Published February 7, 2009

Revenue fall, absence of forex gain hit GuocoLand

By KALPANA RASHIWALA

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GUOCOLAND's net profit for the second quarter ended Dec 31, 2008, fell sharply as revenue more than halved. But a key reason is that the quarter in review did not have the benefit of a huge foreign exchange gain seen in the previous corresponding period.

A Singapore-listed property unit of Malaysian tycoon Quek Leng Chan, GuocoLand yesterday posted a Q2 net profit of just $861,000, down from almost $33 million for the year-ago comparative period. The three months saw revenue dive 55 per cent year-on-year to $94.6 million mainly due to lower sales for development projects in Singapore and China.

There was also a net foreign exchange loss of $2.9 million, against a net foreign exchange gain of $21.6 million for the year-ago period. The latter arose mainly from the revaluation of US$ bank loans.

Helping to a certain extent was lower mark-to-market loss on derivative financial instruments of $4.9 million, against loss of $12.4 million for the comparative period.

Also, share of profit after tax from associates rose to $4.2 million from $1.6 million. Tax expense also fell to $3.6 million from $9.3 million primarily due to lower profits from development projects in China.

For the half year to Dec 31, 2008, GuocoLand found itself in the red with a net loss of nearly $2 million, against a $60.6 million profit for the year-ago period.

The group booked a net foreign exchange loss of $22.1 million for the first-half, arising mainly from unrealised translation loss on US$300 million bank loans as the US dollar appreciated against the Singapore dollar. In contrast, the comparative period recorded net foreign exchange gain of $34.7 million.

Share of profit after tax from associates rose from $1.2 million to $4.5 million as Tower Reit, the group's 19.97 per cent associate, booked a RM38.7 million revaluation gain on its Malaysian investment properties in December 2008.

Group revenue fell 38 per cent to $247.7 million, due mainly to lower sales for property development projects in China, offset by higher sales in Singapore.

GuocoLand said that given the slower economic growth in the countries where it operates, which slowed sales, 'it is difficult to anticipate when the turnaround will happen'.

Published February 7, 2009

Jurong Tech faced with judicial mgt

By CHEW XIANG

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A CREDITOR has applied to put mainboard-listed Jurong Technologies Industrial Corp under judicial management, the company said yesterday.

Jurong Tech, a troubled contract manufacturer, said it was served court papers by an unnamed creditor yesterday on the proposed appointment of Tam Chee Meng, of Deloitte & Touche, as judicial manager of the company.

Judicial management is when a court appoints a manager to direct the affairs of a company in trouble. Under Section 227A of the Companies Act, this can happen when a company is unable to pay its debts but there is some chance of keeping the business going without having to wind it up.

According to Rule 1303(3) of the SGX listing manual, the Singapore Exchange can suspend trading of shares in a company placed under judicial management. The company will then have to submit and implement resumption proposals, or face delisting. Jurong Tech has been suspended from trading ever since the Chinese New Year weekend and last traded at 2.5 cents.

The company is facing legal demands for repayment of loans from at least six banks claiming in total over $200 million. The company has disclosed unsecured borrowings of $282.3 million due in one year or less as at Sept 30, 2008.

Yesterday, Jurong Tech said that it had written to creditors earlier this month to suggest the immediate appointment of Mr Tam as a special accountant, ahead of his official appointment as judicial manager. Mr Tam has also been nominated as judicial manager for a key subsidiary of the company, pending a court hearing on Feb 20 initiated by DBS Bank, another creditor.

Jurong Tech said that they were taking a 'proactive approach' in inviting Mr Tam before his official appointment. The company has drafted a restructuring plan which it is expected to present to Mr Tam by early next week.

'It would be in the interest of all parties for the company's management to meet up with Mr Tam and provide him with the necessary information and assistance required for an expedited understanding of the group's operations,' said Lin Li Fang, chairman of Jurong Tech in a statement.

Ms Lin added that the company would 'try its best to restore the suppliers' and customers' confidence in the group'.

The company recently issued a profit warning, saying that it was likely to book a material loss for the year ended Dec 31, 2008. It made a $29 million net profit for its last full financial year in 2007, but has been weighed down since Motorola, a key customer, started cutting back orders.

The financial crisis in the last quarter of 2008 compounded its woes as the company found itself unable to refinance or repay its increasingly hefty debt.

