Thursday, September 19th, 2024
Market UpdatesSingapore SGX stocks

Far East Group (5TJ SP), Sembcorp Industries (U96 SP), Figtree Holdings (5F4 SP)

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Far East Group (5TJ SP), Sembcorp Industries (U96 SP), Figtree Holdings (5F4 SP)

🏢 Far East Group (5TJ SP) – Strategic Disposal of Non-Core Assets

Recommendation: POSITIVE
Target Price: Not provided
Stop Loss: Not specified
Date of Recommendation: 3rd September 2024
Broker: Maybank Research Pte Ltd

Investment Thesis: Far East Group – Unlocking Value Through Strategic Asset Disposal

Far East Group continues to optimize its asset portfolio through strategic disposals, aligning with its long-term business strategy. The company’s recent decision to sell its property located at Lot No. 565, Seksyen 11W, Bandar George Town, Pulau Pinang, Malaysia, underscores its commitment to unlocking value from non-core assets.

  • Details of the Disposal: Far East Group’s subsidiary, Far East Penang, has agreed to sell a two-storey shophouse property for RM2.38 million. The property is currently leased to a third-party tenant, generating rental income. The sale will result in an estimated net positive cash inflow of SGD653,000 after expenses, contributing a gain of approximately SGD606,000 to the group.
  • Rationale: The property is considered a non-core asset with no foreseeable use for the group’s ongoing operations. The disposal aligns with Far East Group’s strategy to streamline its asset portfolio and focus on core business areas.

Valuation and Financials:
While specific valuation metrics are not provided, the disposal is expected to enhance Far East Group’s cash position and support its operational focus.

Share Price Catalysts:

  • Successful completion of the asset disposal, resulting in a positive cash inflow.
  • Further strategic initiatives to optimize the asset portfolio.

⚙️ Sembcorp Industries (U96 SP) – Securing Long-Term Energy Supply

Recommendation: NEUTRAL
Target Price: Not provided
Stop Loss: Not specified
Date of Recommendation: 3rd September 2024
Broker: Maybank Research Pte Ltd

Investment Thesis: Sembcorp Industries – Strengthening Energy Security with New Gas Agreement

Sembcorp Industries continues to bolster its energy portfolio through strategic agreements, ensuring long-term security of supply. The company’s recent Gas Sales Agreement (GSA) with key partners to import piped natural gas (PNG) from the Mako gas fields in Indonesia is a significant step towards securing energy needs beyond 2028.

  • Details of the Agreement: Sembcorp’s wholly-owned subsidiary, Sembcorp Gas, has signed a GSA with West Natuna Exploration, Empyrean Energy, and Coro Energy Duyung (Singapore). The agreement will see the import of up to 111 billion British thermal units per day of PNG, with gas delivery expected to commence from 2026 and continue for about 11 years.
  • Strategic Importance: This GSA extends Sembcorp’s existing PNG supply, ensuring a stable energy source for its customers. The agreement is pending regulatory approvals and the final investment decision by the sellers.

Valuation and Financials:
The GSA is anticipated to have a neutral impact on Sembcorp’s valuation in the short term, with potential long-term benefits as it secures energy supply beyond 2028.

Share Price Catalysts:

  • Successful regulatory approval and commencement of gas delivery.
  • Strategic initiatives to further diversify and secure energy sources.

🏗️ Figtree Holdings (5F4 SP) – Strategic Asset Sale Amidst Family Ties

Recommendation: NEUTRAL
Target Price: Not provided
Stop Loss: Not specified
Date of Recommendation: 3rd September 2024
Broker: Maybank Research Pte Ltd

Investment Thesis: Figtree Holdings – Managing Family Ties in Strategic Asset Sales

Figtree Holdings has made a strategic sale within its Esme development project in Victoria, Australia. The sale, involving family ties, reflects the company’s approach to managing its asset portfolio while balancing internal relationships.

  • Details of the Sale: Figtree Holdings’ subsidiary, Figminna, has agreed to sell a unit in its Esme development project for AUD1.4 million, representing a 1.65% discount to the listed price. The buyer, Siaw Kai Shi Cassandra, is the daughter of Figtree’s managing director, Siaw Kent Ket.
  • Rationale: The sale includes a discount extended to all employees of Figtree Holdings. The transaction, which has been reviewed and approved by the audit committee, aligns with the company’s policy of offering preferential terms to employees.

Valuation and Financials:
The sale is expected to have a neutral impact on Figtree Holdings’ financials, given the small discount and the strategic importance of maintaining employee relations.

Share Price Catalysts:

  • Completion of the sale and continued progress in the Esme development project.
  • Further strategic asset sales and development activities.

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