by 2050. It's ramped up the amount of money it allocates to impact investment and environmental, social and governance funds.
In April, it teamed up with BlackRock to form Decarbonization Partners, aiming for a US$1 billion initial fund to back start-ups that can cut the world's reliance on fossil fuels. It's also backed an Indian renewable energy investment vehicle and a carbon trading platform.
But Temasek remains the biggest investor in two of the world's biggest oil rig builders - Keppel Corp and Sembcorp Marine.
Last month, its unit signed an agreement to help Keppel sell its built and uncompleted rigs, some of which could be used to mine fossil fuels.
And in February, its wholly owned subsidiary Heliconia Capital Management helped fund a US$600 million rescue package for the country's biggest shipper, known as Pacific International Lines. Other holdings include Pavilion Energy and PSA International, a port service company.
The firm has also pumped billions of dollars into Singapore Airlines, a major global carrier.
Mr Hamiyeh said that unlike peers, the airline has not cancelled new aircraft purchases, allowing it to upgrade to models that emit less carbon. The carrier has pledged to hit net zero by 2050.
The emissions attributable to Temasek's portfolio jumped 36 per cent to 30 million tonnes of carbon dioxide equivalent this year, from 22 million tonnes in 2011, according to the investor's annual report.
Some of these energy and transportation stocks have been a drag on performance for Temasek, which last week reported a 10-year annualised gain of 7 per cent. Over the same period, Singapore Airlines' annual decline was 2.1 per cent, while Sembcorp Marine's was 25 per cent and Keppel's 3.2 per cent.
In the meantime, Temasek is influencing how corporations around the world think and invest in environmental sustainability.
Its staff participate in public forums, it's a member of Singapore's Green Finance Working Group and it takes part in dialogues with bodies like the Sustainability Accounting Standards Board.
Temasek's narrative is shared by many peers, particularly in countries that produce fossil fuels or are still heavily reliant on coal or natural gas as power sources.
Australia's UniSuper Management is the biggest shareholder of gas distributor APA Group even while it has more than 12 per cent of its US$75 billion in assets in sustainable investments.
Canada's US$400 billion national pension fund still holds large stakes in energy stocks like Canadian Natural Resources.
In Temasek's view, rather than palming off a polluting asset to a third party or shutting it down, it's better to fund their adaptation.
"We much prefer to work with our investee companies: Can you reduce your emissions? Can you replace your emissions with a different technology," Ms Neo Gim Huay, Temasek International's climate change strategy managing director, told reporters last week. "It is a global problem and we prefer not to pass the problem to someone else."
Change Within
The approach is lauded by some investors who argue that change from within can be more effective than unloading assets.Mr Christoph Klein, founder and managing partner at ESG Portfolio Management - a Frankfurt-based asset manager with funds targeting sustainable outcomes - uses the example of a hypothetical renewable energy investment in Norway.
"You'd make a much bigger difference helping an Indian coal company to change its energy mix and to significantly reduce emissions," he said. "But there's a risk that some investors can say they're helping a coal company transition without really pushing hard for change."
Critics say carbon abatement is almost never as good as avoiding the emission in the first place.
If Keppel's uncompleted rigs were off the market, they could not be used to pump oil or gas and the price of offshore exploration may increase. And if a lack of capital forced Singapore Airlines to slash services, then higher prices would potentially curb travel.
"Temasek should no longer be supporting any sector that's strongly connected to or supports fossil-fuel burning and deforestation," said Ms Hindun Mulaika, a climate and energy campaign manager for Greenpeace in Indonesia. "Considering carbon offset options without pushing hard to divest from highly polluting sectors is just not enough."
Are you surprised? Ho Ching sold out to BlackRock.
https://www.temasek.com.sg/en/news-...-blackrock-launch-decarbonization-partnership
Whenever a deal is made with BlackRock, expect plenty of 'green' and 'sustainable' claptrap. A prelude to transhumanism.
BlackRock --- WEF --- Klaus Schwab.
stinky peasants coolies serfs don't mind
maybe they haven't got a mind
in real life
they of course need to ride mrt or public bus crammed with ceca and jiuhu cina babi chink pigs
and remain holed up in their pigeonhole flats overinflated price
the following chart is instructive
it tells you some unsavoury facts that pap-pigs and 160th media will not willingly tell you
we can see that brunei and malaysia (both melayun majority) are the only asean countries with developed country standards car ownership
thailand trailing them
indonesia trailing thailand
teeny tiny dot sized pee sai, per capita, own fewer cars than lao
'nuff said
hard to accept cheerful propaganda from norkie/pap-pig media without any question
maybe they haven't got a mind
in real life
they of course need to ride mrt or public bus crammed with ceca and jiuhu cina babi chink pigs
and remain holed up in their pigeonhole flats overinflated price
the following chart is instructive
it tells you some unsavoury facts that pap-pigs and 160th media will not willingly tell you
we can see that brunei and malaysia (both melayun majority) are the only asean countries with developed country standards car ownership
thailand trailing them
indonesia trailing thailand
teeny tiny dot sized pee sai, per capita, own fewer cars than lao
'nuff said
hard to accept cheerful propaganda from norkie/pap-pig media without any question
GIC and Temasek got stuck
China ordered companies that offer tutoring on the school curriculum to go non-profit on July 24, 2021.PHOTO: REUTERS
Jul 25, 2021
(BLOOMBERG) - Global investors from Tiger Global Management to Temasek are reeling after China imposed the harshest curbs yet on its US$100 billion (S$137 billion) private tutoring and online education sector.
China on Saturday (July 24) ordered companies that offer tutoring on the school curriculum to go non-profit, potentially wiping out a big chunk of the billions that private equity and venture capital funds have staked on a once red-hot sector.