OCBC Bank first issued a statutory demand on Jan 9 to get the company to repay some $55 million, or face winding up.

DBS then applied to put Jurong Tech's subsidiary under judicial management. Other banks clamouring for repayment include Belgian outfit KBC, ABN Amro Bank, Sumitomo Mitsui Banking Corporation, and United Overseas Bank.

Published February 7, 2009

Citi analysts' take on 2009

By BRITTANY KHOO

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CITIBANK analysts view 2009 as a year of two halves for financial markets: with the first half characterised by continued volatility and the second half offering opportunities.

Giving their investment outlook for 2009, the analysts said that the near term is likely to see investment returns still being driven by economic contraction, policy easing and de-leveraging. The result is high market volatility. At some point in the year, the extreme valuations seen currently in equity and credit markets should provide attractive opportunities, as downside risks to economic growth dissipate and de-leveraging pressures ease.

While economic growth is likely to remain below trend for now, global equities should find a base in 2009 ahead of expected economic stabilisation. A further boost may come from a pick-up in corporate earnings in 2010 as economic recovery, albeit moderate, takes hold. The Citi analysts believe that the bottoming of equities is likely to be a process. They encourage long-term investors to use the bottoming process to begin a series of rebalancing in portfolios back to their long-term allocations, or enter the accumulation phase for long-term equity exposure.

Citi analysts are keeping their overweight recommendation to stocks over a 12-month period. Regionally, they still favour the US and emerging markets. For bonds, they prefer investment-grade corporate bonds to developed-country sovereign debt. While high yield bonds are enticing, Citi analysts caution against increasing exposure too early.

'Investors can expect significant volatility in the first half (of 2009),' said Salman Haider, Citibank Singapore's managing director and head of wealth management. 'Provided we see economic headwinds receding in the latter half, we could be settling the base for the market to recover.

Citi also recommends that while retail investors structure 55-60 per cent of their portfolios around global equities and fixed income, they could also consider tactical investments in distressed assets and global infrastructure. Mr Haider stressed, however, that these areas would be more for high net worth investors, and advised retail investors to thoroughly understand and figure out how much risk they can take before venturing in.

On the Singapore economy, Citi forecasts an unfavourable outlook as the recession deepens, with overall negative growth of 2.8 per cent for 2009.

Published February 7, 2009

More firms sound profit warnings

By JESSICA YEO

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MORE companies issued profit warnings yesterday, for the quarter or financial year ended December 2008.

The list includes Asia-Pacific Strategic Investments, China Dairy Group, Jadason Enterprises, Kinergy, Kyodo-Allied Industries, Pacific Healthcare Holdings and Sinostar PEC Holdings.

Similar to other companies which have issued profit warnings earlier this year, the global economic downturn was cited as a leading reason for the losses or weaker earnings.

Three companies said that they saw a drop in demand for their products and services due to the financial crisis and resulting recession.

Kinergy warned of a loss for the full year ended Dec 31, 2008. The credit crunch caused a significant drop in demand for its electronic manufacturing services and proprietary equipment business division. The slowdown also led to over-capacity in its newly expanded factory.

Sinostar warned of lower sales and profits for FY2008 due to a fall in demand. The group said that the uncertain global economic climate caused a slowdown, which affected demand for its products and also their selling prices.

Also affected by soft demand is Jadason Enterprises, which expects a loss for fourth quarter 2008 mainly due to weak demand for its printed circuit board (PCB) drilling and PCB mass lamination services.

Two companies saw lower profit margins due to higher costs.

Asia-Pacific Strategic Investments expects a loss for its second quarter ended Dec 31, 2008, due to a decrease in revenue and lower gross profit margin as a result of higher costs from the construction of infrastructure, as well as the slowdown in sales. Also, higher operating expenses were incurred in its effort to secure deeper market penetration.

Kyodo-Allied Industries warned of a loss for the half year ended December. The group attributed this to lower profit margins due to high material costs and intense market competition. Kyodo-Allied also said that a significant decline in fair value of available-for-sale financial assets resulted in an impairment loss of $230,000.

Pacific Healthcare is expecting a full-year loss for FY2008, as the results for the second half will be affected by a material provision for the impairment of its investment in a subsidiary and its related operations in China, it said.

