3 Singapore Stocks to Keep Your Eye on in February
It’s always useful to look out for catalysts that can propel a business to greater heights.
These catalysts can be in the form of a merger and acquisitions (M&A), a spin-off, the clinching of a significant contract, or a potential buy-out offer that helps to unlock value.
Whatever the case, it pays to scrutinise the information to determine if the business will enjoy better business prospects.
These corporate moves could help you to decide if it’s worthwhile to park some money in these stocks.
Let’s take a closer look at three Singapore stocks that recently announced newsworthy corporate developments.
As February approaches, this trio of companies could make it into your buy watchlist if you decide to rejig your investment portfolio.
Olam Group Ltd (SGX: VC2)
Olam Group is a leading food and agri-business supplying food, ingredients, feed, and fibre to 20,900 customers worldwide.
The group has a presence in over 60 countries and has a sourcing network involving around five million farmers.
In early January, Olam Group announced its plan to list its agricultural division, Olam Agri, as early as the first half of 2023 (1H2023).
The primary listing will take place on Singapore Exchange Limited (SGX: S68), or SGX, with a potential concurrent listing in Saudi Arabia.
Olam Agri is present in more than 30 countries and employs 9,100+ employees.
For fiscal 2021 (FY2021), Olam Agri handled 41 million tonnes of agricultural products and owned more than 50 manufacturing and processing facilities.
As part of the IPO process, Olam Agri will be demerged from Olam Group via a dividend-in-specie (i.e. distribution of shares in the former) to eligible Olam Group shareholders.
Olam Agri’s operating profit has risen by 40.1% per annum from 2019 to 2021, an impressive performance against the backdrop of the pandemic, supply chain disruptions and geopolitical tensions.
Olam International’s original reorganisation plan split the group into three separate entities – Olam Group, Olam Agri, and Olam Food Ingredients (ofi).
On this note, Olam Group intends to list ofi on the premium segment of the London Stock Exchange with a concurrent listing on SGX.
No timeline has been provided for ofi’s eventual listing, but it will take place after Olam Agri’s successful IPO.
APAC Realty (SGX: CLN)
APAC Realty is a real estate services provider that holds the ERA regional master franchise rights for 17 countries in the Asia Pacific.
Through this network, the group has a significant presence in Asia with 20,600 advisors across 654 offices.
APAC Realty acquired an additional 22% stake in ERA Vietnam for S$4.9 million which comes with an earn-out incentive of S$10.5 million.
The aggregate consideration amounts to S$15.4 million but the incentive will only be paid to the sellers if they achieve the performance targets set out in the sale and purchase agreement.
For context, APAC Realty acquired an initial 38% stake in ERA Vietnam back in February 2020. Upon completion, the group’s stake in ERA Vietnam will rise to 60%, making it a subsidiary of the listed property services group.
ERA Vietnam was set up in 2017 and has grown its salesperson numbers from less than 100 at its founding to around 3,900 as of 31 December 2022.
The division has also grown its revenue significantly from around S$4.4 million in 2020 to around S$7 million in the first nine months of 2022.
Vietnam has ambitious plans to become a developed country by 2045.
The government has planned for 5,000 kilometres of expressways by 2030 along with a 1,545-kilometre high-speed railway by 2045.
These infrastructure developments should drive healthy real estate development, thus providing a bright future for ERA Vietnam.
Sabana Industrial REIT (SGX: M1GU)
Sabana Industrial REIT owns a portfolio of 18 properties in Singapore amounting to S$900 million as of 31 December 2022.
In mid-January, Volare Group AG (the “offeror”) made a voluntary conditional partial offer for 10% of the units of Sabana Industrial REIT at an offer price of S$0.465 per unit.
The offeror currently owns 5.4% of the REIT and is one of Switzerland’s leading suppliers of fossil fuels.
Volare Group AG also provides vehicle care, wood production, and construction services and owns investments in real estate and property companies.
This partial offer was made as the offeror wishes to diversify its business away from fossil fuels and believes there is inherent long-term value in Sabana Industrial REIT’s units.
The REIT had just announced its FY2022 earnings with gross revenue rising by 15.9% year on year to S$94.9 million.
Net property income inched up 2.6% year on year to S$53.3 million but distribution per unit remained unchanged at S$0.0305.
Units of the REIT offered a trailing distribution yield of 6.9%.
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Disclaimer: Royston Yang owns shares of Singapore Exchange Limited.
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