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4 Stocks This Week (In The News) [5 July 2019] Ascott REIT; ST Group Food; SIA Engineering; Sembcorp Marine

Proposal for a multi-billion dollar REIT merger, new IPO of a well-loved F&B franchise operator, news of a potential privatisation, and police raids on an overseas subsidiary – all within the week. Still think nothing much ever happens to companies on SGX?

It was an eventful week for SGX-listed companies. On a policy level, the Monetary Authority of Singapore announced that it is looking into the possibility of raising the amount of leverage Singapore REITs are allowed to have from the current 45%.

For individual companies, there have been plenty of news and interest as well. For this instalment of 4 Stocks This Week, we highlight 4 companies with developments this week that may have long-standing repercussions in the weeks and months to come.

Read Also: [2019 Edition] Complete Guide To Start Your REITs Investing Journey In Singapore

Ascott Residence Trust (SGX: A68U)

On 3 July 2019, Ascott Residence Trust and Ascendas Hospitality Trust jointly announced that they will be merging, creating the largest hospitality trust in Asia-Pacific with a net asset value of $7.6 billion.

Under the proposal, Ascott Residence Trust will establish Ascott Hospitality Business Trust, and all units of Ascott Residence Trust will be stapled with units in Ascott Hospitality Business Trust to form a stapled trust.

Ascott Residence Trust will then acquire all Ascendas Hospitality Trust stapled units for a consideration of S$1.0868 per unit, comprising cash and Ascott Hospitality Business Trust stapled units.

The planned merger is subject to approval of unitholders of both REITs at their upcoming respective extraordinary general meetings. CapitaLand is a major unitholder in both REITs, owning about 45% of Ascott Residence Trust and about 28% of Ascendas Hospitality Trust.

Ascott Residence Trust closed flat $1.31 this week.

ST Group Food (SGX: DRX)

On 3 July 2019, the Singapore Exchange welcomed the listing of the Australian-headquartered ST Group Food on the Catalist Board.

ST Group Food is a food and beverage franchisee that has exclusive master franchise rights to well-loved brands like Gong Cha, NeNe Chicken, Ippudo, PapaRich, and Hokkaido Baked Cheese Tart, as well as its own brand concepts of PAFU and KURIMU. It has outlets in Australia, New Zealand, Malaysia and the United Kingdom.

Shortly after listing on Wednesday, ST Group Food announced that it has secured exclusive rights to the NeNe Chicken brand in New Zealand, where it already has 15 outlets under other franchise brands like Gong Cha, PapaRich, and Hokkaido Baked Cheese Tart.

The company closed at $0.275 this week, after initially debuting at $0.28.

SIA Engineering (SGX: S59)

SIA Engineering provides Maintenance, Repair and Operations (MRO) support to both SIA and third party airlines, among other aerospace engineering solutions.

On 5 July 2019, the Singapore Exchange queried SIA Engineering for unusual price and volume movements.

News reports suggest that the increase in price and interest in the stock came on the back of renewed talk of possible privatisation by parent company Singapore Airlines, which already controls close to 78% of the company.

The company’s stock closed at $2.93 this week, up 7.721%.

Read Also: Singapore Airlines (SIA) Retail Bond 2019: 10 Things You Need To Know Before Investing

Sembcorp Marine (SGX: S51)

Sembcorp Marine provides offshore and marine engineering solutions around the world. The company is a subsidiary of Sembcorp Industries, which owns about 61% of the company.

On 3 July 2019, Sembcorp Marine’s stock tumbled after news broke that Brazilian authorities raided its Brazilian subsidiary, Estaleiro Jurong Arazruz.

The investigation was connected to the ongoing Operation Car Wash, a wide-ranging anti-corruption probe that also led to the discovery of the Keppel Offshore & Marine bribery scandal, in which company representatives were found to have given bribes of USD $50 million to Brazilian officials over 13 years in exchange for business deals.

Sembcorp Marine put out a release that said that it has co-operated fully with the Brazillian Federal Police, and is “committed to the highest standards of compliance with anti-corruption laws and does not condone and will not tolerate any improper business conduct”.

The stock closed at $1.42 this week.

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4 Stocks This Week is not a recommendation from us to buy or sell any of these stocks. For investors who are keen to find out more, you should continue researching about them before making your investment decisions.