The platforms have lost their ability to go public - depriving their backers of the exits they need to cash out. Foreign capital was banned from the sector, with uncertain ramifications for the likes of Singapore's Temasek and GIC, as well as Warburg Pincus and SoftBank's Vision Fund, which have all invested in many of the industry's big players.
Those in violation of that rule must take steps to rectify the situation, the country's most powerful administrative authority said, without elaborating.
Beijing on Saturday published a plethora of regulations that together threaten to upend the sector. The nationwide crackdown stems from a deeper backlash against the industry, as excessive tutoring torments youth and burdens parents with expensive fees.
Once regarded as a sure-fire way for aspiring children (and parents) to get ahead, it is now also viewed as an impediment to one of President Xi Jinping's top priorities: boosting a declining birth rate.
Investors risk having to mark down their portfolio drastically or worse, getting battered in a sell-off.
On Friday, some of the industry's biggest names, including New Oriental Education & Technology Group, TAL Education Group, Gaotu Techedu and Koolearn Technology Holding tumbled after details of the impending clampdown surfaced.
Warburg Pincus, GIC and Temasek representatives declined to comment. Representatives for Sequoia Capital China said they could not immediately comment. DST and Tiger did not respond to e-mailed requests for comment.
It is a stunning reversal of fortune for an industry that once boasted some of the fastest growth rates in the country. The online education sector had been expected to generate 491 billion yuan (S$103 billion) in revenue by 2024.
Those lofty expectations made stock market darlings of TAL and Gaotu, and groomed a generation of giant start-ups like Yuanfudao and Zuoyebang.
The current regulatory assault mirrors a broader campaign that began late last year against the growing heft of Chinese Internet companies from Didi Global to Alibaba Group Holding.
Investors betting on tech names beyond edtech have incurred hundreds of billions of dollars in losses since the start of the year, hammered by a series of regulatory crackdowns that expanded from fintech to encompass ride-hailing, grocery buying and food delivery.
Beijing's desire to assert control over the economy and one of its most valuable resources lies at the heart of those actions.
Companies that operate as Internet platforms have come increasingly under scrutiny because of the reams of data they collect, stirring government concern over issues of privacy and security.
The potential losses in the education sphere alone could be staggering.
Alibaba, Tencent Holdings and ByteDance are among investors that have entered the education arena. Online education platforms attracted about 103 billion yuan of capital last year alone, according to iResearch. The five biggest companies accounted for 80 per cent of the funding raised.
Among privately backed start-ups, Yuanfudao is one of the largest with a valuation of US$17 billion, according to iResearch. Rival Zuoyebang fetched a US$3 billion valuation in 2018. And Huohua Siwei was valued at US$1.5 billion this year, according to a local media report. Collectively, the three have raised US$7 billion from investors, according to Crunchbase.
The regulatory clampdown has thrown a wrench into the initial public offering plans of many high-flying start-ups, dragging down valuations for those that forged ahead with a listing. Zhangmen Education has plunged 46 per cent in New York since it listed.
It is ultimately unclear how the government clampdown will turn out - many believe Beijing will not seek to annihilate an industry that still plays an essential role in grooming its future workforce. For now, many investors may choose to err on the side of caution.
Mr Kerry Goh, chief investment officer at multi-family office Kamet Capital Partners, said he has reduced his positions in edtech companies in recent months "because it's sell and ask questions later when it comes to China".
"But we are looking for opportunities to rebuild positions," he added.
China's edtech assault hits investors from Tiger to Temasek
China ordered companies that offer tutoring on the school curriculum to go non-profit on July 24, 2021.PHOTO: REUTERS
Jul 25, 2021
(BLOOMBERG) - Global investors from Tiger Global Management to Temasek are reeling after China imposed the harshest curbs yet on its US$100 billion (S$137 billion) private tutoring and online education sector.
China on Saturday (July 24) ordered companies that offer tutoring on the school curriculum to go non-profit, potentially wiping out a big chunk of the billions that private equity and venture capital funds have staked on a once red-hot sector.
The platforms have lost their ability to go public - depriving their backers of the exits they need to cash out. Foreign capital was banned from the sector, with uncertain ramifications for the likes of Singapore's Temasek and GIC, as well as Warburg Pincus and SoftBank's Vision Fund, which have all invested in many of the industry's big players.
Those in violation of that rule must take steps to rectify the situation, the country's most powerful administrative authority said, without elaborating.
Beijing on Saturday published a plethora of regulations that together threaten to upend the sector. The nationwide crackdown stems from a deeper backlash against the industry, as excessive tutoring torments youth and burdens parents with expensive fees.
Once regarded as a sure-fire way for aspiring children (and parents) to get ahead, it is now also viewed as an impediment to one of President Xi Jinping's top priorities: boosting a declining birth rate.
Investors risk having to mark down their portfolio drastically or worse, getting battered in a sell-off.
On Friday, some of the industry's biggest names, including New Oriental Education & Technology Group, TAL Education Group, Gaotu Techedu and Koolearn Technology Holding tumbled after details of the impending clampdown surfaced.
Warburg Pincus, GIC and Temasek representatives declined to comment. Representatives for Sequoia Capital China said they could not immediately comment. DST and Tiger did not respond to e-mailed requests for comment.
It is a stunning reversal of fortune for an industry that once boasted some of the fastest growth rates in the country. The online education sector had been expected to generate 491 billion yuan (S$103 billion) in revenue by 2024.
Those lofty expectations made stock market darlings of TAL and Gaotu, and groomed a generation of giant start-ups like Yuanfudao and Zuoyebang.
