OREANDA-NEWS. It has been a week of keystone fiscal and monetary policy initiatives in India.

The first full year budget of the Modi Government was presented on Saturday. Budget highlights maintained the five major economic challenges for India were “Agricultural income under stress, increasing investment in infrastructure, decline in manufacturing, resource crunch in view of higher devolution in taxes to states and maintaining fiscal discipline”.

Accordingly, the statement noted that “the journey for fiscal deficit target of 3% will be achieved in three years rather than two years. Nevertheless KPMG India maintained this week that the Fiscal deficit of 4.5% of GDP in FY14 is lower than the budgeted target of 4.8% of GDP. On the coffer front, corporate income tax is to be lowered to 25% from the current 30% over the next four years. 

On the Financial Market front, KPMG India have highlighted a number of key budget proposals, including:

  • Non-Banking Financial Companies (NBFCs) registered with the Reserve Bank of India (RBI), with asset size of INR5,000 million and above, would be considered for notifications as a ‘Financial Institution’ in terms of the SARFAESI Act, 2002 enabling them to fund SME and mid-corporate businesses;
  • Merging the Forwards Markets Commission with SEBI. Foreign Investments in Alternate Investment Funds to be allowed;
  • Distinction between different forms of foreign investments, especially between Foreign Portfolio Investors and Foreign Direct Investors to be done away with;
  • Tax free infrastructure bonds for the projects in the rail, road and irrigation sectors; and
  • A regulatory reform bill proposed that would bring out a certainty and clarity across various sectors of infrastructure.

Complementing the fiscal initiatives, yesterday the RBI surprised markets with an intermeeting 25bps rate cut to bring the RBI repurchase rate to 7.5%, from 7.75% previously. This was the second rate cut of the year, following the other intermeeting rate cut on 15 January.

India related stocks & securities

Singapore Exchange (SGX) lists approximately 30 stocks that have geographically segment revenue to India in recent Annual Reports. This includes as many as four Straits Times Index (STI) stocks – however the quartet – Wilmar International, Sembcorp Industries, Noble Group and Golden Agri-Resources all reported less than 10% of their revenue to India in their last Annual Reports.

The iShares MSCI India Exchange Traded Fund (ETF) is the most actively traded ETF on SGX. The liquidity of the ETF is exemplified with the best bid-ask spread for the MSCI India ETF currently around 3 cents, with level five quoted depth of more than US\$5 million. MSCI India ETF assets are up 26% in the past 12 months to US\$712 million (as of 31 January 2015) from US\$564 million a year ago. Meanwhile the SGX Nifty Index Futures has set a number of new participation records since the start of the year. January saw a record high of 1,991,291 contracts traded with highest average daily volume of 99,565 contracts. Open interest touched 534,531 on 24 February 2015.

Among the aforementioned 30 stocks, the largest capitalised that reported more than 10% of their revenue to India in their last Annual Reports were Ascendas India Trust, Religare Health Trust, India Bulls Property Trust, Sarine Technologies and Cordlife Group. The three Trusts reported all their revenue to India, Sarine Technology reported approximately three-quarters of its revenue to India and Cordlife reported 13.3% to India.

In the year thus far, four of these five stocks have generated gains, while one has declined in price. The average gain of the five stocks has been 6.2% and they also maintain an average dividend yield of 3.7%. Details of the relevant stocks are listed in the table below – please also note that clicking directly on the stock name below will take you to the relevant profile page on SGX StockFacts.

Source: SGX StockFacts (Data as of 4 March 2015)

Source: SGX StockFacts (Data as of 4 March 2015)

Ascendas India Trust

Ascendas India Trust (“a-iTrust”) engages in the ownership of real estate properties primarily used as business space and real estate related assets in India. It also involves in the development, ownership, and management of information technology parks in Hyderabad, Bangalore, and Chennai. In addition, the company focuses on acquiring, holding, and developing land or uncompleted developments to be used primarily for business space. a-iTrust was formed in August 2007 and is based in Singapore, Singapore. Last December, Ascendas Property Fund Trustee Pte. Ltd. as trustee-manager of a-iTrust announced that Ascendas Property Fund (India) Pte Ltd (“APFI”), a wholly owned subsidiary of a-iTrust, entered into a conditional share purchase agreement with the existing shareholders of Flagship Developers Private Limited (“FDPL”) to acquire 100% interest in FDPL.

