COSCO Corporation (Singapore) is facing its lowest earnings year this 2013, according to OCBC Investment Research, possibly a net profit of below $50m for FY13 compared to S$139.7m and S$105.7m in FY11 and FY12, respectively.
"Indeed, after five quarters of either little cost overruns or reversal of provisions made earlier, COSCO returned to making provisions on its construction contracts again, dousing hopes that it is gaining footing on the execution front," said OCBC.
"Looking ahead, we expect the operating environment for the group to remain difficult. Any credit tightening in China may also affect the ability of customers to meet their financial obligations," it added.
Interra Resources commences drilling of development well TMT-58
2-month wait before seeing results.
Interra Resources Limited announced to its shareholders that its wholly owned subsidiary, Goldwater TMT Pte. Ltd. (GTMT), has commenced drilling development well TMT-58 at the Tanjung Miring Timur (TMT) field in South Sumatra, Indonesia.
GTMT has 100% operating interest in the Technical Assistance Contract of the TMT field and the cost of drilling will be funded from existing funds on hand. TMT-58 is being drilled as a southern offset to TMT-53 which was completed in April 2013 and has produced in excess of 170,000 barrels to date.
The well is proposed to be drilled to a target depth of 1,250 metres, along the same geological trend as TMT-53 and is planned to intercept at the same producing reservoirs. TMT-58 is the third of four development wells to be drilled back-to-back using an externally contracted rig.
The well is a continuation of the successful drilling programme that began in October 2012 to test new geological and reservoir concepts derived from the 2012 3D seismic survey.
Interra estimates that the results of the drilling should be available in approximately eight weeks. The Company will announce the results as soon as they may be ascertained as well as updates reflecting critical or unexpected events during drilling.
Interra Resources reiterated that investors should exercise due care and caution when trading Interra’s shares.
It is not certain that the development drilling mentioned above will ultimately yield commercially recoverable hydrocarbons or profitable production.
CapitaLand - Here's proof that CapitaLand's large-scale projects are gaining edge in China
Asset build on track.
According to CIMB, its recent ground checks on CapLand’s China projects suggest that it is gradually establishing an edge in large-scale mixed developments. Asset build is on track and retail footfalls are encouraging. Its attitude of improving returns at the project level is also a positive.
Here's more:
What Happened
Last week, we toured CapLand’s projects in Shanghai and parts of south China (Guangzhou and Shenzhen), and also interacted with senior management and ground staff.
What We Think
We think CapLand is gradually carving out a competitive advantage over the local developers in large-scale commercial and mixed developments. Though not all will bear fruit in the near term, we believe the stage is set for more asset recycling once many of its Raffles City (RC) mixed projects are completed in
2015-17.
Meanwhile, we see improvements at the operational and project levels. In Shanghai, retail mall footfall remains robust, with a distinct improvement in traffic at Hongkou Plaza (CMA) since our last visit in 2012.
This asset will enter its first renewal cycle in 2014 and management is confident of getting 15-20% rental reversions, like the group’s other malls. We think this is achievable.
The feel is more mixed on China’s residential segment (12% of its GAV). The high-end segment remains weak due to the home purchase restrictions (HPR) but mid-end projects continue to sell well. Dolce Vita, a mid-range product in Guangzhou sold over 86% of its launched units at Rmb15k-20k psm.
CapLand’s ground staff told us that property remains the most sought-after investment asset class in China.
Interestingly, we noticed more of CapLand’s commercial projects being carved out for strata sales, a segment not affected by HPR.
CEO Mr Lim Ming Yan’s style of management is to go bottom-up and improve yields and IRR at the project level.
He expects development sales to be the ROE kicker, while maintaining a target 34% of its assets for development growth. Overall, we think CapLand is progressing well in achieving its ROE target of 8-12%.
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