Potential IPO

Potential IPO: Healthcare Holdings Sdn. Bhd., which is majority owned by Mia's sovereign wealth fund Khazanah plans to begin testing investors' appetite next week for its $2b IPO, people familiar with the situation said. The healthcare company, which has hospital assets in Malaysia, Singapore and Turkey, is in the process of finalizing cornerstone investors and aims to list in Msia and SG by July. The IPO by the Malaysian co comes despite renewed fears over the ongoing debt crisis in the euro zone, which has soured investor sentiment and caused offerings the world over to either be pulled or delayed. BofA, CIMB, Credit Suisse, DBS., Deutsche Bank and Goldman Sachs are advising on the deal.

Brothers

Brothers: To lift trading halt. Private co Tung Xin Invt offers to acquire co at $0.26 per share. Tung Xin currently owns or controls approx 50.6% and offer is unconditional. Offer is approx a premium of 13.0% to NAV and is approx 44.4% prem to last traded price of $0.18.

DBS

DBS: Indonesia's central bank said it plans to cap single ownership in the country's banks at 40% for new investment, a rule that could scupper a US$7.3b bid by DBS for Bank Danamon. The proposal appeared to be aimed at stopping a DBS bid that has drawn nationalist opposition from local bankers and lawmakers, though it would ease concerns among other existing bank investors in the G-20 economy. The proposal would allow individuals or families to own only up to 30 per cent of local lenders, while financial institutions would be able to own up to a maximum of 40%. Add that this new regulation will only hold for new initiatives and new investment. Nomura note that without retroactive application, the new regulations appear very obviously aimed to scupper the DBS-Danamon deal and the chances of DBS walking away are now significantly above 50%. SG would be better off maintaining the status quo with Temasek holding on to its 67% stake.

Centurion

Centurion: To acquire 100% stake in Msia co Approach Impact for RM180k and provide an advance of RM11.8m to repay advances to the vendor. Approach Impact is the registered and beneficial owner of a piece of lan with an area of approx 28.3 sqm. The land will be developed into workers accomodation and phase 1 is expected to be operational in 2014 with capacity of 6k beds. Phase 2 is expected to either consist of another 4k beds or an industrial building. Co currently trades at P/B of 1.5x and at annualized P/E of 9.1x.

Baker Tech

Baker Tech: lifted halt this morning. Recall yday (at 2.47pm), we mentioned that the High Court has dismissed SMM’s claims (in effect to invalidate Baker Tech's sale of its 15% stake in PPLH to QD Asia Pacific) in their entirety. The news is neutral for SMM, since the Street has not factored in the scenario of a positive settlement in SMM’s favor. Nevertheless, the court decision is good news for Baker Tech, which had deferred the gain on disposal of PPLH of $58.2m (equivalent to 8.3cts/sh based on the current 700m shares out). This development should also reduce the overhang on Baker Tech shares, given investor worries about a claw back on the US$116.25 ($150.5m) cash from sale of PPLH. Baker Tech says if the Court’s ruling is not appealed against or is upheld on appeal, the Co will then recognize the gain on the disposal. Baker Tech recently completed a 2-for-5 rights cum warrants issue. The expected date of issuance of the warrants is 6 Jun. Assuming the warrant entitlements are fully taken up, we estimate Baker Tech to have $194.3m net cash (based on Mar ’12 results), which translates to $0.278/sh. This compares with the counter’s last close at $0.275. The stock trades at 9.7x P/E. The counter remains halted until further notice. Details of outstanding warrants: i) Baker Tech W20121116, 282.6m units out, $0.32 exercise price ii) Recent 2-for-5 warrants, 280m units out, $0.27 exercise price

Keppel Corp

Keppel Corp: has been awarded a contract from Maersk Drilling to build a repeat Gusto MSC CJ70 ultra harsh environment jackup rig worth ~US$560m. The rig is scheduled for delivery in 1Q15, and will be deployed in Dagny field in the Norwegian North Sea for Statoil when completed. This is the third CJ70 jackup rig that KEP is building for Maersk Drilling; note that it is priced 20% higher than the previous order for two such rigs in Feb ’11. The latest contract brings KEP’s ytd order book to $6.9b (incl LOIs for 5 semis from Sete Brasil and 1 semi from Floatel). This compares with the $9.4b contract wins for the whole of FY11. KEP remains a favorite amongst analysts with 21 Buys, 4 Holds, and 1 Sell, with TP ranging btwn $10.80 – 14.80. The stock trades at 8.2x P/E. Technically, the May trough at $9.80 may offer support, while the 200-day exponential moving average at $10.33 may offer resistance.

SG Market (01 Jun 12)

SG Market: S’pore shares are set to fall after Wall Street's and European bourses' negative cues on further weakening of economic data. This comes ahead of US non-farm payrolls data tonight which is expected to add to the pessimistic mood. With the prevailing mood now focused on safety and capital protection, the STI is likely to slip below the 2750 support and may test the next level at 2700. Among stocks likely in focus, KepCorp landed another US$560m harsh environment jackup rig contract, taking its total contract wins this year to almost $7b. DBS’ Danamon acquisition faces headwinds from Indonesian bank-ownership limits under consideration. Formula One is delaying its US$2.5b IPO, which may dampen market sentiment.