OUE Commercial Reit to Merge with Hospitality Reit

OUE Commercial Real Estate Investment Trust (OUE C-Reit) and OUE Hospitality Trust (OUE H-Trust) are proposing to merge in a cash and stock deal that will create one of Singapore’s largest Reits with total assets of about SGD 6.8 billion.

 

Under the proposed scheme, OUE C-Reit will acquire OUE H-Trust by paying OUE H-Trust holders, for every OUE H-Trust stapled security held, SGD0.04075 in cash plus 1.3583 new OUE C-Reit units. OUE C-Reit will pay a total of about SGD74.6 million in cash, and issue about 2.5 billion new units to OUE H-Trust holders. Based on OUE C-Reit’s closing price of SGD0.52 on Friday, the 2.5 billion units would be worth about SGD 1.3 billion.

 

Parent company OUE Group will continue to retain a 48.3% stake in the enlarged Reit. OUE shares closed at SGD 1.77 on Friday.

 

The merged entity will be one of Singapore’s largest Reits by assets.

Briefing News

[February 17, 2017 ] Bosideng International Holdings (3998) announces that it has disposed of an equity interest in its non-down apparel brand Mogao and it closed its flagship store in London in the middle of January. The company sold its 51.004% equity stake in the non-down apparel brand Mogao for RMB40.52million after having reviewed the brand’s financial position and business performance. This will allow the Group to focus its resources on apparel brands with greater potential.

In addition, the Group has closed down its flagship store in London in January this year after having considered the economic uncertainty. The property where the flagship store used to be has been rented out temporarily. The Group may consider entering the British market again when the business environment is favourable. In 2011, the Group acquired the property and established its first overseas flagship store there. The Group has gained valuable experience in an overseas retail market and enhanced its reputation there and in the capital market after having operated the flagship store for several years.

 

Personal Care Products maker Vinda Net profit doubled to HKD654 million

Personal Care Products maker Vinda International Holdings Limited (stock code: 3331) said revenue grew by 24.3% to HKD12.1 billion in 2016, representing a 13.7% of organic growth.  Gross profit increased by 29.0% to HKD3.8 billion, benefited from a lower wood pulp cost, active portfolio optimisation and higher fixed cost coverage, the overall gross profit margin expanded by 1.2 percentage points to 31.7%.  
EBITDA up by 37.6% to HKD1.7 billion and EBITDA margin expanded by 1.4 percentage points to 14.0%, operating profit grew by 33.9% to HK$1.0 billion and operating margin increased by 0.6 percentage points to 8.4%.  Net profit rose by 107.8% to HKD654 million and net profit margin up 2.2 percentage points to 5.4%, the company said, adding sales of e-commerce continued to grow well, accounting for 18% of the total sales. The company proposed final dividend of 12.0 HK cents per share (2015: 5.0 HK cents),  up by 140% from a year earlier, the company said, adding together with the interim dividend, total dividend for 2016 would be 17.0 HK cents per share (2015: 10.0 HK cents)
Revenue from Tissue segment was HKD10.0 billion, accounting 83% of the total sales. Revenue from Personal Care segment was HK$2.0 billion, accounting for 17% of the total sales (2015: 3%). The increased proportion primarily came from the new income stream from SCA Asia business since 2016Q2. Total foreign exchange losses reduced substantially to HKD45 million (2015: HKD309 million),  due to the increased proportion of Renminbi borrowings. Net gearing ratio reduced to 59% (2015: 88%)
Mr. Christoph Michalski, CEO said, “2016 was a difficult year with a slowing macro-economic development in key Asian markets, the ongoing devaluation of the RMB and a continued softening in the physical off-line retail sector. Despite all these challenges,Vinda has delivered a solid top-line growth, broadened its profitability and improved the working capital. The e-commerce channel has again performed well and maintained the No.1 market position. These positive results were primarily driven by our consistent brand building, innovation, trading up through an enhanced product mix, a relentless quality focus and a continuous improvement in operational efficiency.
 
Down the road, we will continue the development with four priorities: (1) drive Tissue business in China, (2) broaden Personal Care presence in China, (3) drive the growth of Personal Care business in Asia and roll out Tissue business to the region, and (4) build up B2B business.”
 
 Mr. Li Chao Wang, Chairman said, “We embarked on our new Five-Year journey in 2016. Our ambition is clear, that is to become a leading hygiene company in Asia by securing the forefront position in the tissue market and speeding up the expansion of our personal care business.
 