China Dairy Group also expects to record a loss for its full-year and fourth quarter ended Dec 31, 2008, but did not give reasons.

Published February 7, 2009

UOB-Kay Hian sees SIA reporting $2.1b hedging loss

By VEN SREENIVASAN

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SINGAPORE Airlines (SIA) will report a huge $2.1 billion hedging loss equivalent to a loss per share of $1.70, says a local analyst.

UOB-Kay Hian analyst K Ajith expects SIA's operating profit to decline to $118m in Q3 2009.

K Ajith of UOB-Kay Hian calculates that with jet fuel having slumped from US$119 a barrel in October 2008 to US$54 by year-end, SIA will suffer a hedging loss that will depress its book value from $12.25 a share to $10.55.

The estimate is based on SIA's mark-to-market accounting of its outlay on fuel, which UOB-Kay Hian estimates to be hedged at an average of about US$110 a barrel.

'At present, SIA is trading at 0.9 times P/B. And if it remains at 0.9 times with book value dropped, it should trade at a reduced target price of $9.70,' says UOB-Kay Hian.

SIA, which will report its third-quarter earnings on Feb 10, slid 32 cents to close at $10.74 yesterday.

The impact of the hedging loss is not new - SIA chief executive Chew Choon Seng said at the Q2 results briefing three months ago that fuel was hedged around $115 a barrel. But this is the first time an analyst has worked out the potential loss, albeit that this is a paper loss at present.

Some analysts, such as Vincent Ng of S&P Equity Research, warn against reading too much into paper losses on fuel hedging. 'Hedge accounting generally goes straight to the reserves in the balance sheet, rather than the profit-and-loss account,' he explained. 'Meanwhile, SIA also pays spot prices for half of its fuel needs.'

Also, SIA's hedge contracts go forward some 18 months from the contract date, by which time the actual fuel price could climb back closer to the hedged price.

Nevertheless, few have reason to be upbeat on SIA's immediate prospects - or those of the aviation sector as a whole.

The industry is in a tailspin thanks to the global economic slowdown and the financial meltdown. Passenger and cargo traffic have dived, and combined with excess capacity, this has put pressure on yields.

Analysts expect SIA to have suffered a 10-15 per cent drop in passenger yield in the October-December 2008 quarter due to falling premium seat sales and falls in the key Australian and British currencies against the Sing dollar. Meanwhile, air cargo operations have been racking up losses since the first half of the current financial year, prompting SIA to start grounding planes and to ask pilots to take no-pay leave.

SIA has cut capacity about 3 per cent system-wide over the past two months, including scrapping of several of its relatively recent all-business class non-stop services to New York and Los Angeles.

One of the more upbeat forecasts for SIA is from CIMB's Raymond Yap, who sees a Q3 net profit of $385.6 million, down 35 per cent year-on-year. But Mr Yap expects SIA to post a net profit of only $55.8 million for the January-March quarter, which is traditionally slow.

'If we are correct, SIA could achieve a full-year net profit of $1.253.8 billion, about 10 per cent higher than our official forecast of $1.137 billion, but down almost 40 per cent from a year ago,' he said in a paper yesterday.

UOB-Kay Hian's Mr Ajith expects operating profit to decline to $118 million in Q3 2009. He is forecasting an FY 2009 net profit of $915.3 million, below the consensus estimate of $1.1 billion.

Citigroup Global Markets is also downbeat on SIA and has a medium-term price target of $9. Besides the tough operating environment, contributions from subsidiaries and associates will be under pressure, Citigroup said.

'SIA would be earning an ROE well below its cost of capital, which suggests that its share price could trade below book value during this stage of the economic downturn,' Citi analyst Robert Kong noted this week. 'With earnings and price performance volatile, it is difficult to have a long-run fair value for an airline stock.'

Citi forecasts SIA's FY 2010 return on equity will fall to 6.7 per cent, from 9.6 per cent in FY 2009.

Going forward, the issue for SIA is how it manages capacity and costs amid deteriorating demand, analysts say.