On 26 January 2015, the company reported that their total property income for the quarter ended 31 December 2014 (“3Q FY14/15”) increased by 6% to INR 1.5 billion. This was mainly due to rental income from Aviator, which became operational in January 2014 and positive rental reversions in Chennai. In SGD terms, total property income increased by 10% to S\$31.8 million as the SGD had depreciated by 3% against the INR over the same period last year. The accompanying statement also noted that the total property expense for 3Q FY14/15 increased by 17% to INR 612 million (S\$12.8 million), partly reflecting higher expenses from operation of Aviator, and one-off accounting items which reduced 3Q FY13/14 expenses by INR 51 million.

Shares in a-iTrust currently trade at S\$0.940 after ending 2014 at S\$0.820. This means that the share price has gained 14.6% in the year thus far after gaining 20.6% in 2014 and declining 9.3% in 2013. The 52 week high for the stock is S\$0.950 and the 52 week low is S\$0.705. The stock currently maintains a 5.1% dividend yield with a history of semi-annual dividend distributions over the last seven years. Shares in the stock went ex-dividend on 20 November 2014, distributing S\$0.024 per share. The five largest shareholders of the stock are Ascendas Land International, Matthews International Capital Management, LLC, Massachusetts Financial Services Company, Ascendas Property Fund Trustee, and JPMorgan Asset Management Holdings Inc.

Religare Health Trust

Religare Health Trust, a business trust, provides medical and clinical establishment services in India. The Trust’s investment mandate is principally to invest in medical and healthcare assets in Asia, Australasia and emerging markets in the rest of the world. Currently the portfolio assets are all located in India and comprises of 12 Clinical Establishments, 4 Greenfield Clinical Establishments and 2 Operating Hospitals.

Recently, the Board of Directors of Religare Health Trust Trustee Manager Pte. Ltd. (the "Trustee-Manager") announced that the Trustee-Manager established a S\$500,000,000 Multicurrency Medium Term Note Programme. The net proceeds arising from the issue of the Notes under the Programme (after deducting issue expenses) will be used by any member within Religare Health Trust and its subsidiaries (the "Group") for general corporate purposes, including refinancing or repayment of existing borrowings, financing and/or refinancing acquisitions and/or investments and financing and/or refinancing capital expenditure and general working capital of the Group.

Three weeks ago, the company announced that their revenue for the third quarter period (“FY 15 Q3”) ended 31 December 2014, increased by 30.7% to S\$31.1 million. The accompanying statement also noted that the total revenue for FY 15 Q3 in INR terms grew 37.4% from FY 14 Q3. This was mainly due to the increase in service fee as a result of additional contribution from the newly added Mohali clinical establishment, an increase in base fees and the contribution from variable fee from Gurgaon clinical establishment. In addition, the revenue from the existing portfolio of clinical establishment increased as a result of the upward revision of base fees by 3% and higher variable fees by 11%.

Shares in Religare Health Trust currently trade at S\$1.065 after ending 2014 at S\$1.000. This means that the share price has gained 6.5% in the year thus far after gaining 29.0% in 2014 and declining 12.4% in 2013. The 52 week high for the stock is S\$1.140 and the 52 week low for the stock is S\$0.800. The stock currently maintains a 7.7% dividend yield with a history of semi-annual dividend distributions over the last two years. Shares in the stock went ex-dividend on 20 November 2014, distributing S\$0.0361 per share. The five largest shareholders of the stock are Fortis Global Healthcare Infrastructure, FIL, Swordfish Investments, Seatown Swordfish, and Polar Capital Holdings plc.

Indiabulls Properties Investment Trust

Indiabulls Properties Investment Trust primarily engages in the development, management, and lease of commercial spaces in India. The company is also involved in the development and sale of residential property. Its portfolio comprises two commercial developments, and three residential developments. Indiabulls Properties Investment Trust was formed on May 7, 2008 and is based in Singapore, Singapore.

On 6 February 2015, the company reported that their total income for the third quarter ended 31 December 2014, increased by 6.3% to S\$21.3 million. The accompanying statement noted that Indiabulls Properties Investment Trust earned S\$21.3 million of rental income in the financial quarter ended 31 December 2014 from the commercial component of the properties comprising One Indiabulls Centre and Indiabulls Finance Centre. As noted in the financial statement, demand is expected to improve in the coming quarter, which is evident from the number of request for proposals (RFPs) currently floating in the market.

Shares in Indiabulls Properties Investment Trust currently trades at S\$0.097 after ending 2014 at S\$0.106. This means that the share price has declined 8.5% in the year thus far after declining 26.4% in 2014 and gaining 32.1% in 2013. The 52 week high for the stock is S\$0.145 and the 52 week low for the stock is S\$0.090. The stock currently maintains a dividend yield of 0.3% with a history of semi-annual dividend distributions. Share in the stock went ex-dividend on 10 December 2014, distributing S\$0.000141 per share. The five largest shareholders of the stock are Farallon Capital Management, L.L.C., Mixtel Co., Indiabulls Real Estate, Foundvest, and SBC Global Asset Management (UK).

