Welcome to this week’s edition of top stock market highlights.
Singapore Post Limited (SGX: S08)
Singapore Post, or SingPost, announced the divestment of its Australian business, Freight Management Holdings Pty Ltd (FMH), to Pacific Equity Partners (PEP).
PEP will acquire FMH for an enterprise value of A$1.02 billion.
This transaction will be settled for A$775.9 million in cash and allow SingPost to book an expected gain on disposal of around S$312.1 million.
Simon Israel, chairman of SingPost, believes that this divestment is the best option to help unlock shareholder value by crystallising the unrealised value of FMH.
The postal group will utilise the proceeds to repay Australian-dollar-denominated debt of around A$362.1 million and consider paying a special dividend in due course.
This divestment will require the approval of SingPost’s shareholders and the group will convene an extraordinary general meeting (EGM) to approve this deal.
Also, PEP needs to submit an investment proposal to the Foreign Investment Review Board in Australia to obtain approval, which may take up to 90 days.
If all goes well, the transaction is expected to close by the end of March 2025.
Standard Chartered Bank (LON: STAN)
Standard Chartered Bank, or SCB, has announced its latest long-term strategy to increase growth.
Over the next five years, the bank plans to acquire US$200 billion in net new money.
Other objectives include double-digit growth for its Wealth Solutions income.
The seminar also outlined plans to enhance the lender’s wealth capabilities through product innovation and digital client journeys.
It will work on improving its brand positioning and execute branch upgrades to cater to the needs of high-value clients.
SCB is currently focused on serving global Chinese and Indian clients through its relationship managers and specialists, who can help to provide tailored cross-border wealth solutions.
The bank has a proprietary wealth platform called “myWealth Advisor” that delivers unbiased investment insights from its Chief Investment Officer (CIO).
In 2025, there are plans to integrate advanced capabilities such as structured products and risk analytics into the platform.
Singapore REITs (S-REITs)
There’s good news for Singapore REIT (S-REIT) investors.
The Monetary Authority of Singapore (MAS) has standardised the leverage requirements and disclosure obligations for the S-REIT sector.
All REITs will be subject to an aggregate leverage limit of 50% and must have a minimum interest coverage ratio (ICR) of at least 1.5 times.
Additional disclosures are also required in their interim result announcements and annual reports ending on or after 31 March 2025.
Previously, S-REITs that intended to increase their gearing from 45% to 50% needed to have a minimum ICR of 2.5 times.
This ICR rule is to ensure REIT managers can meet their interest payments adequately and the new standardised leverage limit is also among the strictest globally.
Meanwhile, REIT managers also need to disclose their plans to manage REITs’ leverage and ICR levels so that investors will be aware of how the REIT’s credit profile can be affected by changes in market conditions.
REITs will need to perform and disclose sensitivity analyses on the impact of changes in their EBITDA (earnings before depreciation, tax, amortisation and interest) and interest rates on their ICRs.
It’s a step in the right direction for disclosures as investors require this level of detail to make prudent investment decisions.
The analyses comprise two scenarios – the first is a 10% decrease in EBITDA and the second is a one percentage point increase in interest rates.
The analyses should be based on the weighted average interest cost for each REIT to improve comparability.
Should the REIT’s ICR fall below 1.8 times, the manager should also disclose plans on how to improve it.
These new requirements come on top of existing disclosure requirements for REITs as investors fret over how high interest rates are impacting REITs.
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Disclosure: Royston Yang does not own shares in any of the companies mentioned.