Published February 7, 2009

Wing Tai changes tack as earnings fall It will defer building housing projects where construction contracts haven't been awarded By KALPANA RASHIWALA Email this article Print article Feedback PROPERTY group Wing Tai will defer construction of housing projects where construction contracts have not been awarded. EARNINGS CONTRIBUTORS Units sold in Wing Tai's Belle Vue Residences (above), Helios Residences and Riverine by the Park in Singapore, and Sering Ukay in Malaysia contributed to revenue and earnings for Q2 and H1 ended Dec 31 It did not name the projects in its second-quarter results statement yesterday but BT understands that they include proposed developments on the Ardmore Point and Anderson 18 sites. The old Ardmore Point has been pulled down, leaving a vacant site, while the existing Anderson 18's units are largely vacant. Market watchers reckon that Wing Tai and its joint venture partner for Anderson 18, City Developments, will probably consider the option of renting out the existing units to tide over the current weak property market until they decide to redevelop the site. Wing Tai said: 'Property market conditions in 2009 are expected to remain challenging.' The group posted a 52 per cent year-on-year drop in net earnings for the second quarter ended Dec 31, 2008 to $20.9 million. For the six months ended Dec 31, 2008, net earnings fell 49 per cent to $53.5 million. The weaker first-half bottom line was due to a $50 million or 66 per cent fall in the group's share of profits of associated and joint venture companies as well as the absence of a $27.5 million one-off gain from disposal of an available-for-sale financial asset in Q2 of the preceding financial year. Excluding the $27.5 million one-off gain, the group's operating profit in the latest first-half period ended Dec 31, 2008 increased by 34 per cent from $42.6 million to $57.2 million; the boost was due chiefly to higher profit recognition from development properties. Units sold in Wing Tai's Helios Residences condo in Cairnhill, Riverine by the Park in Kallang and Belle Vue Residences at Oxley Walk in Singapore and Sering Ukay in Malaysia contributed to revenue and earnings for Q2 and H1 ended Dec 31, 2008. Wing Tai said that the decline in share of profits of associated and joint venture companies was due to lower contribution from VisionCrest on the sale of residential units. Q2 group revenue slid 17 per cent to $91.98 million, but the first-half revenue rose 7 per cent to $226.3 million. Wing Tai's net gearing ratio stood at 0.47 time as at Dec 31, 2008, up from 0.4 time as at June 30, 2008. The group's total borrowings and debt securities stood at $1.15 billion as at Dec 31, 2008, up from $1.09 billion as at June 30, 2008. No dividend has been declared. Net asset value per share excluding treasury rose one cent to $2.04 as at end-December 2008 from six months earlier. Yesterday, the counter ended three cents higher at 71 cents. The stock has lost about 67 per cent of its value from the $2.19 peak on Feb 27 last year.

Published February 7, 2009

Enter Goodyear, with a long-term view

By OH BOON PING

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CHARLES Goodyear, the incoming chief executive of Temasek Holdings, is no stranger to making long-term investments.

MR GOODYEAR Says his management style is 'simple - management by walking around. Walk around and talk to people who are on the front line of making things happen'

The 51-year-old American has previously helmed mining giant BHP Billiton, which takes longer-term views on its projects - a 'great common denominator' between the companies. 'So it is a great opportunity to think of investments from a long-term perspective,' Mr Goodyear said at a press conference yesterday.

Temasek said he joined its board only on Feb 1 this year, but had been identified as a suitable successor to current CEO Ho Ching as early as 2007 - the same year he stepped down as the chief executive and executive director of BHP Billiton.

In an interview with CNN two years ago, Mr Goodyear described his management style as 'simple', adding that it is 'management by walking around. Walk around and talk to people who are on the front line of making things happen'.

The American had joined BHP as chief financial officer in 1999, after prior stints at Free- port-McMoRan, a natural resources group, and Wall Street investment bank Kidder-Peabody.

In 2001, BHP acquired Billiton, the London-based but predominantly South African-focused mineral-mining company, to become BHP Billiton, and Mr Goodyear became the chief development officer, stationed in London. The new corporation soon posted sales of almost US$20 billion and had close to US$30 billion in market capitalisation.

Also in 2001, BHP acquired Dia Met Minerals, with its 29 per cent stake in Canada's only producing diamond mine; combined with Alcoa's North American metals-distribution business in a joint venture called Integris Metals; and spun off its remaining steel business as BHP Steel to focus on minerals, oil and gas operations.

