On Wednesday, Keppel Land fell to 99.5 cents, down 20% since the start of the week. The property company, 52% owned by Keppel Corp, has earlier been subject to talk of privatization. But lately, in the face of the strengthened balance sheet at CapitaLand with its rights call, Keppel Land looks comparatively weak. City Developments is in a similar position. It fell sharply on Monday, to a low of $4.07 before rebounding. Its gearing ratio would be 0.32 should its assets be revalued at current prices but it also looks pallid compared with the more robust CapitaLand.

The latest to join the queue is Neptune Orient Lines (NOL) which was sold down to 86.5 cents on Wed, down 16% on the week. Reuters had reported that the local shipping giant planned to raise US$250 million through a rights issue. NOL, 67% owned by Temasek Holdings, has released a statement to the exchange that it has not done any agreement which would require disclosure.

Companies can be divided into three categories. First, those with weak balance sheets that need to raise capital but the major shareholder may be reluctant to put in additional cash. Smaller property companies fall into this category, and could include counters such as Roxy-Pacific, Sim Lian Group, Hiap Hoe, and SC Global Developments.

Then there are companies which do not really need to raise capital but as similarly healthy peers in their sector do so, they may feel pressure to follow. Oversea-Chinese Banking Corporation, UOB and City Developments fall into this category. Fraser & Neave and WBL Corp are also companies that may be considering rights issues. Fraser & Neave is in a net debt position and needs to recapitalize one of its Reits.

Third, companies who need to raise capital because of stressed balance sheets and with a strong shareholder are probably likely to do so. On Wed, some says the probable candidates are Keppel Land, NOL, City Spring Infrastructure Trust and Mapletree Logistics Trust. "Cyclical companies that have a high net debt-to-equity ratio and a deteriorating earnings outlook have the highest risk of a cash call," states the report. These companies include Keppel Land (net gearing: 61%) and NOL (net gearing:33% currently, but is forecast to deteriorate to 55% by 2010). "While Keppel Land's management recently denied a planned rights issue, the risk of a cash call still exists. NOL will likely see a sharp deterioration in its balance sheet because of losses in 2009 and 2010 in a poor shipping market," the report points out.

Not all Temasek-linked companies need cash. Some like Singapore Airlines, SIA Engineering, ST Engineering and Sembcorp Marine are in net cash positions. Unfortunately, companies that do require new capital are likely to meet increasingly glacial reception from shareholders. The adverse market reaction to Chartered Semiconductor's US$300 million cash call is an example.