Singapore Corporate News - 31 Jan 2008

SPC net soars 78.6% to record $508m in 2007

SHARP spikes in crude and oil product prices last year - fuelled by demand from China, India and the Middle East, as well as geopolitical concerns - helped propel Singapore Petroleum Company's (SPC) full-year net earnings for 2007 to an all-time record of $508.3 million.

This 78.6 per cent jump in net profit over 2006's figure, came on the back of a record revenue of $8.8 billion. Earnings per share was 98.78 cents, up 78.5 per cent.

'This is the group's best performance to date,' SPC chairman Choo Chiau Beng proclaimed.

To reward shareholders, SPC is paying a final ordinary dividend of 40 cents per share.

This comes on top of its earlier, first-ever, interim dividend of 20 cents at mid-year, bringing total dividends for the year to 60 cents per share.

Ahead of the results announcement, SPC yesterday closed at $6.10, up four cents. Based on the last traded price, the dividend yield works out to 9.8 per cent.

The integrated SPC - which has grown from just oil refining/retailing to oil/gas exploration and production - said that while downstream continued to contribute the bulk of its earnings, or $523.2 million in operating profit, exploration and production (E&P), with $52.4 million in operating profit, continues to grow.

Its total oil production will increase to 11,000 barrels of oil equivalent per day in 2008 helped by new output from its recently acquired Bohai oilfield in China, as well as Oyong in Indonesia, boosting that from its first producing field in Kakap, Indonesia.

SPC said that it achieved an average refining margin of about US$7 for 2007.

This means that there was a rebound in its Q4 refining margin to US$7 a barrel, after Q3's weak US$5 figure, when margins took a hit from reduced product demand. Q2 saw strong US$9 margins following Q1's US$7.

SPC has a half share, with partner Caltex, in Singapore Refining Company's 285,000 barrels per day refinery on Jurong Island. Upcoming plant upgradings, including to produce 'green' diesel, will improve the refinery's competitiveness.

SPC said that although the outlook for global economic growth is clouded by fears of a US recession, refining margins are expected to remain relatively healthy this year, given the continued lack of meaningful spare global refining capacity.

In its 2007 performance review, it added that general and administrative expenses were 13.7 per cent higher due to the group's enlarged footprint in the upstream E&P business, and an increase in manpower costs.

But there was no inventory write-down as oil prices were higher at year-end. A one-off divestment gain of $17.7 million was recorded from the disposal of overseas business ventures in the first half-year.

CDLHT Q4 distributable income up 83.4%

CDL Hospitality Trusts (CDLHT), the biggest owner of hotel rooms in Singapore, yesterday posted strong Q4 and full-year results.

Distributable income for the quarter ended Dec 31, rose 83.4 per cent from a year before to $22.7 million. CDLHT, a stapled entity, is hoping to acquire this year Copthorne Orchid in the Bukit Timah area from parent Millennium & Copthorne Hotels, the London-listed hotel arm of Singapore property giant City Developments.

CDLHT's plan is to build up its assets over three to five years from about $1.6 billion as at the end of last year to around $3 billion, with increasingly more overseas acquisitions.

'My favourite acquisition markets at the moment are Singapore, Vietnam and India. These are high-octane growth markets,' said Vincent Yeo, CEO of M&C Reit Management.

The company is the manager of CDL Hospitality Real Estate Investment Trust, which is stapled to CDL Hospitality Business Trust to form CDLHT.

With CDLHT's current gearing ratio (debts-to-assets) only at about 19 per cent, it has debt headroom of $792 million to fund acquisitions before it reaches its self-imposed gearing threshold of 45 per cent.

'Given our strong balance sheet position, we're well placed to seize acquisition opportunities as they present themselves,' Mr Yeo said.

CDLHT has a right of first refusal to buy parent M&C's Singapore hotels. M&C owns the 445-unit Copthorne Orchid at Dunearn Road, as well as a 370-room new hotel being built in the Mohamed Sultan Road vicinity slated for opening in the first quarter of next year.

