STOCKS NEWS SINGAPORE-Shares gain, CapitaMalls Asia leads

Wed Jan 9, 2013 5:39am GMT

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Singapore shares rose by midday, led by shopping mall owner CapitaMalls Asia Ltd, but gains are likely to be limited as investors stayed on the sidelines ahead of a European Central Bank policy meeting on Thursday.

By 0531 GMT, the benchmark Straits Times Index was up 0.4 percent at 3,217.69, while the MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.4 percent.

CapitaMalls Asia, which is seen as a good proxy to China's economic recovery, rose 2.4 percent to S$2.16. It is the strongest performer on the STI so far this year, rising 8.8 percent. Last year, it surged 71.7 percent, beating the benchmark's 19 percent gains.

Maybank Kim Eng said CapitaMalls will be a strong beneficiary from China's focus on growing its domestic private consumption as it has 59 shopping centres in the country.

Hongkong Land Holdings Ltd, which owns Hong Kong offices, gained 2.5 percent to $7.38.

Shares of construction firm Yongnam Holdings Ltd rose 6.1 percent to S$0.26, after it said its American depository receipts started trading on the OTCQX, which would allow it to diversify its shareholder base and improve access to new capital markets. 1334 (0534 GMT) (Reporting by Charmian Kok in Singapore; Editing by Anand Basu; charmian.kok@thomsonreuters.com)

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11:35 STOCKS NEWS SINGAPORE-OCBC raises Midas target price

OCBC Investment Research raised its target price for Midas Holdings Ltd, which supplies components for railway projects, to S$0.60 from S$0.50 and kept its 'buy' rating, citing expectations of more high-speed rail contract wins.

As of 0243 GMT, Midas Holdings shares were up 3.2 percent at S$0.485, and have gained 14.3 percent since the start of the year, compared to a 1.8 percent rise in the FTSE ST All Share Index.

OCBC expects China's railway investments to form a large part of the country's overall infrastructure spending, and cited Xinhua news agency as saying about 600-650 billion yuan of railway investments will be made this year.

"We believe that China's Ministry of Railways could resume high-speed passenger train car contract tenders in the first quarter," said OCBC, which is expected to translate into order wins for Midas. 1129 (0329 GMT) (Reporting by Teo Jion Chun in Singapore; Editing by G.Ram Mohan; teo.jionchun@thomsonreuters.com)

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10:01 STOCKS NEWS SINGAPORE-United Envirotech at 8-yr high after KKR investment

Shares in United Envirotech Ltd jumped as much as 14.6 percent to their highest in eight years, after U.S. buyout firm KKR & Co LP agreed to make a $40 million follow-on investment in the China-focused water treatment and recycling company.

By 0154 GMT, United Envirotech shares were up 9.7 percent at S$0.565, with 10.7 million shares traded, 2.5 times their average daily volume over the last five sessions.

KKR said on Tuesday it will buy shares in United Envirotech at S$0.50 per share, which represents an 8.5 percent premium to the volume weighted average price for the last 30 trading days.

"With such a big and well-known fund investing in United Envirotech, it gives a sign of confidence to investors," said a local trader, adding that the company will be able to use the funds to invest in new earnings accretive water projects.

In 2011 KKR, which manages about $66 billion globally, invested $113.8 million in United Envirotech through convertible bonds.

However, the trader noted that the potential dilution resulting from a conversion of the bonds could limit further upside in United Envirotech's share price. 0956 (0156 GMT) (Reporting by Charmian Kok in Singapore; Editing by Jijo Jacob; charmian.kok@thomsonreuters.com)

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9:11 STOCKS NEWS SINGAPORE-UBS downgrades Olam to 'sell' from 'buy'

UBS downgraded Olam International Ltd to 'sell' from 'buy' and cut its target price to S$1.33 from S$2.95, citing uncertainties around the cost of its Gabon project.

Olam shares were down 0.3 percent at S$1.60 by 0100 GMT, around 8 percent below the level they were at before short-seller Muddy Waters launched an attack on the commodities trading company for its accounting practices and aggressive acquisitions.

UBS said the World Bank now estimates the total cost of the Gabon project to be at $1.5 billion to $2 billion, compared with Olam's initial estimate of S$1.3 billion.

"A cost overrun and project delays significantly increase the risk to management's target of turning free cash flow positive by 2015," said UBS in a note.

The brokerage also said its bankruptcy analysis of Olam shows the company's financial position has deteriorated to below financial health levels, but remains above distress levels.

"A number of concerns have arisen in recent months," said UBS, including Olam's earnings quality and growth, deteriorating returns on asset investment, the risk of Nigerian export credit write-downs, management compensation, the recent share buyback considering its capacity expenditure requirements and negative free cash flow. 0901 (0101 GMT)

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