Singapore Corporate News - 31 Dec 2007

SingTel sees US$82m gain, US$66m disposal loss

Singapore Telecommunications said on Monday it would record an exceptional gain of around $118 million (US$82 million) and post a $96 million loss from the disposal of a stake in a Taiwan company.

The company said the translation gain arose after an Australian subsidary reduced its Australian-dollar denominated share capital by A$323 million (US$283 million) while its loss resulted from a deal to swop SingTel's stake in New Century InfoComm Tech Co for new shares in Taiwanese mobile phone operator Far EasTone Telecommunications Co.

Both the exceptional loss and gain will be recorded in SingTel's third quarter ended Dec 31, 2007.

SingTel said in a statement that the gain and a $84 million translation gain recorded in the first three months this year would amount to $202 million for the nine months ending Dec 31, 2007.

UOB seeks to double Vietnam bank stake to 20%

Singapore's United Overseas Bank has sought permission to double its holding in Vietnam's Southern Commercial Bank to 20 per cent, the Vietnamese bank said in a statement seen on Monday.

Singapore's second-largest lender last week finalised a deal to buy 10 per cent of the unlisted Ho Chi Minh City-based bank. It had said in January the stake was worth $44 million (US$30 million).

'The two banks also signed an application to the State Bank of Vietnam asking for permission to raise UOB's investment in Southern Bank to 20 per cent,' the statement said.

Southern Bank, one of Vietnam's 10 largest partly-private banks, said in April it wanted to list in Singapore. It has yet to list at home, but its shares have more than halved on the unregulated markets to 36,000-37,000 dong (US$2.23) from 82,000 dong in April, indicating its value at around US$290 million.

Vietnam limits total foreign ownership in domestic banks to 30 per cent, with a 10 per cent cap for any individual investor.

But the government has said that in exceptional cases it would allow a foreign strategic investor to own 20 per cent.

Eight foreign banks, including Australia and New Zealand Banking Group and Standard Chartered, have bought stakes in Vietnamese banks as they look to benefit from the communist-ruled country's fast-growing economy.

HSBC Holdings has sought permission to raise its 15 per cent stake in Vietnam's Techcombank to 20 per cent. Oversea-Chinese Banking Corp, Singapore's third-largest lender, owns 15 per cent of Hanoi-based VP Bank.

Deposits at Vietnamese banks grew more than 36 per cent this year. Only 8.2 million of Vietnam's 85 million population have bank accounts, up from 5 million in 2006, industry reports show.

Koh Brothers buys out Brothers (Holdings) in construction venture

KOH Brothers Group and Brothers (Holdings) are terminating their deal over joint venture Construction Consortium.

The companies said separately over the weekend that Construction Consortium would become a wholly owned subsidiary of Koh Brothers.

Brothers (Holdings) agreed last Friday to sell its 46.58 per cent stake in the venture to its partner for $18.97 million. It said that the proposed disposal would strengthen its overall financial position - about $99 million of securities (including performance bonds, corporate guarantees and indemnities) that it furnished in support of Construction Consortium's contractual and financial obligations with third parties will be assumed by Koh Brothers.

Construction Consortium undertakes building and civil engineering construction contracts for both public and private sectors and is also involved in the production of ready-mix concrete and cement as well as rental of concrete pumps.

Koh Brothers said that Construction Consortium accounted for 30.37 per cent of pre-tax profit for the year ended Dec 31, 2006.

As at Dec 15, 2007, the venture's construction order book stood at some $848.1 million for projects in Singapore, of which $312.8 million is still to be recognised.

Koh Brothers is bullish on the sector, citing Building & Construction Authority data that actual construction demand for the first 10 months of the year reached $18.5 billion and that it is likely to carry over into 2008 and 2009.

The latest deal follows a share swap between Koh siblings in January, under which Koh Brothers aims to focus on its construction and property business in Singapore.

Koh Brothers founder and chairman Koh Tiat Meng, and his wife, acquired 6.72 per cent of the company from Mr Koh's brother, Tiak Chye.

In return, they transferred 12.67 per cent of Brothers Holdings to him.

Mr Koh Tiak Chye also stepped down as chief executive officer and managing director of Koh Brothers and resigned as director in the company's subsidiaries and associate companies - except for those related to Construction Consortium.

This is so that he can focus on his commitments in Brothers (Holdings), particularly the company's real estate business in China.

China Flexible Packaging's annual turnover tops one billion yuan

CHINA Flexible Packaging Holdings, which produces biaxially oriented polypropylene (BOPP) film, has crossed one billion yuan (S$198 million) in sales for the year ended Oct 31.

For its fourth quarter, net profit rose 9.66 per cent to reach some 43 million yuan, while revenue went up 7.42 per cent to some 284.1 million yuan.

Earnings per share for the quarter came to 0.1 yuan - up from 0.09 yuan a year earlier.

On a full-year basis, the company posted a 12.6 per cent rise in turnover to 1.11 billion yuan, while net income came to 180.5 million yuan.

The firm attributed the healthy results to sales of its new five-layer BOPP film, which accounted for higher sales contribution of 20 per cent - up from 12 per cent for FY06.

The group's gross profit grew by 15 per cent from 316.7 million yuan for FY06 to 364.2 million yuan for FY07, despite an increase in the cost of sales due to higher raw material costs.

Besides the five-layer BOPP film, the high shrinkage film segment also posted good growth with a rise in revenue of 10.3 per cent to 345 million yuan.

Last year, the firm invested an additional 5.1 million yuan in research and development to widen its product range.

To improve its profit margins, China Flexible is in the process of developing additional production capacity to process BOPP film into higher value metallised film.

There are also plans to expand its production capacity by investing in at least one additional BOPP production line to meet the growing demand.

China Flexible sees the recent hike in oil price as an important factor that will affect the entire BOPP film industry.

To mitigate its impact, the firm said it will widen its distribution network by appointing new dealers and grow its penetration into different geographical markets in China.

'Furthermore, through our R&D efforts and improvements in machineries, we will continue to develop products with higher margin and at the same time increase production,' it added.

The company has declared a dividend of 9.67 fen per share, to be paid out either in cash or in scrip at the option of shareholders.