In 2003, BHP named him the new CEO and he spearheaded the group's expansion in China, closing its largest-ever deal in a joint venture with four Chinese steel mills in 2004. In the venture, named Wheelarra, the mills agreed to purchase more than US$9 billion worth of ore over a 25-year period, where shipments would come from BHP Billiton's Jimblebar mine in Western Australia, and the mills would take a 40 per cent stake in a sub-lease of the mines.

As a result of surging sales in China, rising metal prices and increased sales of base metals and stainless steel, BHP Billiton's 2003-2004 first-half profit jumped 30 per cent to US$1.2 billion.

With him as CEO, BHP's stock rose almost fourfold, outpacing the MSCI Materials Index's 83 per cent advance. Between 2003 and 2007, revenue went from US$15.6 billion to US$47.5 billion amid record gains in commodity prices.

When he finally left the mining company in 2007, Mr Goodyear took home a salary package of about US$7.82 million for that year. This included a US$1.78 million base salary and US$1.52 million in bonuses, according to a Daily Telegraph report.

Published February 7, 2009

The Ho Ching Effect on Temasek

How she changed the face and the portfolio of the institution

By VIKRAM KHANNA

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WHEN Temasek CEO Ho Ching steps down on Oct 1, it will mark the end - or perhaps a continuation - of a bold and ambitious innings that has transformed an institution.

A LEGACY Ms Ho said one of her aims at Temasek was 'to put in place something that goes beyond us from one generation to the next generation'

During her six years at Temasek, starting as executive director and then as CEO, Ms Ho has changed the investment company's inner makeup as well as its international profile.

When she came on board in 2002, after heading the Singapore Technologies group, the majority of Temasek's investment portfolio was domestically based, comprising mainly stakes in government-linked companies, which were later designated as 'Temasek-linked companies' (TLCs).

Under Ms Ho, Temasek refocused its investment strategy, making bold bets, first in Asia and then beyond. In terms of the geographic mix of its portfolio, Temasek set a broad guideline of one-third in Singapore, one- third in Asia and one-third in OECD countries. It also indicated that its strategy would centre on four themes: it would invest in 'transforming economies'; countries with a thriving middle class; in areas where it could deepen comparative advantages; and in emerging champions.

In keeping with these themes, Temasek began, from 2003 onwards, to take big, bold bets in Asia. Banking was reckoned to be a sector that would give broad exposure to the overall economy and many early investments focused in that area. Through its subsidiary Fullerton Financial Holdings, Temasek bought majority stakes in two Indonesian banks, Bank Danamon and Bank Internasional Indonesia, in which it also took operational control.

It also established Fullerton India Credit Company, which has grown to become one of India's largest microlenders. In China, it made investments in two large state-owned banks, China Construction Bank and Bank of China, as well as privately owned Mingsheng Bank. Temasek was also involved in several big private equity deals in India, including in Bharti Infratel, Tata Teleservices and Punj Lloyd. It also bought shares in large listed entities, including ICICI Bank and Tata Consultancy Services.

All of these investments yielded solid - and, in some cases, spectacular - returns.

More controversially, in 2006, Temasek, through various holding companies, invested in Thailand's Shin Corp, controlled by the family of then prime minister Thaksin Shinawatra. The investment led to a storm of protest in Thailand, partly on account of Mr Shinawatra not having paid taxes related to the deal.

Among other controversial investments, Temasek took a 14.7 per cent stake in Australian childcare provider ABC Learning, which went into receivership last November.

And in two high-profile deals made since December 2007, as the global financial crisis was unfolding, Temasek took significant stakes in Merrill Lynch and Barclays Bank - which have resulted in large paper losses, although Temasek has pointed out that it is a long-term investor.

The Ho Ching years have witnessed an exponential growth in the size, diversity and value of Temasek's portfolio, which has risen from around $60 billion at the end of 2003 to around $185 billion as at March 31, 2008. From being a relatively low-key (and largely domestic) investor, Temasek has become a globally-oriented investment house which is now looking at opportunities as far afield as Latin America and Russia. With the publication, annually since 2004, of the Temasek Review, it has also become a more open and transparent institution.

Investments aside, Ms Ho put a great deal of emphasis on institution-building within Temasek. This is evident in several areas. For example, in the area of staffing, whereas before her time Temasek's staff was almost entirely local, today they come from 22 countries. Forty per cent of Temasek's senior management team comes from outside Singapore. This has helped bring a greater diversity of perspectives and experience to the institution. In light of this, it should not come as a great surprise that Ms Ho's successor is a non-Singaporean.