The current regulatory assault mirrors a broader campaign that began late last year against the growing heft of Chinese Internet companies from Didi Global to Alibaba Group Holding.
Investors betting on tech names beyond edtech have incurred hundreds of billions of dollars in losses since the start of the year, hammered by a series of regulatory crackdowns that expanded from fintech to encompass ride-hailing, grocery buying and food delivery.
Beijing's desire to assert control over the economy and one of its most valuable resources lies at the heart of those actions.
Companies that operate as Internet platforms have come increasingly under scrutiny because of the reams of data they collect, stirring government concern over issues of privacy and security.
The potential losses in the education sphere alone could be staggering.
Alibaba, Tencent Holdings and ByteDance are among investors that have entered the education arena. Online education platforms attracted about 103 billion yuan of capital last year alone, according to iResearch. The five biggest companies accounted for 80 per cent of the funding raised.
Among privately backed start-ups, Yuanfudao is one of the largest with a valuation of US$17 billion, according to iResearch. Rival Zuoyebang fetched a US$3 billion valuation in 2018. And Huohua Siwei was valued at US$1.5 billion this year, according to a local media report. Collectively, the three have raised US$7 billion from investors, according to Crunchbase.
The regulatory clampdown has thrown a wrench into the initial public offering plans of many high-flying start-ups, dragging down valuations for those that forged ahead with a listing. Zhangmen Education has plunged 46 per cent in New York since it listed.
It is ultimately unclear how the government clampdown will turn out - many believe Beijing will not seek to annihilate an industry that still plays an essential role in grooming its future workforce. For now, many investors may choose to err on the side of caution.
Mr Kerry Goh, chief investment officer at multi-family office Kamet Capital Partners, said he has reduced his positions in edtech companies in recent months "because it's sell and ask questions later when it comes to China".
"But we are looking for opportunities to rebuild positions," he added.
Temasek is using citizens' reserves to keep Sembmarine on life support.
Only a Shitty Times editor is irresponsible enough to put a positive spin on the rights issue.
Ven Sreenivasan
Associate Editor
The rights issue will give the group full assurance of raising the $1.5 billion it critically requires.PHOTO: SEMBCORP MARINE
July 27, 2021
SINGAPORE - Sembcorp Marine's (Sembmarine) share price has been brutally bashed down after the company announced its $1.5 billion rights issue on June 24.
As at Monday (July 26), the stock was down over 50 per cent from the 19.1 cent level when the announcement was made. The selldown reflects the unhappiness among minority shareholders who, less than a year ago, had to cough up cash for a massive $2.1 billion rights issue.
Short sellers have also had a field day.
Why is Sembmarine seeking another $1.5 billion barely a year later?
The short answer is: The company is running out of money to complete its 17 ongoing but delayed projects, most of which it must deliver over the next 18 months or face untold consequences.
"In the absence of a recapitalisation, the group will face challenges to continue operating as a going concern," the company said in a filing last week.
But here's the long answer.
The offshore and marine (O&M) industry has had a dreadful time since 2015 and has had to face one challenge after another - a collapse in oil prices and major structural changes away from oil and gas and towards renewable energy.
The industry began a painful pivot to clean energy, but just as it was poised for a recovery last year, the Covid-19 pandemic struck and sent it into another tailspin.
Of course, Sembmarine did raise $2.1 billion last year.
But $1.5 billion of that was used to pay off a loan from Sembcorp Industries, its then parent, to urgently reduce its gearing to be able to refinance its debt facilities.
That meant that only $600 million net cash proceeds were raised.
Of this, $300 million has already been used for working capital.
The remaining $300 million is now insufficient amid the protracted and continuing impact of Covid-19, which has caused revenue to fall and costs to rise, resulting in higher negative operating cash flow.
As the group has pointed out, the latest $1.5 billion rights issue will meet immediate funding needs and strengthen its balance sheet.
The idea is to replenish depleted working capital and enhance the liquidity position to meet its projected operational funding requirements until at least the end of next year.
Why not borrow instead?
Responding to this query from investors and the media, the company said that although the group's net debt to equity ratio has been brought down to around 0.74, the challenging business conditions have put increasing pressure on it when refinancing its existing maturing debt facilities - let alone raise new borrowings.
"Obtaining additional debt financing from lenders is unlikely to be available nor sufficient to meet the group's funding needs. Adding debt would also increase the pressure on cash flow through higher debt servicing needs," Sembmarine said in its filing.
Hence, the rights issue is seen as the best solution in a bad situation.
With the support of Temasek subsidiary Startree, its major shareholder, and underwriting by DBS Bank, its financial adviser, the rights issue will give the group full assurance of raising the $1.5 billion it critically requires.
This may be good for the group, but is it good for its long-suffering minority shareholders?
The question many retail shareholders will ask is whether they are being asked to cough up more good money after bad.
Here's the skinny.
The renounceable rights issue will see Sembmarine issue three rights shares for every two Sembmarine shares held by a shareholder.
The issue price will be 8 cents per rights share, which is at a 58 per cent discount on Sembmarine's closing share price of 19.1 cents on June 23, when the rights issue was announced.
As this is a renounceable rights issue, shareholders can sell their rights without taking up the offer. In other words, the rights are transferable and can be bought or sold on the stock market.
So what should a shareholder do?
Unfortunately, there is no painless solution. But the deeply discounted rights issue also offers opportunity for money to be made, if shareholders have the patience, the holding power and the means.
But first, there is a unique feature in this rights issue that should be pointed out.
This involves Startree, the Temasek subsidiary, which currently owns 42.65 per cent of Sembmarine. Startree has committed to not just taking up its rights entitlement but also subscribing to excess rights up to a cap of 67 per cent of Sembmarine's enlarged share capital.
