Straits Trading stands tall with majority stake in ARA Asset Management

Straits Trading stands tall with majority stake in ARA Asset Management

By: 
Michelle Zhu
17/05/17, 11:46 am

SINGAPORE (May 17): OCBC Investment Research is maintaining its “buy” call on Straits Trading Company with an unchanged fair value estimate of $2.73, after it posted 1Q results which the research house deems to mark a “firm start to the year” for the group.

(See also: Straits Trading reports 2.7% decline in 1Q earnings to $21.9 mil on lower revenue)

In a Wednesday report, lead analyst Eli Lee says the dip in Straits Trading’s 1Q revenue, mainly due to weaker contributions from the tin mining segment, was broadly within expectations – but nonetheless notes generally stable results for the quarter.

The analyst brings attention to the privatisation and delisting of ARA Asset Management Ltd was completed on April 12 this year – through which Straits Trading received $48.2 million in cash.

More importantly, Straits Trading is the only publicly-listed entity in Singapore to hold a significant stake of 20.95% in the privatised ARA, highlights Lee, who also notes its robust balance sheet.

(See also: Confirmed: John Lim-led consortium to buy out ARA Asset Management in $1.8 bil deal)

“The group’s asset management company, SRE Capital, was appointed on 28 Feb 2017 as the investment advisor to Nikko Asset Management Asia Ltd for the NikkoAM StraitsTrading Asia ex-Japan REIT ETF. As a seed investor in the ETF, Straits Trading stands to gain long-term recurring income and attractive risk-adjusted returns,” shares the analyst.

As at 11.45am, shares in Straits Trading are down by 2 cents at $2.31. 

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