Wednesday, 4 August 2004

Temasek on the prowl again

The Singapore government's investment holding company, Temasek, is on the acquisition trail again. This time, it's for shipping giant Neptune Orient Lines (NOL).

Yesterday, Temasek made an offer to buy all the shares of NOL it does not own for S$2.80 a share. Temasek currently owns about 30 percent of NOL.

Temasek did not give any specific reason for buying NOL. A spokesman told The Straits Times: "We are an Asian investment company and we actively manage our investments."

I'll take that at face value. I suspect that Temasek hopes to ride on the global trading boom resulting from China's increasing participation in the world economy, and believes that NOL is well-placed to benefit from it.

The acquisition price translates to a P/E ratio of about 4.7 based on historical earnings, or about 3.9 based on 2004 earnings. Based on these valuations, the acquisition price is not high.

However, it must be said that NOL is a highly-geared company and its earnings have been very volatile over the past few years. The company reported losses in 2001 and 2002.

Other recent news on Temasek purchases:

Temasek ups stake in Hana Bank to 9.3%

Temasek picks up stake in Apollo Hospitals

Temasek to invest $30m in ICICI One Source

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