Mr Yeo indicated that CDLHT would like to acquire Copthorne Orchid this year 'if it's possible'. He reckons the property is worth over $200 million. 'The ball is in M&C's court ... We're waiting to hear from them,' he added.

The trust would acquire the Mohamed Sultan hotel only after it has opened and even then, this is likely to include initial income support if necessary, he said.

Copthorne Orchid had once been earmarked for development into a condo but it now continues to operate as a hotel as there is a shortage of hotel rooms in Singapore.

When CDLHT launched its initial public offer in July 2006, it had four hotels Singapore in its portfolio - Orchard, Grand Copthorne Waterfront, Copthorne King's and M. In June last year, it acquired Novotel Clarke Quay.

Revenue per available room for the four IPO hotels rose 33.5 per cent year-on-year to $195 in Q4 2007. That together with a full quarter's contribution from Rendezvous Hotel Auckland (acquired in December 2006), and the contribution from Novotel Clarke Quay provided the fillip to CDLHT's Q4 distributable income in the fourth quarter. Gross revenue jumped 65.2 per cent to $27.96 million in Q4 last year.

Unit holders will receive a total distribution per unit of 4.61 cents for the July 19-Dec 31 period, which works out to 10.14 cents on an annualised basis, reflecting a distribution yield of 4.97 per cent based on CDLHT's $2.04 closing price yesterday, when the shares ended 8 cents lower.

For the year ended Dec 31, distributable income was $68.7 million, or 75.7 per cent above the trust's forecast. Gross revenue of $90.65 million was also 61.1 per cent ahead of forecast.

SingPost: New players will squeeze margins

SINGAPORE'S liberalisation of basic mail services and the entry of new players will squeeze margins for Singapore Post, the company said yesterday.

In a statement announcing its third-quarter results, the postal operator said that along with rising operating costs in the economy, 'this will result in margin pressure'.

SingPost, which held the monopoly on basic mail services, said it will pursue and implement initiatives to grow its core mail and logistics businesses. As part of its diversification strategy, it will leverage its retail and distribution network to offer higher value products and services to its customers.

The company is also looking at ways to extend its regional reach.

SingPost is continuing to review its non-core businesses and is exploring opportunities to 'unlock' the value of SingPost Centre.

For the third quarter ended Dec 31, 2007, it posted a net profit of $36.8 million or 1.914 cents per share, up from the previous corresponding quarter's $34.1 million or 1.782 cents per share.

The earnings rise came on the back of better results for all its three business segments of mail, logistics and retail.

Q3 revenue grew 9.2 per cent to $122 million. An interim quarterly dividend of 1.25 cents per share, pay- able on Feb 29, was also announced yesterday.

Mail revenue, which made up the bulk of sales, increased 9.5 per cent to $94.2 million on higher mail volumes.

The logistics segment turned in a revenue of $17.9 million, a rise of 5.3 per cent, from increased Speedpost traffic and growth in its vPost on-line shopping transactions.

Retail revenue grew 7.9 per cent to $15.6 million, as growth in financial services and retail products continue to offset the decline in agency/bill presentment services, said the company.

Rental and property-related income improved by 21.6 per cent to $6.2 million, as a result of higher rental rates and yield enhancement initiatives at SingPost Centre.

Total expenses rose 10.7 per cent to $84.9 million as a result of increased labour and volume-related costs.

The first nine months saw revenue of $353.5 million, up 9.3 per cent, while net profit was $114.8 million, a 13.5 per cent rise.

SingPost's group chief executive officer Wilson Tan said: 'The third quarter is traditionally a busier period for SingPost because of the year-end festive season.'

'In mail, despite the decline in year-end festive postings, we achieved steady growth in direct mail in tandem with a robust Singapore economy,' he added.

Mr Tan also noted that on the retail front, the company leveraged its network of post offices by expanding its service offerings with festive shopping through shop@post, featuring items such as notebooks, iPods and branded watches.

