2 New SGD Issues – Gallant Venture 2Y & Overseas Education 5Y


–      New Gallant Venture SGD 2yr announced on the back of strong reverse inquiries
–      Initial Price Guidance: low 6s

Credit Highlights:

–       Supportive sponsors – Salim Group is the majority shareholder (74.55%) and SembCorp Industries is a strategic shareholder (11.96%)

–       Exposure to growing Indonesian automobile market through IMAS, one of the two largest automotive groups in Indonesia

–       Strategically located assets in Bintan and Batam with ready access to Singapore’s air and sea transportation hubs

–       Cashflow visibility via three to five year contracts at its industrial parks and utilities business

–       Growth potential from MOU with Garuda to develop Bintan as aerospace hub

–      Comps:
LMRTSP 4.48 17 at 4.18%
LMRTSP 4.25 16 at 3.69%
GUTGTS 3.70 18 at 3.99%

Comment :

Hard to fault except that borrowings have swelled between 2012 – 2013 from 27 mio to 825 mio ! but inventory and receivables also up by the same amount.

Shares are tightly controlled between 2 shareholders which makes one wonder why they are listed because the free float is pathetic.

I remember buying this stock before in its better days when it showed terrific promise and with Bintan at 1 buck (or less) psf (now selling for 300 psf), it cannot go wrong.

Market cap SGD 1.45 bio and heavyweight backers, 6% should be easy sell.

Overseas Education Limited

–   New 5Y SGD announced. Significant IOIs in place following recent investor
meetings with key accounts
–   Initial Price guidance : 5.375% area

Do not know much about private education except that OEL looks a yard better than Raffles Education, in my opinion, and at least they are not bogged up or down by strange items in the balance sheet known as Net Non Operating Losses (Gains) that appears to be sustaining Raffles Education these days.

Nothing much else to comment as this money is probably going into their building fund, which is not a bad idea because it will be cheaper than what the banks will lend them at.

Profitable company and clean books so just pray for no recession because that would be their biggest risk and for the bond holder, the additional risk of illiquidity because I don’t see many banks making prices for this one anytime soon.