What is unique is that Startree has not requested a whitewash waiver - it has not asked to be excused from making an unconditional mandatory general offer (MGO) if it accumulates over 50 per cent of the shares of Sembmarine.
Any other shareholder with a stake of between 30 per cent and 50 per cent, and giving an undertaking to apply for excess shares, would insist on a whitewash waiver to avoid having to make an MGO.
So Startree will have to make an MGO if it subscribes to a mere 1.67 per cent of shares in excess of its pro-rata 42.6 per cent entitlement of rights shares. And this MGO will become unconditional if it accumulates an additional 6.4 per cent of Sembmarine's enlarged share capital, crossing the 50 per cent threshold.
To the best of this writer's knowledge, no other rights issue has this buyback option from a major shareholder.
Basically, the MGO gives all shareholders a free option to sell back their shares to Startree if, after the rights issue, there is no upside in the share price.
The important part is that the MGO underpins Sembmarine's share price at 8 cents on an ex-rights basis. This sets the floor price for Sembmarine shares after the rights issue and before the MGO.
Sembcorp Marine's Tuas Boulevard Yard. There is no painless solution for Sembmarine's shareholders, but the deeply discounted rights issue offers a chance for money to be made, if they have the patience, the holding power and the means, says the writer. PHOTO: LIANHE ZAOBAO FILE PHOTO
For Sembmarine shareholders who have the funds - and the patience - at 8 cents a share, the rights are affordably priced.
Those who can afford it should subscribe to the rights shares and also apply for excess shares.
Those who cannot afford to take up their rights or do not wish to increase their exposure, should go for a "half strategy": Sell enough shares to use the proceeds to take up their rights entitlement.
They should not give up their entitlement completely as the deeply discounted rights issue is meant for shareholders to take up and not to forgo.
Here is a simple illustration of why there is money to be made.
Assume you have one share at 19 cents, the price at the time of the rights announcement. If you subscribe to 20 rights shares (entitlement and excess) at 8 cents apiece, you cough up $1.60.
Of course, whether this brings you above water depends on what price you paid to acquire the share.
Those who paid more will have to continue to be patient and believe that Sembmarine will recover and return to growth. In other words, the question for them is this: Is the worst behind Sembmarine?
Quite possibly.
The Sembmarine stock is currently trading at a substantial discount from net asset value.
With the rights issue, Sembmarine would be adequately capitalised and have the funds to complete existing projects.
Its net order book was $1.89 billion as at March 31 and most of the 17 projects under execution will be completed by end-2022 with cash collection to follow.
The company has issued profit guidance that it will make full provisions in its first-half FY2021 results for foreseeable future costs and expenses for project completions up to end-2022.
Beyond the existing projects, Sembmarine will have the balance sheet to bid for and secure new projects, especially in the new and renewable energy segment.
The outlook for new orders has improved for Sembmarine, which has a solid track record in the industry, but was beaten down by circumstances beyond its control.
This is underpinned by several factors. One is that oil prices have bounced back to pre-2015 levels in recent weeks.
Meanwhile, Sembmarine has also begun a successful pivot to renewables and green energy.
A final key development is the potential merger with Keppel O&M's (KOM) business and assets.
Though this is a separate ongoing negotiation and not linked to the rights issue, a successful merger with KOM - if it materialises after being talked about for years - could supercharge Sembmarine's prospects.
Unlike KOM, which is exiting the oil rig business and transitioning to an asset-light strategy, Sembmarine remains fully committed to the O&M industry.
Given the pickup in the oil market and renewables, it would appear there is more upside than downside in the Sembmarine share price.
Shareholders with the means should therefore take this opportunity to not only subscribe for the rights shares but also apply for excess shares to further average down their investment cost.
This writer, who has held Sembmarine shares for years, plans to pick up some rights shares.
Of course, analysts will be updating their estimates following the announcement of results on Thursday. Their view should be a cue to the market.
Only a Shitty Times editor is irresponsible enough to put a positive spin on the rights issue.
Commentary
Sembmarine's rights issue is an opportunity for minority shareholders
Ven Sreenivasan
Associate Editor
The rights issue will give the group full assurance of raising the $1.5 billion it critically requires.PHOTO: SEMBCORP MARINE
July 27, 2021
SINGAPORE - Sembcorp Marine's (Sembmarine) share price has been brutally bashed down after the company announced its $1.5 billion rights issue on June 24.
As at Monday (July 26), the stock was down over 50 per cent from the 19.1 cent level when the announcement was made. The selldown reflects the unhappiness among minority shareholders who, less than a year ago, had to cough up cash for a massive $2.1 billion rights issue.
Short sellers have also had a field day.
Why is Sembmarine seeking another $1.5 billion barely a year later?
The short answer is: The company is running out of money to complete its 17 ongoing but delayed projects, most of which it must deliver over the next 18 months or face untold consequences.
"In the absence of a recapitalisation, the group will face challenges to continue operating as a going concern," the company said in a filing last week.
But here's the long answer.
The offshore and marine (O&M) industry has had a dreadful time since 2015 and has had to face one challenge after another - a collapse in oil prices and major structural changes away from oil and gas and towards renewable energy.
The industry began a painful pivot to clean energy, but just as it was poised for a recovery last year, the Covid-19 pandemic struck and sent it into another tailspin.
Of course, Sembmarine did raise $2.1 billion last year.
But $1.5 billion of that was used to pay off a loan from Sembcorp Industries, its then parent, to urgently reduce its gearing to be able to refinance its debt facilities.
That meant that only $600 million net cash proceeds were raised.
Of this, $300 million has already been used for working capital.
