Daily news - 12 Sep

Golden Agri and JMH to replace two stocks in STI
Golden Agri-Resources and Jardine Matheson Holdings – The first review of the 30-stock Straits Times Index (STI) since its relaunch in January this year has resulted in the entry of two new components - Golden Agri-Resources and Jardine Matheson Holdings - to replace Thai Beverage PCL and Yangzijiang Shipbuilding Holdings. The replacement takes effect on Sept 22. The STI comprises the top 30 mainboard companies selected by full market capitalisation. On the STI reserve list - to be used in between index reviews - are STX Pan Ocean Co, ComfortDelgro Corp, Ascendas Real Estate Investment Trust, Keppel Telecommunications & Transportation and SMRT Corp. Reserve lists are created at each half-yearly review and contain the next five companies ranked in order of market capitalisation below the STI. In the event of corporate actions or mergers which impact the index between reviews, companies in the reserve list will be included in the STI to replace any component stocks that may be excluded as a result of the corporate actions or mergers. The next review date is March 12 next year.

Olam's gearing still within a comfortable range: CEO
Olam International – Says its group borrowings are still within a comfortable range as its net gearing is still well below the limit agreed with banks. CEO and managing director Sunny Verghese, said Olam’s convenant with the banks for net gearing is five times net debt to equity ratio. It is at 3.17 times, so it has “enough headroom”. Olam has raised almost $750m of capital in the past five months, which included a $307m preferential share offering in April and a US$300m convertible bond issue in July despite tough credit conditions. Consequently, Olam has raised equity capital between last year and this year by 65% to $964m. Olam has made 13 acquisitions since the start of 2007, according to Bloomberg data, and more may follow in the next 12 months, which may need further capital-raising. Its stock currently has 'buy' or 'overweight' calls from brokerage houses such as JPMorgan, Nomura and DMG & Partners Securities in view of its strong profitability. But CIMB-GK recently downgraded the stock to 'underperform' from 'outperform' as it expects Olam's risk profile to increase as it expands upstream and downstream.

OCBC raises stake in Great Eastern
OCBC Bank – Has purchased 582,000 shares in Great Eastern Holdings (GEH) at $14.00 per share for a total consideration of about $8.2m. The purchase has increased its shareholding in GEH from 86.89% to 87.02%.

Source: Kim Eng