GuocoLand posts 26% drop in Q2 earnings

QUEK Leng Chan's Singapore-listed property arm GuocoLand yesterday posted a 26 per cent year-on-year slide in group net profit to $32.95 million for the second quarter ended Dec 31, 2007. This was due largely to a 26 per cent drop in other income, from $39.4 million to $29.3 million largely because of a non-recurring profit of $19.3 million that arose from GuocoLand selling its stake in BIL in the year-ago corresponding period.

However, gross profit for Q2 rose 145 per cent, from $16.38 million to $40.21 million on the back of contributions from the group's development projects in Singapore (including The Stellar, Quartz, Le Crescendo and The View @ Meyer condos) as well as the West End Point project in Beijing.

The decrease in other income was mitigated by higher net foreign exchange gains of $11.3 million from revaluation of US dollar bank loans.

Revenue for Q2 more than doubled from $99.6 million to $211.1 million. For the half year ended Dec 31, 2007, revenue also more than doubled from $187.8 million to $402.1 million. Net earnings for the half year rose 15 per cent to $60.6 million.

GuocoLand's results statement also showed it has withheld payment of 2.58 billion yuan (S$509.2 million) out of the total 5.8 billion yuan purchase price for the acquisition of a 90 per cent stake in Beijing Cheng Jian Dong Hua Real Estate Development Company (CJDH) and a 100 per cent stake in CJDH's holding company, Hainan Jing Hao Asset Limited, to cover potential liability relating to separate lawsuits involving guarantees and loans given by Beijing Dong Hua Guang Chang Zhi Ye Co Ltd, formerly a related company of CDJH.

One law suit, for 1.5 billion yuan, has been lodged by Shenzhen Development Bank against CJDH and the other, by Agricultural Bank of China, has been lodged against CJDH and Hainan for a loan of about two billion yuan given to Zhiye. GuocoLand said in its statement it will vigorously contest both suits and give further updates when appropriate.

CJDH owns the land use and development rights to a prime plot of land along Dongzhimen Road on the East Second Ring Road in Beijing's Dong Cheng District.

MMP Reit posts 15.7% rise in distributable income for Q4

MACQUARIE MEAG Prime Real Estate Investment Trust (MMP Reit) has reported a 15.7 per cent year-on-year rise in distributable income to $16.2 million for the fourth quarter ended Dec 31, 2007. The Q4 distribution brought 2007 full year's distributable income to $59 million, up 7.5 per cent.

Distribution per unit (DPU) for the quarter rose 14.3 per cent to 1.68 cents, bringing full-year DPU to 6.19 cents, a rise of 6.9 per cent. 'This is a result of our regional diversification strategy and focused asset management efforts,' said Franklin Heng, CEO of MMP Reit's manager Macquarie Pacific Star.

On an annualised basis, the latest distribution represents a yield of 6.06 per cent based on MMP Reit's traded unit price of $1.10 on Dec 31, 2007. An increase in the valuations of MMP Reit's portfolio of 10 properties raised group net asset value (NAV) per unit to $1.61 as at Dec 31, 2007, up 38.8 per cent from end-2006's $1.16.

Gross revenue for Q4 2007 was $29.8 million, up 32.1 per cent year-on-year. This was due to higher rental rates from renewals, new leases and revenue from new acquisitions. Full-year gross revenue rose 14.6 per cent to $103 million. Net property income for Q4 rose 29.1 per cent to $22.1 million, despite higher year-on-year expenses. This brought full year's net property income to $76.8 million, up 10.9 per cent. Mr Heng said: 'As at Dec 31, 2007, our Singapore properties enjoyed full occupancy for retail space and 99 per cent occupancy for office space. The 79,100 square feet of office leases which expired in 2007 had average quarterly passing rents of $4.90 to $5.30 per square foot per month (psfpm) and these were renewed or contracted at average rents of $7.70 to $12.10 psfpm.'