The remaining $300 million is now insufficient amid the protracted and continuing impact of Covid-19, which has caused revenue to fall and costs to rise, resulting in higher negative operating cash flow.
As the group has pointed out, the latest $1.5 billion rights issue will meet immediate funding needs and strengthen its balance sheet.
The idea is to replenish depleted working capital and enhance the liquidity position to meet its projected operational funding requirements until at least the end of next year.
Why not borrow instead?
Responding to this query from investors and the media, the company said that although the group's net debt to equity ratio has been brought down to around 0.74, the challenging business conditions have put increasing pressure on it when refinancing its existing maturing debt facilities - let alone raise new borrowings.
"Obtaining additional debt financing from lenders is unlikely to be available nor sufficient to meet the group's funding needs. Adding debt would also increase the pressure on cash flow through higher debt servicing needs," Sembmarine said in its filing.
Hence, the rights issue is seen as the best solution in a bad situation.
With the support of Temasek subsidiary Startree, its major shareholder, and underwriting by DBS Bank, its financial adviser, the rights issue will give the group full assurance of raising the $1.5 billion it critically requires.
This may be good for the group, but is it good for its long-suffering minority shareholders?
The question many retail shareholders will ask is whether they are being asked to cough up more good money after bad.
Here's the skinny.
The renounceable rights issue will see Sembmarine issue three rights shares for every two Sembmarine shares held by a shareholder.
The issue price will be 8 cents per rights share, which is at a 58 per cent discount on Sembmarine's closing share price of 19.1 cents on June 23, when the rights issue was announced.
As this is a renounceable rights issue, shareholders can sell their rights without taking up the offer. In other words, the rights are transferable and can be bought or sold on the stock market.
So what should a shareholder do?
Unfortunately, there is no painless solution. But the deeply discounted rights issue also offers opportunity for money to be made, if shareholders have the patience, the holding power and the means.
But first, there is a unique feature in this rights issue that should be pointed out.
This involves Startree, the Temasek subsidiary, which currently owns 42.65 per cent of Sembmarine. Startree has committed to not just taking up its rights entitlement but also subscribing to excess rights up to a cap of 67 per cent of Sembmarine's enlarged share capital.
What is unique is that Startree has not requested a whitewash waiver - it has not asked to be excused from making an unconditional mandatory general offer (MGO) if it accumulates over 50 per cent of the shares of Sembmarine.
This is a rare exception to the rule.Any other shareholder with a stake of between 30 per cent and 50 per cent, and giving an undertaking to apply for excess shares, would insist on a whitewash waiver to avoid having to make an MGO.
So Startree will have to make an MGO if it subscribes to a mere 1.67 per cent of shares in excess of its pro-rata 42.6 per cent entitlement of rights shares. And this MGO will become unconditional if it accumulates an additional 6.4 per cent of Sembmarine's enlarged share capital, crossing the 50 per cent threshold.
To the best of this writer's knowledge, no other rights issue has this buyback option from a major shareholder.
Basically, the MGO gives all shareholders a free option to sell back their shares to Startree if, after the rights issue, there is no upside in the share price.
The important part is that the MGO underpins Sembmarine's share price at 8 cents on an ex-rights basis. This sets the floor price for Sembmarine shares after the rights issue and before the MGO.
For Sembmarine shareholders who have the funds - and the patience - at 8 cents a share, the rights are affordably priced.
Those who can afford it should subscribe to the rights shares and also apply for excess shares.
Those who cannot afford to take up their rights or do not wish to increase their exposure, should go for a "half strategy": Sell enough shares to use the proceeds to take up their rights entitlement.
They should not give up their entitlement completely as the deeply discounted rights issue is meant for shareholders to take up and not to forgo.
Here is a simple illustration of why there is money to be made.
Assume you have one share at 19 cents, the price at the time of the rights announcement. If you subscribe to 20 rights shares (entitlement and excess) at 8 cents apiece, you cough up $1.60.
Assuming an ex-rights price of, say, 9 cents, your 20 rights shares would realise a gain of 20 cents. This means you recoup the value of the starting 19-cent share.Of course, whether this brings you above water depends on what price you paid to acquire the share.
Those who paid more will have to continue to be patient and believe that Sembmarine will recover and return to growth. In other words, the question for them is this: Is the worst behind Sembmarine?
Quite possibly.
The Sembmarine stock is currently trading at a substantial discount from net asset value.
With the rights issue, Sembmarine would be adequately capitalised and have the funds to complete existing projects.
Its net order book was $1.89 billion as at March 31 and most of the 17 projects under execution will be completed by end-2022 with cash collection to follow.
The company has issued profit guidance that it will make full provisions in its first-half FY2021 results for foreseeable future costs and expenses for project completions up to end-2022.
Beyond the existing projects, Sembmarine will have the balance sheet to bid for and secure new projects, especially in the new and renewable energy segment.
The outlook for new orders has improved for Sembmarine, which has a solid track record in the industry, but was beaten down by circumstances beyond its control.
This is underpinned by several factors. One is that oil prices have bounced back to pre-2015 levels in recent weeks.
Meanwhile, Sembmarine has also begun a successful pivot to renewables and green energy.
Given the requisite financial resources, the company has the wherewithal to re-emerge as a leader in both traditional and renewable energy solutions.A final key development is the potential merger with Keppel O&M's (KOM) business and assets.
Though this is a separate ongoing negotiation and not linked to the rights issue, a successful merger with KOM - if it materialises after being talked about for years - could supercharge Sembmarine's prospects.
Unlike KOM, which is exiting the oil rig business and transitioning to an asset-light strategy, Sembmarine remains fully committed to the O&M industry.
Given the pickup in the oil market and renewables, it would appear there is more upside than downside in the Sembmarine share price.