The year 2017 marks the 10th anniversary of our listing, a milestone that marks our transformation over the past decade, into the truly international and multi-category hygiene company that we are today. We, as always, will work in concert relentlessly to ensureVinda grow and bring sustainable returns as we move forward.”
PhotoSocio / Pixabay

Fashion Brands Operator I.T Annual Result 2016

I.T Limited reported gross profit grew by 9.0% to HK$2,209.2 million, while gross profit margin increased by 0.9 percentage point to 60.6% amid difficult times and promotional headwinds. Total turnover increased by 7.4% to HKD3.64billion.

 

 

The company says the operating environment of the fashion retail business in the first half of the fiscal year continued to be suppressed by the same adverse economic factors as in the previous year. External market factors, such as the persistent cost inflation in operating retail channels, continued to place downward pressure on the Group’s profitability, particularly in the Hong Kong segment. As a result, total operating cost ratio of the Group increased by 0.5 percentage point to 57.6%. Rent-to-sales ratio (including rental charges and building management fees) remained flat at 26.5%. Staff cost-to-sales ratio (excluding share option expenses) increased from 16.3% to 17.0%.

 

Operating profit (adjusted) increased by 12.1% to HK$125.0 million whereas net profit (adjusted) increased by 9.2% to HK$39.1 million. Basic earnings per share were 3.2 HK cents against the basic loss per share of 2.6 HK cents for the corresponding period in 2015. The Board does not declare the payment of an interim dividend for the six months ended 31 August 2016.

 

The company management said looking specifically in theHong Kong market, the overall market conditions have remained very challenging in the midst of an uncertain macroeconomic landscape and volatile financial markets. Currency headwinds continued to impact domestic spending momentum. The cost of operating retail channels, particularly rental and staff costs, continued to rise. This was an area that placed significant pressure on the profitability of the Group’s Hong Kong segment and remained the most challenging area of the Group’s business. As a result, retail sales in Hong Kong declined by 2.0% to HK$1,540.2 million, with comparable store sales growth registered at -0.9%. Gross margin increased by 2.0 percentage points to 58.9%, primarily a result of a more favorable mix of sales toward in-house brands and a slight decrease in markdowns in relation to sales during the period. However, such enhancement in gross margin was not sufficient to completely offset a decline in efficiency measured by operating costs on sales. An operating loss of HK$140.0 million was recorded for the six months ended 31 August 2016.

 

The Group is gratified with the progress in expansion that it has achieved so far in Mainland China as it has successfully capitalised on multiple growth opportunities and has extended its self-managed store presence to new cities such as Changchun and Nanning. Total retail sales of the Group’s Mainland China business increased by 14.0% to HK$1,523.7 million, attributable to not only the increase in total trading area but also a positive comparable store sales growth of 4.6%. Gross margin decreased by 0.6 percentage point to 58.4%, primarily a result of exchange differences from the devaluation of Chinese Renminbi over the previous period. Operating profit increased by 4.8% to HK$82.0 million.

The company said its Japan segment has continued to outperform benefiting from the overwhelming responses to its collections of all brands within the A Bathing Ape group, as well as the increase in inbound tourist traffic growth during the period. Sales of Japan business increased by 28.4% to JPY4,796.3 million, whereas sales in Hong Kong Dollar terms grew by 46.6% to HK$348.5 million. Gross margin landed at 71.6%, compared to 70.5% in 1H FY15/16. Operating profit increased by 52.6% to HK$144.5 million.

 

The Group maintained a solid balance sheet, with cash and bank balances amounting to HK$1,766.4 million and a net cash position of HK$343.2 million as at 31 August 2016.

 

HK Fashion Brand Company Sees Luxury Fashion Demand Dip

Sitoy Group Holdings Limited (the “Company”, together with its subsidiaries, the “Group”; stock code: 1023), a brand management and retailer, and large-scale outsourced manufacturer of luxury handbags, small leather goods and travel goods, is pleased to announce today its annual results for the financial year 2015/2016 (“FY2016”).

 

During FY2016, the Group’s revenue decreased by 16.1% year on year to HK$2,837.0 million. This decrease was primarily attributable to the decrease in demand from the high-end and luxury brand customers. However, the impact was partially offset by an increase in retail segment sales.

 

During the year, due to stringent cost control, as well as depreciation of the RMB against HK dollar, the Group’s gross profit margin increased slightly to 27.0%, while profit attributable to owners of the Company decreased by 10.1% year on year to HK$370.1 million.

The Group’s basic earnings per share were HK36.96 cents for the year. The Board recommended the payment of final dividend of HK13 cents and special dividend of HK15 cents per share for the year ended 30 June 2016.

