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Published April 3, 2007
DMG highlights stocks that may benefit from hosting F1
Hospitality, retail, nightspots, construction sectors will gain
By JANICE HENG
WHILE speculation continues over Singapore's bid to host a Formula One (F1) motor race, analysts have begun looking at the implications. In a report released yesterday, the stockbroking firm DMG and Partners Securities highlighted stocks in sectors which they think will benefit - hospitality, retail, nightspots, accessories and gifts, construction and logistics, and transport.
DMG noted that hotel room rates 'are known to double and even triple in host cities during the event'. One expected beneficiary is Singapore Land, which owns an effective 26.5 per cent in three hotels along the proposed race route: the Pan Pacific, the Oriental Hotel and the Marina Mandarin.
Hotel Properties Ltd (HPL) and Overseas Union Enterprise (OUE) can offer lodging along the Orchard Road tourist belt, in the HPL-owned Hilton and Four Seasons hotels, and OUE's Meritus Mandarin.
Hotels on the city periphery - such as United Overseas Land's Hotel Plaza and Park Royal Hotel - will also benefit, while Koh Brothers' Changi Hotel and Oxford Hotel will welcome the budget-conscious.
Real estate investment trusts (Reits) that could gain include CDL Hospitality Trust, Ascott Residence Trust and Ascott Group. Retail landlords, 'particularly those with turnover rent lease structures', may also gain from higher retail spending, said DMG, which named Suntec Reit, MM Prime Reit and CapitaMall Trust.
The expected boost in spending will 'tilt towards the branded retailers', DMG thinks. These include FJ Benjamin, which provides agency services for labels including Gap, Banana Republic, Guess, and La Senza, and also promotes in-house brand Raoul.
Robinsons and Isetan are also expected to benefit, while Wing Tai will cater to the Asian crowd with a portfolio that includes Top Shop, Top Man, Dorothy Perkins, G2000, U2, Nike Women and Fox Fashion.
FJ Benjamin is also tipped to gain from nightspot patronage, as it holds a 33 per cent stake in St James Power Station. DMG notes that LifeBrandz, which has 11 clubs and bars including the Ministry of Sound, is a 'strong competitor'.
Retailers of a more specialised sort are Stamford Tyres and YHI. The motoring aftermarket accessories that they distribute are 'becoming fashion statements', said DMG.
Roads on the circuit will require resurfacing and repairs, which may benefit road maintenance company OKP. Aluminium extrusion company AEI Corporation may also get to provide F1-related signage and track railings.
On the logistics side, event organiser Cityneon may see increased demand for hospitality tents and other forms of temporary infrastructure. Marketing and communications firm Communication Design International may also gain.
While noting that takings for taxi drivers will increase, DMG adds that the spillover effect for fleet owners and operators will be 'limited to the sharing of booking fees'. Singapore Airlines is a clearer winner. 'Improvement in the passenger load factor will flow directly down to SIA's bottom line,' said DMG.
Profit aside, a successful F1 race will improve Singapore's international branding, said DMG. Hotelier Ong Beng Seng - whose Hotel Properties Limited announced its non-involvement last Friday - and SUTL Group's managing director Arthur Tay are the two known parties vying for F1 hosting rights. And F1 may not be Singapore's only racing event, if plans to build a permanent race track see fruition. The Ministry of Community Development, Youth and Sports is reportedly considering a permanent track at Changi.