Sarine Technologies

Sarine Technologies develops and manufactures planning, evaluation, and measurement systems for diamond and gemstone production in India, Africa, Europe, North America, Israel, and internationally. The company was formerly known as Sarin Research, Development and Manufacture (1988) Limited and changed its name to Sarin Technologies Limited in 1994. Sarin Technologies Limited was founded in 1988 and is headquartered in Kfar Saba, Israel. Sarine Technologies’s 2014 full year financial report geographically segmented 79.3% of its FY2014 revenue to India. On 25 January 2015, Sarine Technologies announced the successful completion of its cooperation with HRD Antwerp, the leading Belgian gemmological laboratory owned and operated by the Antwerp World Diamond Center (AWDC), to facilitate interoperability between Sarine's Advisor™ 5.2 diamond planning software and HRD Antwerp's EOS Fancy bruting and girdling (i.e., shaping) systems.

Last week, the company reported that their revenue for the full year ended 31 December 2014, increased by 14.9% to US\$87.8 million. The accompanying statement noted that Sarine Technologies’s record for the year stemmed primarily from increased Galaxy™ family related revenues, along with increased sales of our other rough diamond planning and processing products. The increase in revenues was across most geographic segments, save the Far East (included in Other).  

Shares in Sarine Technologies’s currently trade at S\$2.74 after ending 2014 at the same price. This means that the share price has remained unchanged in the year thus far after gaining 48.1% in 2014 and gaining 85.0% in 2013. The 52 week high for the stock is S\$3.250 and the 52 week low is S\$2.160. The stock currently maintains a dividend yield of 3.05% with a history of semi-annual dividend distributions. Shares in the stock will go ex-dividend on 23 April 2015, distributing US\$0.02 per share. The five largest shareholders of the stock are FIL, Harel Ehud, Stark Hanoh, rian Investment Partners, and Chartered Asset Management.

Cordlife Group

Cordlife Group is an investment holding company that provides umbilical cord blood and cord lining banking services in Singapore, Hong Kong, India and other countries. The company’s cord blood banking services involve the processing and storage of stem cells. It also offers newborn screening services for metabolic disorders. Cordlife’ s FY2014 Annual Report geographically segmented 13.3% of its FY2014 revenue to India. Following no geographical revenue segmentation to India in 2013, a total of \$6.5 million was attributed to the India business in its FY2014. Cordlife completed the acquisition of the cord blood and cord lining banking businesses in India, the Philippines, Hong Kong and Indonesia from Life Corporation Limited in June 2013. In October 2013, the Group’s Indian subsidiary, Cordlife Services (India) Pvt. Ltd., introduced an advanced non-invasive metabolic screening service known as Metascreen™. Metascreen™ is a comprehensive set of metabolic screening test specially designed for both newborn babies and adults.

Cordlife Group recently announced unaudited group earnings results for the six months ended December 31, 2014. Revenue was reported to increase by 17.3% or S\$4.0 million from S\$23.5 million in HY2014 to S\$27.5 million in 1HFY2015. The increase in revenue was mainly due to an increase in the number of client deliveries, from approximately 7,400 in 1HFY2014 to 10,700 in 1HFY2015. The accompanying statement noted the increase in client deliveries was due to increased awareness as a result of increased marketing and client acquisition efforts with an increase in marketing spend in the Group's Indian subsidiary to increase brand awareness amongst prospective clients and establish its presence in more cities. The Group reported a net loss of S\$6.9 million for 1HFY2015, compared with a net profit of S\$12.9 million for 1HFY2014. According to the Financial Statement, this was mainly due to a S\$6.8 million fair value loss on its investment in China Cord Blood Corporation (CCBC), which was computed based on the changes in CCBC’s last traded price as at 30 June 2014 of US\$5.52 (S\$6.90) and 31 December 2014 of US\$4.52 (S\$5.98) for 1HFY2015.

Shares in Cordlife currently trade at S\$0.955 after ending 2014 at S\$0.890. This means the share price has gained 7.3% in the year thus far after declining 25% in 2014 and gaining 118% in 2013. The 52 week high for the stock is S\$1.270 and the 52 week low is S\$0.825. The stock currently maintains a 2.1% dividend yield with a history of semi-annual distributions. The one cent per share dividend declared on 13 December will go ex-dividend on 12 March. The five largest shareholders of the stock are Goldvein Holdings Pte Ltd, China Cord Blood Corporation, Wells Spring Pte Ltd, FIL Limited and Franklin Resources, Inc.