Shareholders with the means should therefore take this opportunity to not only subscribe for the rights shares but also apply for excess shares to further average down their investment cost.
This writer, who has held Sembmarine shares for years, plans to pick up some rights shares.
Of course, analysts will be updating their estimates following the announcement of results on Thursday. Their view should be a cue to the market.
Temasek indicating their regret in selling NOL by trying their hand again at owning a shipping business, now that freight rates have shot through the roof.
This clearly shows the lack of talent they have in Temasek. My opinion is, they will fail again. It takes a certain kind of dare and swashbuckling to steer a liner company. TH doesn't have that.
So say bye bye to your CPF again.
This clearly shows the lack of talent they have in Temasek. My opinion is, they will fail again. It takes a certain kind of dare and swashbuckling to steer a liner company. TH doesn't have that.
So say bye bye to your CPF again.
CPF was already bye-bye... unless you believe Lim Swee Say.
What good is 'money' that you cannot use to buy food, pay bills etc?
Temasek is now collaborating with BlackRock.
https://www.temasek.com.sg/en/news-...-blackrock-launch-decarbonization-partnership
https://www.realclearmarkets.com/ar...rs_the_joy_of_other_peoples_money_491556.html
Expect a lot of 'sustainability' nonsense.
Why Is Temasek So Massively Overexposed to Chinese Regulatory and Market Risk?
KJEYARETNAM 2 WEEKS AGO
The ostensible reasons for the Chinese crackdown on the tech sector are curbing monopoly power and the ability to discriminate against outside vendors in favour of their own companies and protecting consumers against fraud and misuse of their personal data. In the online education sector the reason given is to reduce pressure on parents to spend more on online tuition and thus indirectly boost the birth rate, a major priority for Chinese leaders.
Curbing the monopoly power of Big Tech strikes a chord with many Democrats and also Republicans in the US where curbing the dominance of big tech and its monopoly power is seen as a major priority and while the benefits to the consumer might prove elusive it is sold on the basis of promoting innovation. However in the US the Democratic administration has to contend with its small majority in Congress and the courts, where a Federal judge recently threw out an anti monopoly suit brought by several US states. Reining in big tech is a lot easier in China which has no rule of law and no real property rights. There is no requirement to seek democratic approval with the antitrust agencies functioning as investigator, prosecutor and judge rolled into one. However the real reason for the Chinese crackdown has more toCurbing the power of China’s tech billionaires is more about flattening all sources of potential opposition to Xi and ensuring that no new personality cults develop around people like Jack Ma that could threaten Xi’s rule.
The sell off in China is particularly ironic because just two weeks ago Temasek published its annual report accompanied by glowing articles in the state media and friendly (read sycophantic) foreign financial media like Bloomberg and the Financial Times with headlines like “Temasek posts best shareholder returns in 11 years.” Even without taking account of the sell-off since the balance sheet date, the historic 24.5% return in the year to 31 March 2021 is not as impressive as it appears when we remember that a year before that markets had fallen sharply at the beginning of the pandemic in March 2020. Then later in the year progress on developing vaccines and massive Government aid packages caused a gigantic relief rally. In fact between 31 March 2020 and 31 March 2021 the S&P 500 index rose twice as fast, by 53.7%, while the MSCI World Index rose by 52.0%. The Shanghai Composite Index only rose by 25% while the Hang Seng Technology Index.
Anyone who has read my blog knows that I have been scathing in my criticism of Temasek’s management, and in particular of Ho Ching for many years. (See links below to just a few of the articles). The precipitate plunge in the value of Chinese tech stocks reinforces all the doubts that Temasek’s management know what they are doing and in particular why they have put so many eggs in the Chinese basket. After all China only represents about 5% of global stock market capitalisation whereas the US represents over 55%. Temasek’s exposure to China is 27% of the portfolio whereas the whole of the Americas (North and South) is only 20%.
Being so overweight China carries huge political risk and makes Temasek hostage to a Communist Government that is no respecter of rule of law and does not care about foreign investors. On their website Temasek state that one strand of their strategy is betting on a growing middle class in Asia. If it is relying on China to fuel global growth then this strategy is already outdated since it has become clear that under Xi China is focused on becoming self-sufficient, presumably in preparation for conflict with the West. Consumption, and with it import growth have been downgraded which means less growth for the rest of the world unless the US tales up the slack (though to be fair both LHL and the PAP think consumption is an unnecessary evil like the Chinese leadership and that ordinary Singaporeans should consume as little as possible and produce and export as much as possible).
Since these trends have been clear for some time why has Temasek (and GIC along with the rest of the Singapore Government) put so many eggs in the Chinese basket. It probably stems from the PAP’s China-centric mentality, which started with LKY, and belief in China’s unshakeable rise to world dominance. That is the best interpretation. However there may be other more sinister reasons. As I said in my last blog, Why the Greedy Gullibility of Temasek’s General Counsel Should Ring Alarm Bells, if the top management of Temasek can so easily be taken in by a scam that should not have fooled an ordinary retiree, how can Singaporeans have faith that they know what they are doing. How can we be sure that Temasek’s whole portfolio is not full of rotten apples. Instead of giving Singaporeans facts, overpaid, unaccountable and arrogant expatriates like Mukul Chawla are wheeled out to repeat nursery mantras like “Our stance on China remains unchanged in our optimism”
Temasek is clearly not there to maximize returns on Singaporean-owned assets since it would have reduced its over exposure to China (and Singapore which is still nearly a quarter of its portfolio) and put more of its money into the US if that were the case. It started as an instrument of industrial policy to grow Singaporean state-owned companies but that rationale no longer exists since these companies no longer need state help and in fact are candidates for break up since they rely on monopolies and overcharging Singaporeans. Many of them, like DBS, have expat managers while others, like Keppel, Sembawang Marine and Singapore Airlines have workforces that are either largely or substantially foreign. In most cases Temasek owns only a minority stake though seems to exert a degree of control much greater than its They should be fully privatized. As a first step Temasek should be split in two, with a Singaporean arm and a foreign investment portfolio. Ultimately, as I have advocated many times in the past, Temasek and GIC should be owned directly by Singaporeans through the issue of shares which would be listed, This would provide transparency and accountability which seems sadly lacking at the moment.
