Singapore Corporate News - 27 Jul 2007

Expressions set to expand

SPA company Expressions International is considering an initial public offering, possibly by next year, while it steps up expansion efforts in Singapore and in the region.

The plans were set out yesterday at a signing ceremony at the Chinese Swimming Club, when Expressions inked an agreement for the construction of its 5,700 square foot premium rooftop spa and wellness boutique to be at the sports club. This is believed to be the first such partnership between a spa owner and a sports club in Singapore.

Edwin Lee, president of the swimming club, said that it had looked at about seven different parties before granting Expressions a five-year lease with an option to renew.

He said the decision was based on branding, image and the ability to deliver. The club is to celebrate its centennial year in 2009.

Dr Theresa Chew, co-founder and chief executive officer of Expressions International, touched on future plans for three key overseas markets - Dubai, China and India.

Dr Chew, who is a founding member of the Singapore Spa Association, emphasised the vast changes in the Singapore spa industry of late.

'Ten years ago, there were hardly less than 20 spas around,' she said. 'Last year, it was recorded we have 308 spas in Singapore. I believe with the integrated resorts, spas are going to grow tremendously.'

She said the current value for the spa industry is over a $100 million - and the arrival of the integrated resorts is expected to increase this to $500 million.

The Fusion Spa will be built on the rooftop of the new Chinese Swimming Club building, the Arrival Pavilion. It is to be completed by the first quarter of 2009.

The spa, which is expected to cost close to a million dollars to create, will be open to non-members. The location of the spa will allow Expressions to capitalise on the club's 8,000 members as well as the various residential developments coming up in the area.

Ascott Q2 profit jumps 75%

THE Ascott Group, the serviced residences arm of property giant CapitaLand, yesterday posted a 75 per cent rise in group net profit for the second quarter of this year to $88.1 million compared with a year ago. Net profit for the first half rose 6 per cent to $97.8 million.

The bottom-line increases were driven primarily by divestment/portfolio gains.

Portfolio gains net of tax jumped 109 per cent or $39.7 million to $76.2 million for the second quarter ended June 30. In the first half, portfolio gains net of tax increased 6 per cent to $82.1 million.

Ascott said the portfolio gains in Q2 as well as H1 this year related mainly to progressive recognition of the divestment gain from the compulsory acquisition of Masters Golf & Country Club land in Guangzhou, and the group's disposal of Somerset Chancellor Court in Ho Chi Minh City to Ascott Residence Trust.

Net profit from operating assets rose 18 per cent in Q2 to $22 million but the increase was more than offset by a doubling of expenses from assets under development to $10.1 million in Q2 2007, from $4.9 million in Q2 2006. For H1 2007, net profit from operating assets increased 28 per cent to $30.3 million, but the gain was again eroded by an 80 per cent rise in expenses from assets under development. The higher expense from assets under development for both Q2 and H1 this year arose from new investments in China and India.

Ascott said it achieved strong operating performances in most markets, especially the Philippines, Singapore, Vietnam and Europe. Fee income was also higher. The group has a 33 per cent equity stake in the US$500 million Ascott Serviced Residence (China) Fund, which was successfully closed last month. The fund aims to develop serviced residences from scratch, or buy assets while they are under development, or acquire completed assets that require repositioning to boost their yields.

When these assets are generating sufficient income, The Ascott Group including its subsidiaries and associated companies such as listed Ascott Residence Trust have the right of first refusal to buy the China fund's assets.

Ascott deputy CEO (finance and investment) Chong Kee Hiong yesterday indicated that Vietnam and India could be potential markets for setting up more such funds. The group would typically look at a fund size of at least US$300 million, he added.

The group has grown its serviced residences portfolio from about 18,500 units as at end-2006 to 19,500 units currently and is on target to expand this to 25,000 units by 2010.

The additional units are expected to come from Asia (including Vietnam, Singapore, Hong Kong, Japan, China and India), Europe (including CIS countries) and Gulf region (Bahrain, Qatar and the UAE). Revenue for Q2 rose 9 per cent year on year to $107.1 million, due largely to the group's serviced residences in Europe and North Asia. First-half revenue dipped one per cent to $202.2 million due to the deconsolidation of revenue from properties divested in 2006.

On a same-portfolio basis - excluding the revenue of the 2006 divestments and contribution from new properties in 2007 - the revenue for H1 2007 would have been increased by 19 per cent over that of H12006.

Earnings per share rose from 3.2 cents in Q2 last year to 5.5 cents for Q2 this year while net asset value per share increased from 67.5 cents as at Dec 31, 2006 to 68.5 cents as at June 30 this year. There will be no interim dividend.

Ascott looks set to book further portfolio gains in Q3 - around $22.2 million net profit from the sale of Hotel Asia on Scotts Road, and possibly a further $17.8 million from the sale of Somerset Bayswater in London assuming the sale is completed this quarter.

'The group's portfolio gains and operating performance in 2007 are expected to remain strong,' Ascott said in its results statement.

SP Chemicals Q2 net profit rises 21% to record 89.9m yuan

SP Chemicals, China's fourth largest producer of ion-membrane chlor-alkali, has achieved another record quarter of earnings.

Net profit in Q2 ended June 30 jumped 21 per cent to 89.9 million yuan (S$18 million) from 74.1 million yuan in the previous corresponding period.

Backing the earnings rise was a 28 per cent increase in Q2 revenue to 464.3 million yuan from 363.2 million yuan.

First-half revenue climbed 46 per cent to 889.9 million yuan, while net profit rose 41 per cent from 119.4 million to 168.7 million yuan. 'At the mid-point of our fiscal year, our financial results prove the success of our strategy in the marketplace. We have a highly efficient and low-cost infrastructure which has made us the success we are today,' said SP Chemicals CEO Chan Hian Siang. 'We have the right strategies and we're making the necessary systemic interventions.'

Q2 earnings per share increased 21 per cent to 0.246 yuan.

The group's revenue from aniline grew by 18 per cent to 214.9 million yuan despite an 8 per cent fall in average selling prices, largely due to the doubling of production capacity. But gross profit of aniline dropped by a huge 85 per cent to 6.9 million yuan from 47.3 million yuan. This was due to an average price rise of 32 per cent in aniline's main raw material, benzene.

However, caustic soda, another of SP's products, experienced the strongest revenue and gross profit growth, of 110 per cent to 166.4 million yuan and 222 per cent to 89.9 million yuan respectively.

SP said it will continue to add new production capacity, bringing total annual production capacity for caustic soda to 450,000 tonnes; chlorine, 396,000 tonnes; and aniline, 135,000 tonnes.

Despite its quarter's record net profit, the company remains cautious about the near future. It expects the current quarter to be challenging and profitability to be lower than for the previous corresponding quarter.

Factors cited were the changes in China's tax regulations and a shutdown of its plant SP Taixing for up to 14 days for annual repairs and maintenance.