Singapore Corporate News - 9 Nov 2007

Sinostar posts 40.2% drop in Q3 profit

PETROCHEMICAL producer Sinostar Pec Holdings posted a 40.2 per cent drop in third-quarter net profit to 15.2 million yuan (S$2.9 million), dragged down by lower profit margin and higher expenses.

The profit drop came despite a 30.6 per cent jump in revenue to 327.4 million yuan.

The bulk of the revenue came from LPG sales, which rose 31.7 per cent to 184.6 million yuan. This was possible due to higher capacity, brought about by the acquisition of an additional 250,000 ton gas fractionation facility last year.

Sinostar's LPG products also saw higher average selling price and sales volume during the three months ended Sept 30.

The group's propylene products, however, suffered a drop in average selling price.

Higher sales volume helped buoy revenue contribution from the segment to 56.7 million yuan, from 36.2 million yuan in the same quarter last year. Revenue from polypropylene climbed 32 per cent to 86.1 million yuan, mainly due to increase in sales volume.

'The demand for propylene and polypropylene is expected to continue its growth trends into Q407 buoyed by China's strong economic growth,'

China-based Sinostar said in a statement. 'The strong demand for the group's products will drive the group's revenue growth.'

The group posted a 37.4 per cent jump in cost of sales to 298.7 million yuan. At the same time, it incurred 11.8 million yuan in additional expenses due to its share issue. As a result, net profit margin fell to 4.7 per cent, from 10.2 per cent.

Basic earnings per share for the quarter came to 2.36 fen, from 5.20 fen in Q3 last year. Net asset value stood at 70.7 fen per share as of Sept 30, from 13.6 fen as of end of last year.

Notwithstanding the lower Q3 profit, Sinostar's nine-month net profit came to 70.1 million yuan, a 46.3 per cent gain from the previous year. Revenue for three quarters to date went up 42.3 per cent to 848.2 million yuan.

Longcheer Q1 profit edges up 1% as costs rise

MOBILE handset designer Longcheer Holdings reported a one per cent gain in Q1 net profit to 56.4 million yuan (S$10.9 million), hit by competitive pricing and changes in its product mix.

For the three months ended Sept 30, the Shanghai-based firm generated a 35 per cent jump in revenue to 830.7 million yuan. The number of handsets shipped went up to 3.07 million units, from 1.96 million. But their average selling prices slipped 9 per cent to 256.02 yuan. Cost of sales grew 40 per cent to 734.9 million yuan. The group benefited from a gain in its other operating income, which went up to 10.8 million yuan, from three million yuan in the same quarter last year.

The group said it also incurred 6.8 million yuan more in operating expenses, about 20 per cent higher than a year before, largely due to increase in headcount as it beefs up its sales and R&D teams.

'Our continued investments in R&D and marketing have begun to bear fruit and have placed the group ahead of our competitors in China's mobile telecommunications industry,' said Longcheer chairman Tao Qiang.

'We will continue to emphasise developing new products to cater to changing market trends and our marketing efforts for further penetration in the domestic market have resulted in the group's higher shipment volume as well as revenue growth.'

Basic earnings per share went up to 14.21 fen, from 14.13 fen. Net asset value as of Sept 30 came to 141.80 fen per share, from 136.68 fen as at end-June.