MMP Reit's portfolio includes a 74.23 per cent strata title interest in Wisma Atria and a 27.23 per cent strata title interest in Ngee Ann City. In 2007, it acquired seven prime properties in Tokyo and a retail property in Chengdu in China, growing its asset portfolio to $2.2 billion.

The Reit said it continues to exercise prudent capital management by maintaining a low gearing and strong balance sheet. 'Our gearing of 29 per cent is at a healthy level. To shield MMP Reit from interest rate volatility, 89 per cent of our debt is fixed and the average interest rate is 2.69 per cent. Interest cover is 4.4 times. The recent establishment of a $2 billion multi-currency medium term note (MTN) programme will provide additional sources of funding,' said Mr Heng.

On MMP Reit's outlook, Stephen Girdis, chairman of Macquarie Pacific Star, said: 'MMP Reit has in the past year laid the foundations for strong organic growth for the next couple of years, through its maiden acquisitions in Japan and China, and its tenancy remix and asset enhancement initiatives for MMP Reits's Singapore properties, Wisma Atria and Ngee Ann City.'

SIA to start A380 flights to London on March 18

SINGAPORE Airlines is launching the first Airbus A380 commercial service to Europe, with the inaugural flight on the Singapore- London route scheduled to take off on March 18.

Flight SQ308 will leave Singapore at 9am, reaching London at 3.05pm the same day and returning as SQ319 at 6.55pm, arriving at 3.35pm the next day.

The airline will be able to operate the service when it takes delivery of its third A380 by mid-March. Regular scheduled services will commence as SQ322 departing at 11.20pm on March 18, the same day as the inaugural flight, returning as SQ317 at 11am on March 19.

London will be SIA's second A380 destination after starting the world's first commercial A380 service to Sydney last October.

'With the addition of London as the second A380 destination, more of our customers can now enjoy the award-winning cabin products, enhanced in- flight entertainment and renowned Singapore Airlines service,' said executive vice-president for marketing and regions Huang Cheng Eng.

'The A380 will provide a capacity expansion on the popular Singapore-London route,' he said. 'For the first time, an aircraft larger than the B747-400 will fly this route, thereby meaning more seats without the need for more frequencies to what is already one of the world's busiest airports.'

Seats on the inaugural flight are open for sale on www.singaporeair.com, the airline said. Passengers will receive personalised certificates, as well as limited-edition SIA A380 souvenirs and exclusive premium giveaways.

Wee Hur's strong debut

SHARES of construction company Wee Hur Holdings yesterday posted a strong debut on the local market's main board, closing at a 24 per cent premium to their offer price, despite a weak day throughout the broad market.

Wee Hur, which had offered about 83.65 million shares (including 4.74 million vendor shares) at 25 cents each, saw its shares trade between 30 and 33 cents before closing at 31 cents, with 29 million units changing hands for the day. In a news release, the firm said its offer exercise had been 1.4 times subscribed and that despite the poor market conditions, it had attracted institutional interest from AIG Investment Corporation, Merrill Lynch, JL Capital and UOB Asset Management.

Overall market sentiment was weak yesterday ahead of a key US interest rate meeting, with the Straits Times Index reversing a 20-point rise to close 49.87 points lower for the day at 3,000.03.

New China printing deals to double Xpress' revenue

IN one fell swoop, speed printer Xpress Holdings will be doubling its annual revenue and possibly its profits with deals that will bring in some 200 million yuan ($40 million) a year in new business.

For the year ended July 31, 2007, Xpress, the company founded by flamboyant businessman K K Fong reported net earnings of $7.09 million on a turnover of $37.3 million.

It announced yesterday that it had signed print management agreements for a total of 22 magazines with seven major Chinese media companies that will yield fees of between 8 and 12 per cent of turnover of a minimum 200 million yuan. The printing will be done by 30 per cent-owned associate Shenzhen Jiaxinda Printing Group.