 

Commenting on the Group’s results, Mr. Teras Yeung Wo Fai, Chief Executive Officer of the Company, said, “During the year, against the backdrop of weak global consumer sentiment, various major brands not only placed their focus on destocking, but also adopted an increasingly conservative attitude in placing their orders for the coming season. As a result, the Group’s results of operations inevitably came under pressure. To maintain consistent quality and services to its customers, the Group will continue most of its manufacturing operations in China despite rising labour costs, mainly due to their higher level of craftsmanship and well-developed supply chain and logistic facilities. Leveraging the Group’s enhanced operational efficiency of its retail network, despite the overall sluggish retail environment, the retail business achieved stable growth during the year. Moreover, with the reinforcement by the Group’s promotional and marketing campaigns across the on-line and off-line sales channels to build up the brand image of TUSCAN’S and Fashion & Joy, together with the implement of cost control policies, the retail business has recorded pleasing results for the year. The Group continuously upgrades itself to meet ever-changing requirements of both existing and new customers. For the year under review, the Group has made its best endeavours to tap new opportunities under a challenging business environment.”

 

During the year, revenue from manufacturing business decreased by 15.4% year on year to HK$2,767.9 million which was mainly due to decrease in demand for high-end and luxury brand products in the worldwide market. However, new orders generated from the Group’s effort in actively developing businesses with certain high-end and luxury brand names in international and China markets, have partly offset effects of lower demand from existing customers.

 

During the year, the Group’s retail business continued to grow and diversify. Revenue from the retail business increased by 10.3% year on year to HK$119.6 million, demonstrating enhanced operational efficiency of its retail network. Revenue from the retail business accounted for 3.35% of the Group’s total revenue, a relatively stable level as compared to FY2015. As of 30 June 2016, the Group owned and operated 51 retail stores, of which, 6 stores were situated in Hong Kong, 1 in Macau and the remaining in China.

 

During the year 2016, the Group has obtained the exclusive license rights from two international brands, Kenneth Cole and Bruno Magli. By obtaining the license rights, the Group has successfully diversified and enriched its retail brand portfolio. With the addition of Bruno Magli and Kenneth Cole to the Group’s retail portfolio, the Group reached the goal of multi-brand development.

 

Commenting on the prospects, Mr. Michael Yeung Wah Keung, Chairman of the Group said, “Looking ahead, with stalled recovery of the China economy and uncertainties stemming from the worldwide markets, coupled with keener competition in the industry, the Group is well-equipped to face the upcoming challenges. To withstand this difficult environment, the Group will continue to step up its efforts in research and development of its products and technologies. Moreover, the Group shall source quality raw materials with competitive price, and continue to optimise and streamline production procedures to boost competitiveness of the Group and satisfy brand customers’ demands. Meanwhile, the Group will increase the proportion of the development of retail business by actively growing its existing brands, TUSCAN’s, Fashion & Joy, Bruno Magli and Kenneth Cole in both China and Hong Kong, while adopting a prudent approach in seeking ideal locations for new stores, and enhancing operations and efficiency of its existing stores. In order to optimise its product and brand portfolio, the Group will actively capture business opportunities by acquiring suitable high-end luxury brands. Despite mounting challenges and a difficult operational environment in the coming year, the board of directors is confident that it can weather the storm and grow further.”

Fosun Buys Germany Private Bank

Fosun International said today it has completed the acquisition of 99.91% equity interest in a German private bank Hauck & Aufhäuser Privatbankiers, for approximately EUR210 million. Through the acquisition, Fosun aims to continue to strengthen its integrated financial capability in German and European market. This acquisition also marks an important move made by Fosun to establish a family wealth management platform globally.

 

“We are delighted that the European Central Bank and related financial regulatory authorities have made a positive decision and support. H&A is a strategic investment for us and provides us with the channel to invest in major economies in Europe,” said Mr. Guo Guangchang, Chairman of Fosun. “According to our investment plans and leveraging our rich resources across the world, we can effectively help H&A enhance its position in the banking sector of Germany and the rest of Europe.  At the same time, we can provide investors from China and other Asian countries with the opportunities to invest in Germany.”

 

“With the support from Fosun, our long-term shareholder, we are fully capable of building a bridge for Chinese companies seeking opportunities for investment in Germany and the rest of Europe. Meanwhile, we can also assist German enterprises to enter China’s market. H&A will continue to leverage its excellent brand and independence to become a reliable partner of our clients,” said the senior management of H&A. “In the past few months, we have had a full understanding about the opportunities to be brought about by the co-operation with Fosun and we have already started establishing our business in China systematically. Together with Fosun, we will increasingly take advantage of synergies which are to be generated and will extend and enrich our investment portfolio significantly.”

