Company Briefs - 21 Jun 2007

China's Sunmart Hldgs seeks listing on SGX

SUNMART Holdings, which makes spray pumps, aluminium cans and plastic bottles in China, is seeking a listing on the mainboard of the Singapore Exchange (SGX).

It said it will use its initial public offering (IPO) proceeds to construct a new factory, upgrade other facilities and install more production equipment.

Its two subsidiaries in Jiangsu Province, China, produces and sells spray products used in packaging perfumes, toiletries, pharmaceuticals, and health supplements. The company wants to expand into developing products for the medical sector. Sunmart says it has 2,000 customers in more than 80 countries across the Asia-Pacific, North and South America, Europe and Africa. Last year, about 61 per cent of its products went to overseas customers, it said.

The group says its R&D capabilities allow it to develop new products and customise according to its clients' needs. It benefits as it enjoys economies of scale which allow it to keep unit costs low.

The total cost of constructing a plant and the upgrading of existing facilities as well as the installation of additional production equipment is expected to come up to about 150 million yuan (S$30.2 million).

Sunmart says it may set up overseas branches in the US or Europe 'when suitable opportunities arise'. It said risks to its business included the unpredictable price of its main raw materials for manufacturing. Plastic resins - which accounted for a substantial part of its total cost of raw materials last year - are linked to the price of crude oil, which is often unpredictable.

The price of aluminium, its other raw material, is also affected by market demand and supply. Another risk set out in the preliminary prospectus is dealing in foreign currency. 'There is no assurance that the yuan will not be subject to devaluation due to legislative intervention by the PRC government or adverse market movements.

Any devaluation in the yuan will adversely affect the dividends (in foreign currency terms) received by our company, and by our shareholders,' it said. The company reported revenues of 237 million yuan last year and net profit of 48 million yuan.

Stamford Tyres net profit falls 25.5% to $11.6m

RISING raw material costs for its tyre and alloy wheel businesses caused Stamford Tyres' net profit for the full year ended April 30, 2007 to fall 25.5 per cent to $11.6 million.

But Singapore's biggest distributor and retailer of tyres and rims saw revenue rise 16.9 per cent to $296 million, thanks to continued growth of its major tyre brands Falken, Dunlop and Continental, as well as an increase in sales of its proprietary brand of tyres and aluminium wheels, Sumo Firenza and SSW Wheels respectively.

The company, a leading global tyre and wheel specialist, said the fall in FY2007 profit was due to rising raw material costs that resulted in price increases from tyre manufacturers, and soaring aluminium ingot costs in wheel manufacturing. Stamford operates an alloy wheel factory on the outskirts of Bangkok.

It added that the profit for the previous year - FY2006 - was exceptional because of a shortage of mining tyres in the market. That supply shortage no longer existed in FY2007.

'Amid an intensely competitive market environment and rising cost of raw materials, operating conditions for the group in the past year have proved to be more challenging than anticipated,' said Stamford Tyres president Wee Kok Wah. 'The competitive environment in the distribution business limits the group's ability to fully pass on the cost increases to the customers.'

Basic earnings per share was 5.15 cents, down from the year-ago figure of 7.26 cents. But net asset value per share rose 4.2 per cent to 38.54 cents from 36.97 cents. A gross dividend of 2.0 cents less tax of 18 per cent per share has been proposed. The dividend for FY2007 translates into a dividend yield of 3.2 per cent.

Looking ahead, Stamford Tyres said it will continue to pursue its growth strategy in achieving incremental sales from its proprietary and major brands. Barring any unforeseen circumstances, it is optimistic about riding out the difficult market conditions and will strive for a double-digit increase in turnover with higher net profit than that achieved in FY2007.

Omega orders 5 tankers worth US$221m

OMEGA Navigation Enterprises Inc has announced newbuilding contracts with a South Korean shipyard worth US$221 million for five high specification product/chemical tankers.

The Nasdaq- and SGX-listed Greek-based provider of global marine transport services said yesterday it had signed the newbuilding contracts with Hyundai Mipo Dockyard to construct the five double-hull handymax-sized product tankers, each with a capacity of 37,000 deadweight tons.

Four of the product tankers are scheduled for delivery from the first quarter of 2010, through to the first quarter of 2011.

With the addition of these five vessels, the Omega fleet will consist of 13 product tankers with a total deadweight capacity of 697,358 tons.

The company's existing fleet of eight vessels are chartered out under three-year time charters.

Saying the newbuilds represent the company's continuing growth strategy, Omega president and CEO George Kassiotis said he expected the vessels would be employed on long term charters to high quality charterers.

'We believe that this transaction ensures that we will be able to grow the fleet in a disciplined manner as we have contracted these high quality vessels at prices well below those that could be currently achieved in the second hand market,' Mr Kassiotis said.

Omega's current fleet already includes two similar vessels built at the same shipyard. Mr Kassiotis said Omega would take delivery of the new vessels 'at a time when newbuilding berths for product tankers around the world are becoming increasingly hard to find.'

The first two pre-delivery payment instalments - 10 per cent in July and 10 per cent in December - will be funded either fully with debt or a combination of debt and internally generated cash flow, the company said in its stock exchange statement.

FPSO problems delay oil production at SPC's Indon field

FIRST oil production at Indonesia's Oyong field - in which Singapore Petroleum Company has a 40 per cent stake - has been further delayed to the third quarter, Santos Ltd, the field's Australian operator, said yesterday.

SPC has not been officially informed of the latest hiccup, although sources said they had been earlier alerted to some possible delays, due to contracting problems with the FPSO (floating production, storage, offloading) vessel.

First oil from the offshore field in East Java - earlier expected this quarter - is now only expected late in the third quarter at a 5,000 to 8,000 barrels per day (bpd) rate, a Santos spokeswoman said. This is a further delay from the earlier initial production date of Q3, 2006.

SPC is expecting to get about 6,575 bpd of crude oil from Oyong, which will be its second producing field, adding to its 2,540 bpd of oil equivalent which it is getting from Kakap in Indonesia. A second phase gas development at Oyong, expected to start next year, will include construction of a 60 km pipeline from the field to a power plant at Grati, owned by PT Indonesia Power.

The Oyong partners, including Santos and Australia's Cue Energy, expect to sell between 40 and 60 billion British thermal units per day under this deal.

The partners' Oyong woes started one and a half years ago when they found it difficult to mobilise a production barge for the field, amid the tight rig market.

It was only in February that they managed to award a leasing contract for a production barge. Earlier this month, SPC chairman Choo Chiau Beng said the company was looking to acquire more upstream oil and gas assets, worth up to $1 billion, to boost the company's oil production up to 150,000 bpd.

SPC is looking at potential targets, that is, companies with 'good oil reserves' in Asean, Australia, India and the Middle East, he said.