The magazines include widely read publications such as Chinese Venture, Funds Observer and Money Journal - for which the Nasdaq-listed company Xinhua Financial Media Limited has exclusive rights to sell advertising. The other customers are Yin Yang Media, Media Shell, SunGrace Culture, Econ World and Tongji Technology.

Commenting on the contracts, executive director for strategic planning and business development Poh Eng Seng said: 'The contracts mark another important milestone for Xpress as we continue to strengthen our position in one of the PRC's fastest-growing industries. By setting up facilities close to where our clients operate, we can offer them quick and fuss-free access to our pre-press, split printing and delivery logistics expertise.

'A win-win situation, it brings about cost-savings and shorter project delivery time for our clients. The signing of the agreements is clear evidence that this print model is an attractive proposition for major PRC print customers.'

Xpress said that the successful launch of its one-stop print management model in China has set the industry standard for the country's lucrative financial printing industry - covering the entire value chain from pre-press, through print and to delivery logistics.

The benefits to clients, it added, are a more dedicated and higher-quality product (tailored solution), shortened project management time, improved communications between publisher and printer, better service, lower cost, faster delivery and their ability to meet the end-customers' needs.

Its one-stop print management services also include creative design, layout, photo retouching, electronic imposition and professional colour-proofing.

Yesterday's agreements follow recent memoranda of understanding entered into by Xpress last year to jointly publish comprehensive financial yearbooks in Chinese and English of all PRC-listed companies for the next six years; and to form two joint-venture companies with a leading established provider of professional translation and oral interpretation services to offer specialised financial translation to Chinese companies printing financial reports in various languages for the global market.

Said Mr Fong: 'We are constantly on the lookout for more innovative ways with which we can add further value to our customers and harness new technology to improve the speed and ease of print for them. By setting up our pre-press print facilities on site, we aim to help our customers enjoy cost savings up to 20 to 30 per cent.'

Xpress, which halted trading in the morning yesterday pending its announcement, saw its shares closing in the afternoon half a cent up at 11.5 cents apiece.

China's Epure to buy S'pore-based Aqua-Tech

EPURE International Ltd, a turnkey water and wastewater treatment solutions provider in China, plans to buy 100 per cent of Aqua-Tech Engineering & Supplies Pte Ltd, a Singapore-based water treatment design and consulting firm. Epure has signed a non-binding memorandum of understanding with Aqua-Tech and exclusive negotiations are expected to begin soon. The actual consideration will be decided after the completion of the due diligence exercise. The transaction is expected to be completed by end-April 2008.

MAS, State Bank of Vietnam sign agreement

SINGAPORE'S central bank and its Vietnamese counterpart signed an initial agreement to expand links between the nations' lenders and cooperate on supervision, the Monetary Authority of Singapore (MAS) said in an e-mailed statement yesterday. MAS and State Bank of Vietnam will begin work on the agreement immediately. 'It is one of several initiatives to enhance economic and financial cooperation between Vietnam and Singapore,' MAS said in its statement.

Suntec Reit Q1 distribution income up 24%

SUNTEC Real Estate Investment Trust has announced a distribution income of $33.5 million for its first quarter ended Dec 31, 2007, 24 per cent higher than the $27 million for the previous corresponding period. The distribution per unit (DPU) of 2.279 cents for the quarter was 16.1 per cent up from a year ago and 6.5 per cent higher than its forecast.

Jurong Cement associate in Zhejiang stake sale

JURONG Cement's 40 per cent-owned associate company Sin Chang An Holdings's fully-owned unit, Sin Chang An Investments, has inked a conditional deal to sell its entire 60 per cent stake in Zhejiang Shanying Cement and Zhejiang Jurong Cement, both of which are engaged in the manufacture and distribution of cement in China's Zhejiang Province.

The total gross consideration is 300 million yuan (S$59.34 million) in cash. The portion of this consideration attributable to Jurong Cement is S$23.74 million. The consideration amount was arrived at on a willing buyer and willing seller basis and constituted the most attractive offer received.