Clearly the management of Temasek do not know what they are doing which is ironic because I do not know what they are doing either. The muddled strategy, which can be used to justify any investment, opacity and the management’s lack of accountability for mistakes suits LHL and his wife as it provides them with a vehicle for his wife and family to use to promote their interests. They can pay sycophants like its expatriate management and buy loyalty globally. It is also provides a route for LHL to channel state resources secretly without any credible oversight to himself and his wife since Ho Ching’s salary, likely to be in the tens if not hundreds of millions of dollars. Since LHL does not have to tell Singaporeans what assets he owns, Temasek’s clout as a large investor might provide profitable opportunities for him and his wife to invest on a favorable basis in unlisted companies together with Temasek. Singaporeans will not be told about the losses it has suffered in the rout in Chinese technology stocks. The only certainty is that Temasek’s existence provides little or no benefit to Singaporeans, It is high time that Temasek (and GIC) were made properly accountable to the people starting with the salaries and job performances of its top management and how much money Ho Ching has been paid and will still have invested at Temasek after she leaves in October.
Not reported in The Straits Times
The six stocks mentioned in the report had a market value of $562.1m on 30 Jun. They were worth $316.4m at the time of the report. A total loss of $245.7m or 43.7%.
Wed, 18 August 2021
A woman passes a logo of state investor Temasek Holdings at their office in Singapore July 8, 2014.
REUTERS/Edgar Su/File Photo
By David Ramli
(Bloomberg) — Singapore’s Temasek Holdings bought stakes or increased its holdings in several prominent Chinese technology companies shortly before sweeping moves to rein in the private sector caught the market by surprise.
The state-owned investor disclosed its stake in ride-hailing service Didi Global Inc. for the first time and added shares in a range of businesses from search giant Baidu Inc. to online education providers in the second quarter, ahead of a sudden collapse in some Chinese stocks last month, according to its 13F filings late Monday with the U.S. Securities and Exchange Commission.
A spokesman for Temasek declined to comment.
The bets underscore the dilemma facing even the most powerful institutional investors in the world as Beijing targets the nation’s technology companies. The cascade of policy changes makes for delicate strategic maneuvering in a region that offered seemingly unbound financial promise not long ago.
Many of Temasek’s listed Chinese investments have dramatically slumped in value amid heavy crackdowns by Beijing and heightened scrutiny by U.S. regulators. Here’s a breakdown of some of Temasek’s holdings as of June 30.
Temasek also held 44.1 million shares in 17 Education & Technology Group Inc. as of Dec. 31, according to the company’s prospectus. In the three months ending June 30, Temasek acquired 644,919 shares of the company. The Chinese company, which traded at over US$18 a share in January, most recently traded at US$1.04 a share.
While 13F filings provide a snapshot of an investor’s holdings, Temasek may have trimmed its stake in these companies since June 30 and before their prices fell. Temasek’s stake in Didi appeared in filings for the first time in the second quarter after the company’s initial public offering at the end of June.
Temasek reiterated its bullish confidence in the market during its results in July after China’s moves against Didi and Ant Group Co. But that came before authorities announced wide-ranging new laws governing the education market that have slashed the value of related companies.
China was Temasek’s biggest geographic source of investments as of March 31, making up 27% of its S$381 billion (US$280 billion) portfolio. It has previously stated that it takes a long-term view of investments.
The six stocks mentioned in the report had a market value of $562.1m on 30 Jun. They were worth $316.4m at the time of the report. A total loss of $245.7m or 43.7%.
Temasek bet on Chinese tech companies just before share collapse
Wed, 18 August 2021
A woman passes a logo of state investor Temasek Holdings at their office in Singapore July 8, 2014.
REUTERS/Edgar Su/File Photo
By David Ramli
(Bloomberg) — Singapore’s Temasek Holdings bought stakes or increased its holdings in several prominent Chinese technology companies shortly before sweeping moves to rein in the private sector caught the market by surprise.
The state-owned investor disclosed its stake in ride-hailing service Didi Global Inc. for the first time and added shares in a range of businesses from search giant Baidu Inc. to online education providers in the second quarter, ahead of a sudden collapse in some Chinese stocks last month, according to its 13F filings late Monday with the U.S. Securities and Exchange Commission.
A spokesman for Temasek declined to comment.
The bets underscore the dilemma facing even the most powerful institutional investors in the world as Beijing targets the nation’s technology companies. The cascade of policy changes makes for delicate strategic maneuvering in a region that offered seemingly unbound financial promise not long ago.
Many of Temasek’s listed Chinese investments have dramatically slumped in value amid heavy crackdowns by Beijing and heightened scrutiny by U.S. regulators. Here’s a breakdown of some of Temasek’s holdings as of June 30.
| Company | Value of Stake as of June 30 (US$): | Share Price Since June 30: |
| Didi Global Inc | $466.6 million | -42.64% |
| New Oriental Education & Technology Group | $13.6 million | -77.05% |
| TAL Education Group | $30.2 million | -79.39% |
| Baidu Inc | $34.1 million | -28.12% |
| Kanzhun Ltd | $14.8 million | -11.85% |
| Pinduoduo Inc | $2.7 million | -35.27% |
While 13F filings provide a snapshot of an investor’s holdings, Temasek may have trimmed its stake in these companies since June 30 and before their prices fell. Temasek’s stake in Didi appeared in filings for the first time in the second quarter after the company’s initial public offering at the end of June.
