Singapore Corporate News - 1 Feb 2008

KepCorp posts record earnings

KEPPEL Corporation, the world's largest builder of offshore oil rigs, yesterday announced another set of record breaking earnings for both the fourth quarter and the full year ended Dec 31, 2007.

For the fourth quarter, net earnings shot up 46 per cent to $268 million from $184 million a year ago on a 38 per cent increase in revenue to $3.36 billion from $2.44 billion.

For the full year, Keppel saw total group revenue of $10.43 billion, surpassing the $10 billion mark for the first time. This was 37 per cent more than the previous year's $7.6 billion.

Also for the first time, full-year net earnings breached the billion-dollar mark with the group posting net profits of $1.03 billion compared with $750.8 million a year ago. The consensus average forecast of 15 analysts polled by Reuters Estimates was almost on the mark with their target of $1.05 billion. For the current financial year, they are targeting net profits of $1.27 billion.

Including exceptional items, the full-year net profit came to $1.13 billion.

Commenting on the results, Keppel executive chairman Lim Chee Onn said: 'All our key businesses performed better in 2007 when compared with the preceding year.'

He also pointed out that compounded annual growth rates for both net earnings and earnings per share (EPS) was about 23 per cent over the last seven years.

Reviewing the sectors, he noted: 'Keppel Offshore & Marine (KOM) has increased its net orderbook to $12.2 billion and it is now accepting orders for 2011 delivery. Our long-term partnerships with customers remain robust and they continue to entrust us with repeat orders.' The sector, thanks to the huge demand for oil rigs and ship repair, accounted for $7.26 billion in revenue and $522 million in net earnings before exceptional items.

Subsidiary Singapore Petroleum Company, which on Wednesday reported a 79 per cent jump in net earnings to a record $508 million, 'had a successful year executing its strategy to grow its upstream business', Mr Lim remarked.

'Keppel Land also made significant strides last year in extending its regional reach and growing its townships and integrated lifestyle developments. It also took advantage of the strong office market to secure long-term leases,' Mr Lim said. Keppel Corp saw a 118 per cent jump in net earnings, before exceptional items, to $209 million for its property segment on a 59 per cent increase in revenue to $1.83 billion.

The infrastructure sector, which has been suffering losses for some years, now reported net earnings of $26.4 million before exceptionals compared with a previous loss of $35 million.

Full-year earnings per share (EPS) increased 36 per cent to 64.9 cents. To commemorate the group's 40th anniversary, Keppel Corp is paying a final dividend of 10 cents a share, a capital distribution of 25 cents and a special dividend of 20 cents, which together with an interim dividend of 9 cents brought 2007 distribution to 64 cents a share.

Return on equity rose from 19.1 per cent to 21.8 per cent, one of the highest among major companies in Singapore.

Net gearing has been lowered to 9 per cent as a result of free cash flow of $1.2 billion.

On prospects, group finance head Teo Soon Hoe said: 'We have broadened our earnings base effectively in the last few years. Keppel Offshore & Marine remains a strong contributor of 50 per cent to the bottom line of the group. Properties and the oil & gas business under SPC contribute more than 20 per cent each.'

'Also, there is the potential to use our infrastructure technologies in the Tianjin eco-city project for the next 10 to 15 years,' he added.

Keppel shares hit an all-time high of $15.30 each in the last quarter of 2007, up 50 per cent. They have since retreated amid the recent market turmoil. The stock closed trading yesterday at $11.32.

Hour Glass Q3 profit up 58% at $8.2m

THANKS to festive spending, net profit at luxury watch retailer The Hour Glass jumped 58 per cent to $8.2 million for the third quarter ended Dec 31, 2007.

Sales rose 22 per cent to $132.24 million. For the first nine months of fiscal 2008, net profit almost doubled to $20.54 million from $10.35 million a year earlier, on a 27 per cent spike in sales to $369.74 million and an increase in gross margins to 18.9 per cent from 16.6 per cent.

This places the company in good stead to post record earnings for fiscal 2008, the group's executive director Michael Tay said.

This is the first time that the group is announcing its quarterly results and is ahead of the deadline under revised listing rules to do so for its fiscal year beginning April 1.

The group now looks set to form the largest luxury watch retail in Thailand through a joint venture with Prima Times Co, an associate of Blue River Corporation, Thailand's premier fine watch and jewellery group.

The 50:50 venture, PMT The Hour Glass, is still being finalised and subject to execution of a shareholders' agreement. It is expected to begin operations on April 1 with four boutiques in Bangkok's top luxury retail malls. One of the four is The Hour Glass's outfit in Gaysorn and the rest are Prima Times's outlets in Emporium and Siam Paragon.

Despite the prospects of slower economic growth dampening consumer sentiment, Mr Tay said, the group remains confident as it has beefed up its management discipline and efficiency since the Asian financial crisis when the company was 'hit hard'.

Besides its Thai venture, The Hour Glass is also spending some $4 million this calendar year on expansion elsewhere.