Judging from successive issues of the Temasek Review, Ms Ho also appears to have spent a good deal of her time overseeing the development and refinement of systems and processes at Temasek, including the investment process; the risk management framework; the process of engagement with TLCs; the compensation system (which is based on incentives, but with clawback provisions if investments do not perform); investment performance measurement; as well as training and recruitment.

Temasek's initiatives in the areas of corporate social responsibility and community outreach have also multiplied, especially with the establishment in 2007 of the Temasek Foundation, which funds social programmes to help build capacities throughout the region.

At yesterday's press briefing, Ms Ho said that one of her aims at Temasek was 'to put in place something that goes beyond us, that goes from one generation to the next generation'.

Although she will step down during a difficult environment for an investment house, Ho Ching will leave behind a legacy of an institution that is cosmopolitan in its makeup, global in its capability and scalable in its potential. Notwithstanding recent setbacks, it is well equipped to cope with the challenges of an unstable, changing world.

Published February 7, 2009

breakingviews.com

Outsider in

By UNA GALANI

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TEMASEK is breaking the mould. The Singaporean sovereign wealth fund has appointed a foreign national, former BHP Billiton boss Chip Goodyear, as its new chief executive. The succession may be planned and orderly, but that doesn't make it any less radical. Mr Goodyear replaces Ho Ching, the prime minister's wife who has led the investment group for six years. The move makes Temasek the first large sovereign fund to appoint an outsider to such a prominent role.

While it's not unusual for sovereign funds to hire international financiers for managerial positions, these state investment vehicles like to keep a national face. The Abu Dhabi Investment Authority's board is made up exclusively of Emirati nationals. Kuwait and Qatar's sovereign funds are no exception. Even Norway's sovereign fund - typically seen as the gold standard in openness - is dominated by Norwegians at board level.

True, Mr Goodyear isn't taking the really top job of chairman, which is still held by S Dhanabalan, a Singaporean. But Ms Ho was widely regarded as Temasek's key decision maker. There's no reason to believe that will change when Mr Goodyear takes over. His appointment may even finally help convince sceptics that Temasek, which has US$123 billion under management, operates at arm's length from the state. Mr Goodyear's mining expertise makes him an unusual hire in a fund that has sealed its reputation as an aggressive investor in the financial sector.

Under Ms Ho, financial services grew to account for about 40 per cent of Temasek's portfolio as it expanded beyond its traditional Asian market. But after years of record-breaking profits, the sovereign fund is now nursing losses on some large investments. Its US$5 billion bet on Merrill Lynch is worth around US$2 billion. Temasek is also sitting on large paper losses on Standard Chartered and Barclays.

Ms Ho's long-planned departure isn't related to these sorry financial investments. But Temasek might still benefit from a change of direction. And Mr Goodyear could hardly set a more different tone.

Published February 7, 2009

Temasek's change of guard

Ho Ching to hand over reins to American Chip Goodyear on Oct 1

By SIOW LI SEN

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IN an announcement that took many by surprise, Temasek Holdings revealed yesterday that Ho Ching will step down as its chief executive on Oct 1. The woman who was ranked as the most powerful in Asia last year by Forbes magazine will be succeeded by Charles (Chip) Goodyear, the former chief executive of Australia's BHP Billiton, the world's biggest mining company.

PASSING THE BATON Ms Ho and Mr Goodyear at the media conference yesterday. Mr Goodyear joined the Temasek board on Feb 1

Mr Goodyear, first identified as a potential successor to Ms Ho some 15 months ago, joined the Temasek board on Feb 1, said chairman S Dhanabalan at a media conference.

Ms Ho, the wife of Prime Minister Lee Hsien Loong, joined Temasek in 2002. She said that she would step down from the Temasek board as well as her post. 'I'd like to think that whoever is the CEO would like to have maximum space without having to ask if this is somebody's pet project; it is a wise thing for a departing CEO not to hang around on the board.'

Mr Dhanabalan added that it is Temasek's policy that 'the outgoing CEO shouldn't hang around on the board'.

