Singapore Corporate News - 28 Jan 2008

Micro-Mechanics Q2 earnings up 20% at $2.5m

MICRO-MECHANICS Holdings has reported a 20 per cent jump in its earnings for its fiscal second quarter, on the back of improved operating efficiencies and a steady hand on costs, the company said.

It is rewarding its shareholders with an interim dividend of 2 cents per share.

The precision-tool maker's net income went up to $2.5 million in the quarter ended Dec 31, 2007, from $2.1 million the year before.

This, as its gross profit margin grew to 60 per cent, from 58 per cent previously. Its net profit margin also increased to 26 per cent, from 24 per cent.

Micro-Mechanics' revenues climbed 10 per cent to $9.7 million, thanks to double-digit sales growth in China, Europe, Thailand and Malaysia - despite a sluggish semiconductor industry.

Its sales in China jumped 44 per cent to $1.8 million as the group continued to grow its list of customers there.

The better performance has meant a healthy operating cashflow during the first six months of FY2008, which culminated in a cash balance of $13.5 million.

'We achieved double digit revenue and profit growth in the second quarter of FY2008 - and a record first-half net profit of $5 million, despite sluggish industry conditions,' said Micro-Mechanics chief executive Chris Borch.

'To reward our shareholders, we are proposing a 33 per cent increase in interim dividend to 2 cents per share.'

Comparatively, for the first half of FY2007, the company paid out 1.5 cents per share.

Going forward, the group says that barring an unexpected slowdown in the semiconductor industry, it expects to achieve steady growth and progress in FY2008.

Raffles Education sees HK as step to China

NOT content with just a Singapore listing, Raffles Education Corporation intends to list all its China operations on the Hong Kong Stock Exchange.

This, however, excludes Oriental University City - a company that owns, develops and operates a campus site in Langfang city, Hebei province.

A listing in Hong Kong would enable the private education provider to springboard into China, said Raffles Education founder and chairman Chew Hua Seng.

'We will list in Hong Kong, then hopefully migrate to a listing in Shanghai,' said Mr Chew in an interview with BT. He declined to say how much the listing would raise, but according to Reuters, the figure could be up to US$700 million.

Mr Chew said that he hoped to list before the Beijing Olympics this August.

'The Hong Kong listing gives specific focus to our China operations. The appreciation in our stock will be much better there.'

By listing in Hong Kong, Mr Chew said, there would be no 'China risk' where the investing public may not understand the nature of its business. 'People there appreciate and will participate in the growth.'

China is Raffles Education's single most important market, he added. Out of a total headcount of 1,846 people employed by the company, more than half are located in China.

Last year, its China business accounted for 65 per cent to its revenue, and he said that the China contribution in 2008 would increase. The company's business growth in China is currently about 40 per cent.

The Hong Kong listing, and eventually China, would not lead to a subsequent delisting in Singapore, said Mr Chew.

'The listings fulfil different functions. The Singapore listings will serve as a pan-Asian focus for business in India and Vietnam, while the China listings will look specifically at growth in China. There is still substantial business in Singapore.'

Around the region, the company has seen 30 per cent growth annually for Vietnam, while India has a 20 per cent growth rate. For now, Mr Chew seems unperturbed by the ongoing market turmoil and says it will not affect the planned listing.

'This market volatility is only temporary, I believe a recession won't hit Asia,' he said, adding that he was confident of garnering sufficient investor interest for the listing. 'If valuations are not up to expectations, then we might delay.'

Their strategy is one of growing organically, he said. 'Acquisitions only account for a bit of our growth.'

Raffles Education, which runs 29 colleges in the Asia-Pacific region with total enrolment of some 44,000 students, is one of the largest publicly listed education companies in Asia.

Earlier this month, it proposed a 1-into-2 stock split. Last November, Raffles Education posted a 57 per cent rise in first-quarter net profit to $14.7 million for the period ended Sept 30, 2007. The result was on a 45 per cent rise in revenue to $39.1 million. The company also said that it would carry out $200 million a year of acquisition deals in China, India and Vietnam over the next three years.