Welcome to this week’s edition of top stock market highlights.
Mapletree Pan Asia Commercial Trust (SGX: N2IU)
Mapletree Pan Asia Commercial Trust, or MPACT, announced its intention to divest Mapletree Anson for a total consideration of S$775 million.
This consideration represents a S$10 million gain over the property’s independent valuation of S$765 million as of 31 March 2024.
It is also S$95 million higher than the property’s original purchase price of S$680 million.
Mapletree Anson is a 19-storey building that was completed in July 2009 with a total of 320,000 square feet of lettable area.
MPACT is divesting this asset at an exit yield of 3.8%.
The proceeds will be used to lower the REIT’s gearing which currently stands at 40.5%.
After paying off some debt, aggregate leverage should reduce to 37.6%, thereby increasing MPACT’s debt headroom from S$3.2 billion to S$3.9 billion.
The commercial and retail REIT’s adjusted interest coverage ratio will also improve from 2.9 times to 3.3 times.
The good news is that this divestment will also help to improve the REIT’s distribution per unit (DPU) as the paying down of debt will lower overall interest costs and generate a higher distributable income.
DPU for the fiscal year 2024 (FY2024) is projected to increase by 1.5% from S$0.0891 to S$0.0904.
After the divestment, Singapore will still contribute 53% to MPACT’s total assets under management (AUM), down from 55% pre-divestment.
In terms of net property income, Singapore’s contribution will fall from 60% to 58% post-divestment.
This divestment is slated for completion in July 2024.
Post-divestment, MPACT’s portfolio will comprise 17 commercial properties with a total lettable area of 10.8 million square feet.
Seatrium Limited (SGX: 5E2)
Seatrium announced in late May that it won an international tender from Brazil’s National Oil Company Petrobras.
The contracts are for the construction of floating, production, storage, and offloading (FPSO) vessels and are valued at approximately S$11 billion.
The vessels, platforms P-84 and P-85, are part of Petrobras’ new generation of FPSO platforms that prioritise sustainable practices along with innovative technologies.
Each FPSO will have a production capacity of 225,000 barrels of oil per day and a gas processing capacity of 10 million cubic metres per day.
These FPSOs will focus on efficient power generation and achieve a 30% reduction in greenhouse gas emission intensity.
Construction will commence in the first quarter of 2025 will the final delivery projected to be in 2029.
Post-announcement, Seatrium’s shares rallied by 11.7% from S$1.54 to S$1.72 the next day and closed at S$1.86 recently, up nearly 21% before the FPSO announcement.
Quantum technology and data centres
As part of its National Quantum Strategy, Singapore will invest around S$300 million to pursue quantum technology.
This strategy was launched by Deputy Prime Minister Heng Swee Keat on the first day of the ATxSummit, a flagship technology event organised by the Infocomm Media Development Authority (IMDA).
The investment will be made in four areas, namely quantum research and development, engineering capabilities, talent, and partnerships.
This initiative is part of Singapore’s plan to build quantum computers, a type of technology that harnesses the laws of quantum mechanics to solve problems that are too tough for standard computers.
Higher processing capabilities can enable the discovery of complex drug molecules and spur the training of advanced artificial intelligence (AI) models, among other uses.
Mr Heng also announced the launch of the green data centre roadmap which will add 300 MW of additional capacity in the short term, with the potential to add 200 MW or more in the future.
With most of Singapore’s digital economy growth dependent on data centres, this asset class is essential to Singapore’s ambition to produce a vibrant digital ecosystem.
The information communication sector alone accounted for 17% of the country’s gross domestic product, underscoring the importance of building and growing this sector into the future.
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Disclosure: Royston Yang does not own shares in any of the companies mentioned.
