85 firms post combined 30% higher gains

IT has been a rewarding financial year for most Singapore-listed companies as they rode on the strong economy. Some 86 companies that released year ended June 30 results raked in a combined $2.4 billion in group profits.

Seventy-six out of these 86 companies posted profits, while 10 firms incurred losses. Fifty firms enjoyed higher profits from a year ago, against four that saw losses widen from the preceding year. Profits of the 85 companies with a year-ago comparison grew 30.2 per cent to $2.37 billion.

Topping the earnings chart was Singapore Exchange, which saw a bumper fiscal year as net profit surged 124.8 per cent to a record $421.78 million and revenue jumped 41.4 per cent to $576.22 million on robust trading volumes and stable contribution from listing fees, account maintenance, corporate action and price information fees.

'Financial services will probably continue to remain supportive of overall growth but the outlook has certainly been tainted by the recent volatility in the financial market,' DBS Bank economist Irvin Seah said. He expected the pace of growth in the financial services sector to ease towards the end of this year and 2008.

For the fiscal year ended June 30, the earnings of property and construction companies also ranked high among companies that released their full year results, given the bullish market conditions throughout the financial year.

Property and retail group Wing Tai Holdings saw its net profit tripled to $381.84 million from $128 million in the preceding year, as it recognised $189 million in fair value gains on investment properties (mostly Winsland House I & II) as well as profits from the sale of residential property units.

Trailing behind, GuocoLand's full-year net profit jumped 81 per cent to $281.89 million on a 94 per cent surge in revenue to $702.48 million, due to higher profits from residential development projects in Singapore and from the sale of residential apartments in Beijing.

Thanks to the buzz in the property sector, construction activities here experienced a significant pick-up, lifting the earnings of construction companies, with double- or triple-digit percentage point growth from low comparative bases.

Sim Lian, which engages in property development and builds homes for the Housing Development Board and private developers, enjoyed a 71.6 per cent increase in net profit to $33.24 million. Construction cum property development firm Lum Chang Holdings saw a staggering 798.5 per cent growth in net profit to $2.99 million.

Economists said that the real estate industry here is likely to stay healthy as the property market boom shows no signs of tapering off in the near term.

Still riding the wave of high oil prices, earnings from offshore marine companies gathered pace on strong shipbuilding orderbooks and higher shipchartering rates. Jaya Holdings' net profit rose 12.5 per cent to $120.77 million, CH Offshore's net profit soared 210.2 per cent to $61.55 million and ASL Marine posted a record $40.25 million in net profit, 74.5 per cent higher than a year ago.

Some Chinese companies with a short listing history here also sprinkled pleasant surprises, with confectionery firm Hsu Fu Chi landing on eighth spot in the chart as net profit grew 20.8 per cent from a year ago to $51.32 million. China Yuanbang Property Holdings' net profit surged 96 per cent to $15.97 million.

'Given that the Chinese people's disposable income is rising very fast and their buying ability is going higher and higher, it's no doubt that these types of companies with domestic focus will do well,' Phillip Securities analyst Zuo Li said.

While analysts believed that these companies will keep up with current growth momentum into the year ending June 2008, they were also quick to point out the downside risk coming from the recent US sub-prime woes.

'The sub-prime problem remains the key risk factor to keep an eye on, but inflation would be a problem to contemplate with while keeping the growth momentum positive,' Mr Seah of DBS Bank said.

UOB Group economist Alvin Liew noted that despite sound fundamentals here, equity markets continue to be hit by the unravelling of US sub-prime mortgage delinquencies and the related collateralised debt obligation issues.

'So far, the financial sector problem seems contained and there is no material impact on the real sector in the region. The downside risk is when the real sector gets affected, such as weakened consumer spending and investment decisions,' Mr Liew said.