SATS Ltd - OCBC Investment 2016-01-25: Forming JVs with Wilmar in China

SATS Ltd - OCBC Investment 2016-01-25: Forming JVs with Wilmar in China SATS LTD S58.SI 

SATS Limited: Forming JVs with Wilmar in China 

  • SATS Limited (SATS) announced last Friday that its wholly-owned subsidiary, Singapore Food Industries (SFI), has entered into two conditional JV agreements (JVAs) with a wholly-owned Chinese subsidiary of Wilmar International Ltd (Wilmar), Yihai Kerry Investments (YKI), to supply high quality and safe food to the Chinese market. 
  • The JVAs will see: 
    1. SFI and YKI subscribe 60% and 40%, respectively, to incorporate an investment holding company (JV Co) with an expected capital of RMB230m in China, and 
    2. SFI and YKI subscribe 60% and 40%, respectively, to incorporate another JV as an operating company in China with an expected capital of RMB200m, which will become a wholly-owned subsidiary of JV Co. 
  • We believe the proposition of proving high quality and safe food to the Chinese market is certainly a sound one, especially in a country plagued with scandals of unsafe food. Therefore, over the longer-term, we believe SATS will benefit from such collaboration. 
  • As we do not expect any material impact for now, maintain HOLD on SATS with an unchanged FV of S$3.78
  • Separately, we have a BUY on Wilmar with a fair value of S$3.27



Eugene Chua OCBC Securities | http://www.ocbcresearch.com/ 2016-01-25
OCBC Securities SGX Stock Analyst Report HOLD Maintain HOLD 3.78 Same 3.78


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