Singapore stock market update 17March09 :

More Singapore listed companies may make cash calls in the next few months

Over the past few months, many big cap stocks such as DBS,  Capitaland,  CapitaMall Trust, Chartered Semicon and Ascendas REIT have made cash calls in the form of loan refinancing or rights issue.  In all cases, the rights issues were completed successfully since one of the major shareholders is Temasek with deep pocket.  The fund raising exercises have strengthened the balance of these companies such as raising the Tier1 CAR for DBS and improving the gearing ratio of other companies.

As the outlook for the economy remains unclear, the ongoing recession may negatively impact other companies’ balance sheets and cash flows, raising the possibilities of other fund raising activities.

DMG issued a report today and highlighted some of the non Temasek-linked companies that may require fund raising :

   *   UOB  (BUY, TP:S$11.60) has the lowest Tier 1 CAR of 10.9%, after DBS completed its S$4b right issue and now achieved a proforma Tier 1 CAR of 2.2%. There has been market talk that UOB may beef up its capital closer to its peers.

   *   Suntec  (NEUTRAL,  TP:S$0.75)  has  a S$700m CMBS due in Dec 09.

Its current  gearing of 0.34x is higher than the sector average of 0.29x.

We  believe  the probability of a cash call is relatively higher than its peers.

   *   Swiber  (SELL, TP:S$0.23) has a net debt to equity ratio of 1.0x.

We are also concerned with its ability to repay the S$109m bond maturing late FY09/early FY10. We believe a cash call will help strengthen its balance sheet.

   *   China  Fishery (BUY, TP:S$0.86) has lowered its net gearing to 0.87x (from  Sep  08’s  0.93x). To conserve cash, the company is giving out script dividends.  We do not rule out the possibility of a cash call to strengthen its balance sheet.

Other possible companies include Parkway, Indofood and Keppel Land.