Temasek reiterated its bullish confidence in the market during its results in July after China’s moves against Didi and Ant Group Co. But that came before authorities announced wide-ranging new laws governing the education market that have slashed the value of related companies.
China was Temasek’s biggest geographic source of investments as of March 31, making up 27% of its S$381 billion (US$280 billion) portfolio. It has previously stated that it takes a long-term view of investments.
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NanoFilm shares plunge 28.8% on resignation of COO, disappointing earnings report
The company had racked up expenses on its new product introduction projects, which have yet to contribute materially to revenue.PHOTO: NANOFILM TECHNOLOGIES/FACEBOOK
Kang Wan Chern
AUG 16, 2021
SINGAPORE - Investors dumped shares of NanoFilm Technologies on Monday (Aug 16), unnerved by the resignation of the company's chief operating officer (COO), which was announced after the market closed last Friday.
The nanotechnology company last Friday reported a 2.3 per cent drop in net profit after tax for the first half of the year, missing analyst expectations.
Its stock closed on Monday at $4.25, down $1.72, or 28.8 per cent.
Speaking at a results briefing on Monday, deputy chief executive Gian Yi Hsen said COO Ricky Tan's resignation was "part and parcel of a corporate restructuring under which a business unit head is appointed to directly oversee each division of the company".
"This will help to drive and accelerate business growth more effectively," Mr Gian said, adding that there is no need for an additional layer of reporting under the COO and that Mr Tan's departure will have "minimal impact" on NanoFilm's operations.
Mr Tan's resignation comes less than two months after chief executive Lee Liang Huang stepped down on June 22 due to health reasons.
Mr Lee was appointed as chief executive in November 2017.
Since then, NanoFilm founder and executive chairman Shi Xu has assumed the role of interim chief executive.
Dr Shi was recently added to Forbes' Singapore's 50 Richest list, coming in at No. 24 with a net worth tagged at US$1.8 billion (S$2.4 billion).
The 57-year-old professor-turned-entrepreneur made his fortune after listing his company, which makes high-tech carbon coating used in cars, smartphones and computers, on the Singapore Exchange at $2.59 a share in October last year, raising $470 million.
He retains a 53 per cent stake in NanoFilm.
Dr Shi, a Chinese national who arrived here in 1991 and is now a Singapore citizen, started NanoFilm while working at the Nanyang Technological University's School of Electrical and Electronic Engineering.
For the first half of the year, NanoFilm's revenue increased by 24.2 per cent to $96.6 million compared with a year ago. This was supported by the advanced materials and industrial equipment units.
However, net profit after tax was 2.3 per cent lower, at $18.1 million, compared with the same period last year due to expenses incurred at its new plant in Shanghai.
The company racked up expenses on its new product introduction projects, which have yet to contribute materially to revenue.
The board declared an interim dividend of one cent per ordinary share for the financial year ended Dec 31, which will be paid on Sept 8.
NanoFilm sees better growth for its advanced materials business from customers such as makers of smartphones, vehicles and optical lenses as well as companies involved in precision engineering and printing and imaging.
It also expects to enter new sectors such as medical devices and optics.
Last month, NanoFilm shares hit an all-time high of $6.53, a week after the company announced a joint venture with Temasek to develop hydrogen energy solutions.
Nanofilm partners Temasek in S$140m joint venture to enter hydrogen energy business
Sydrogen will anchor its core research and development activities in Singapore, Nanofilm said. PHOTO: NANOFILM TECHNOLOGIES INTERNATIONAL LIMITED/FACEBOOK
Raphael Lim
JUL 19, 2021
SINGAPORE (THE BUSINESS TIMES) - Nanofilm Technologies said on Monday that it has entered into a definitive agreement with state investment company Temasek to invest in a joint venture (JV), Sydrogen Energy.
It follows an earlier announcement in April where the parties had entered into a non-binding term sheet.
In the exchange filing on Monday, the company said Sydrogen will leverage Nanofilm's core technologies to develop new components and solutions to overcome existing limitations in enabling the use of hydrogen as an energy source.
It aims for this to bring about greater and more widespread commercial adoption of hydrogen energy.
Under the JV agreement, the total initial investment in Sydrogen is up to around S$140 million, comprising cash contribution of up to S$21 million by Nanofilm and the transfer of the group's hydrogen energy business and related intellectual property for a 65 per cent shareholding, and cash contribution by Temasek for the remainder.
Nanofilm said the proceeds are intended to be used for research and development and the construction of production capacity.
Nanofilm executive chairman Shi Xu said: "We are excited to partner Temasek in this strategic joint venture to tackle the global climate change crisis through technological solutions that enable the hydrogen economy."
He added: "The combination of Nanofilm's technologies and Temasek's global network will help Sydrogen bring its advanced solutions to the hydrogen economy quickly and effectively."
Sydrogen will anchor its core research and development activities in Singapore, Nanofilm said. It also noted that Sydrogen sees China as an attractive market, with government policies strongly supporting the development of a hydrogen economy starting with fuel cell electric vehicles.
Nanofilm added that Sydrogen has entered into a technology collaboration with Nanyang Technological University to license the latter's fuel cell associated intellectual property.
Nanofilm shares closed at S$6.22 on Monday, down S$0.04 or 0.6 per cent, before the announcement.
wtf does camelfucking mudslime know?
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