He said that the board, including Ms Ho, began addressing succession planning in early 2005 on an annual basis and first identified Mr Goodyear in 2007. The board looked at 'external and internal candidates, as well as Singaporeans and non-Singaporeans, over various time horizons', Mr Dhanabalan revealed. He added that while Temasek is Singapore-owned and based, 'our area of operation is the globe'.

He also dealt with speculation that Ms Ho's decision to step down is tied to Temasek's performance of the past few years. Since December 2007, Temasek had pumped US$5-6 billion into Merrill Lynch which suffered massive losses from the US sub-prime mortgages and was acquired by Bank of America in January this year. It now holds Bank of America shares.

Another of Temasek's soured investments was Australian ABC Learning Centres, once the world's biggest childcare company which collapsed last November. Then, there was Temasek's US$1.9 billion purchase of 49 per cent of Shin Corp, an investment that was caught up in a political upheaval that culminated in the ouster of Thai prime minister Thaksin Shinawatra.

'It's got nothing to do with performance,' he said. 'I would ask you to be a little cautious in coming to a conclusion that these investments are losses because we have a long-term view of our investments. And it is too early to say,' he said.

He also said that Ms Ho's relationship with the prime minister is not a factor in her stepping down, an issue he has dealt with from the first day since she was made CEO.

'I was very instrumental in bringing in Ho Ching and it was based purely on merit and has nothing to do with her relationship to anyone,' said Mr Dhanabalan. 'This is a not a burden I'm getting rid of, certainly not,' he said.

Asked if she has any regrets, Ms Ho said: 'Is there a regret? I think if you want to run life with regrets, you may end up doing very little.'

Mr Dhanabalan also revealed that Temasek has begun a review of its long-term plans and taken a different stance since mid-2007.

'The team has already embarked on a different stance since mid-2007, and has begun to review its long-term plans under various scenarios prompted by the economic downturn. The board is of the view that, if we are to bring in new leadership, it would be as good a time as any to involve a new leader in this review.' .

As to what he would bring to Temasek, Mr Goodyear said that he understands capital and the application of capital. He mentioned his background as an investment banker and experience in mergers and acquisitions. Later, when he joined industry, he went first into the financial role. 'In the resources business, our payoff times are decades,' said Mr Goodyear who was with BHP Billiton for nine years and where he presided over record profits.

Observers such as Target Asset Management chief executive Teng Ngiek Lian says that Ms Ho transformed Temasek. As for the Shin Corp deal, he said: 'The problems are political, not investment issues. It's risks one encounters when investing in emerging markets, where politics is so volatile.' Chua Sock Koong, chief executive of Singapore Telecommunications, 55 per cent owned by Temasek said: 'Under Ho Ching's leadership, Temasek has transformed into an active international investor.'

As at March 31 2008, Temasek holds a portfolio of $185 billion, concentrated principally in Singapore, Asia and the developed OECD countries. 

Published February 6, 2009

IOI shares rise on buyout offer

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(KUALA LUMPUR) Shares of IOI Properties rose 12 per cent to RM2.49 after its parent IOI Corp proposed buying out minority stockholders in the property developer.

IOI Corp, the second largest plantation stock on the Kuala Lumpur bourse by market value, dropped 24 sen, or 6.1 per cent, to RM3.68, the worst performer on the benchmark Composite Index.

The planter said on Wednesday it plans to take the 76 per cent-owned property unit private by offering RM2.60 per share to minority shareholders at a total cost of RM506 million (S$210.8 million).

Shares of IOI Properties were trading higher as they present a cheaper entry into IOI Corp, analysts said.

But IOI Corp risks a low take-up for its plan as the largely stock offer has a cash component of just 33 sen per IOI Properties share, said Ong Chee Ting, plantation analyst at Maybank Investment Bank.

'But minority shareholders may be compelled to take the offer as IOI intends to delist the company,' he said.

The buyout 'is a good deal but the bottomline impact is minimal', said James Ratnam, analyst at TA Securities.

'Ultimately, looking beyond the current depressed market condition, we believe IOI Properties still owns an array of prime landbanks with good development potential, particularly in Johor and Singapore,' he added.

A full acceptance will result in IOI Corp paying RM60 million in cash and issuing 119 million new IOI Corp shares, which would raise its capital base by 1.9 per cent to 6.27 billion shares. -- Reuters