 

In the past five years, owners’ equity in H&A increased tremendously, laying the sound foundations for its further development. In such fields as asset servicing and the business of managing equity interests in small-cap and mid-cap companies, H&A has achieved growth rates in results higher than the industry average in recent years. The private bank has also expanded its business to the key markets in Europe. Since 2013, assets under H&A’s management has increased by nearly 50%. The successful acquisition of H&A will reinforce the blueprint of Fosun’s financial service business in overseas markets. Fosun will also continue to expand its presence in private banking and wealth management segments.

 

H&A is one of the few independent private banks in Germany with 220 years of tradition. The bank resulted from the 1998 merger of two highly traditional private banks: Georg Hauck & Sohn Bankiers, founded in Frankfurt am Main in 1796, and Bankhaus H. Aufhäuser, which opened its doors in Munich in 1870. From its locations in Frankfurt, Munich, Hamburg, Düsseldorf, Cologne and Luxembourg, the bank focuses on providing comprehensive advisory services and administering the assets of its private, corporate and institutional clients. This includes asset management for institutional investors, close cooperation with independent asset managers and both the launch and management of private label funds.

 

SGX launches SGX APAC ex Japan Dividend Leaders REIT Index

Singapore Exchange (SGX) today announced the launch of the SGX APAC ex Japan Dividend Leaders REIT Index, composed of 30 real estate investment trusts (REITs) across the Asia Pacific ex Japan region. It will be the first SGX index to be used as a benchmark index for a new exchange-traded fund (ETF), which will be issued by Phillip Capital Management (S) Limited (Phillip Capital Management), the asset management arm of Phillip Capital.

The index is the first of its kind, comprised entirely of REITs in the Asia Pacific region that are dividend weighted, whilst also becoming accessible through an ETF. The dividend-weighted index measures the performance of REITs that pay the largest dividends within the Asia Pacific ex Japan region, providing investors with the opportunity to participate in a portfolio offering significant and sustainable yields. The index’s total return over the twelve months to 29 July 2016 was 19.97%, demonstrating a yield over the same period of 4.53%.

Phillip Capital Management’s ETF, which will be listed on SGX, highlights the growing investor interest in ETFs in the region and attests to SGX’s status as the regional hub for REITs. The region’s ETF market is fast developing and poised for strong growth, with ETF assets in Asia expected to reach US$560 billion by 2021.

Loh Boon Chye, CEO of SGX, said, “I am delighted with the launch of our first Pan-Asian index and that it will be used as a benchmark for an ETF. As SGX’s first truly regional index, it broadens our offering beyond the Singapore equity market, demonstrating our continued push to provide investors access to diverse opportunities. The demand for index-linked investment opportunities is increasing rapidly across Asia, and SGX is committed to supporting this growth through our comprehensive index services.”

Jeffrey Lee, MD and Co-CIO of Phillip Capital Management, said, “We are very excited to be working with SGX on producing a unique index where the underlying REIT constituents are weighted by total dividends paid in the preceding 12 months. The prospective ETF will offer investors transparent and low cost access to a diverse basket of quality REITs, many of which we have been investing in over the past decade through our actively-managed REIT funds. In view of the growing demand we see from our investors for sustainable income and the rise of passive investing, this is a highly opportune time to launch the first Asia Pacific REIT ETF comprising the region’s largest dividend-paying REITs.”

The SGX APAC ex Japan Dividend Leaders REIT Index captures over 70% of the region’s REIT universe by total capitalisation, taking into consideration size, free-float and liquidity.  All constituent weights are capped at 10% to ensure greater portfolio diversification. The index was designed and built using SGX’s in-house index engineering expertise, in consultation with Phillip Capital Management.

 

Singapore

SGX Names New Chairman

The Directors of Singapore Exchange (SGX) names Mr Kwa Chong Seng to succeed Mr Chew Choon Seng as Chairman of the Board.

Chew will be retiring at the conclusion of SGX’s Annual General Meeting on 22 September 2016, and will not be standing for re-election. He joined the Board in December 2004 and has been the Chairman since January 2011.

Kwa was elected to the Board in September 2012. He was appointed the Lead Independent Director in December 2013, and has been the Chairman of both the Nominating & Governance and the Remuneration & Staff Development Committees since September 2013.

Chew said, “The exchange is an important component of Singapore’s financial system. It has been an honour to be of service and I am thankful for the support and cooperation of my fellow Board members and all the people, inside and outside the organization, whom I have worked with. I trust that Mr Kwa will enjoy the same. Mr Kwa’s capabilities, experience and accomplishments in industry, business and public service are well known and highly regarded. SGX will definitely be well steered.”

Commenting on his new appointment, Kwa said, “I am honoured to have this opportunity to contribute. Filling Mr Chew’s big shoes will be difficult as SGX has many stakeholders who all want SGX to succeed. I will do my best to serve these important stakeholders.”

Singapore river