By April, it will double the size of its boutique at Raffles Hotel Arcade in Singapore. It will also launch a new 1,300 square foot Montblanc mono-brand boutique in Sydney's prime shopping district, Castlereagh Street, taking the number of owned-and-operated Montblanc mono-brand boutiques in Australia to five.

It will open South-east Asia's first Hublot mono-brand boutique in Kuala Lumpur in May, which will occupy 1,200 square feet at Starhill Gallery, one of KL's luxury shopping centres.

Separately, shareholders yesterday approved the 1-into-2 share split announced last month. After the share-split, The Hour Glass will have an issued share capital of 231.71 million paid-up shares.

Some analysts say that the share-split would allow fresh investors to take stakes in the group in a big way, after seeing Peace Mark's acquisition of Sincere Watch last month.

Mr Tay declined to say if the group had been approached by potential investors or if the Tay family would divest its 63 per cent stake in the group.

But he felt that The Hour Glass looks attractive given its relatively lower valuation but higher earnings compared to its peers.

STATS ChipPAC Q4 net jumps 46% to US$41.3m

SEMICONDUCTOR testing and packaging firm STATS ChipPAC recorded a 46.2 per cent jump in net profit for the fourth quarter of 2007 on the back of strong demand for its services.

Net income for the period rose to US$41.3 million, or 20 cents per American Depositary Share (ADS), from US$28.3 million, or 14 cents per ADS, a year earlier. Fourth-quarter revenue climbed 14.6 per cent to US$476.7 million from US$416 million in the previous corresponding period.

Strong demand for its services across the computing, communications and consumer sectors, coupled with the revenue contribution from its recently-acquired factory in Thailand, were the key reasons for the positive Q4 performance, STATS ChipPAC's CEO Tan Lay Koon said.

Buoyed by its record Q4 profits, the company's net income for the 12 months ended Dec 31 reached a new high of US$93.7 million, up 22 per cent from US$76.8 million in 2006. Full-year sales rose by 2.1 per cent to US$1.65 billion.

Mr Tan said the firm managed to make significant inroads with its '3D solution offering' last year - these are essentially chips designed to power gadgets like mobile phones and gaming consoles.

'We are also expanding our flip chip offering to provide our customers with a full turnkey solution in China. We invested more in technology, including the establishment of a new research and development facility focused on advanced wafer integration,' he said.

While overall sales and revenue grew strongly in 2007, the numbers still fell short of the company's initial projections. In March last year, it said in a note to shareholders that it expected net profit for 2007 to double to US$151.1 million and sales to increase by 13 per cent to US$1.83 billion.

STATS ChipPAC has since decided to discontinue its practice of issuing earnings forecasts and holding financial results briefing from last October.

The company is in the midst of a capital reduction exercise which could see around US$813 million being returned to shareholders. Temasek Holdings, which owns nearly 84 per cent of STATS ChipPAC through its subsidiary Singapore Technologies Semiconductors Pte Ltd, could receive US$684 million if the move goes through.

STATS ChipPAC shares were unchanged at $1.32 yesterday.

Petrobras leases 36% of Chemoil's terminal

MARINE fuel supplier Chemoil Energy yesterday announced a 'Brazilian connection' at its recently opened US$122 million Helios Terminal on Jurong Island, with Brazil's largest energy company Petrobras leasing over one-third of the 448,000 cubic metres oil storage.

Petrobras' lease of 163,000 cu m, or 36 per cent of the facility, 'will help maximise returns' from the terminal, mainboard-listed Chemoil said.

'Whilst Chemoil's customer activity continues to increase at Helios Terminal, the long-term lease agreement with Petrobras will provide both companies with the potential to explore supply synergies in the long-term. Petrobras has been supplying the Singapore bunker market since 2004, offering low-sulphur fuel oil and 500 centistoke fuel oil,' it added.

Petrobras Singapore managing director Odilia Dauzacker said: 'Having access to such a state-of-the-art facility like Helios' will provide us with greater advantages to fulfil our own growth objectives. Petrobras has had a good relationship with Chemoil for a number of years and looks forward to working with them going forward.'

Chemoil said that it began discharging cargoes at Helios from Jan 11 and successfully completed its first end-to-end delivery turnaround on Jan 24 with the loading of barges for marine fuel deliveries.

Currently, eight tanks with a total 328,000 cu m of storage are in operation. The remaining tanks at the Helios facility - which has a total of 18 fuel tanks with 448,000 cu m storage - are due to be in use by end-February, it added.

Chemoil also announced that the earlier scheduled official opening of Helios on Jan 10 - cancelled because of the death of founder and CEO Robert Chandran from a helicopter crash in Indonesia - will now be held on Feb 28. It will be officiated by Minister for Finance and Education Tharman Shanmugaratnam.

Michael Bandy, who has succeeded Mr Chandran as Chemoil's chairman and CEO, said that 'the start of operations at the Helios Terminal reflects Chemoil's strength and determination to continue the ambitious growth plans that Bob Chandran had developed with the senior management team and to find new and innovative ways of delivering energy'.

Fragrance Group profit doubles

FRAGRANCE Group has reported a turnover of $136.12 million for FY2007, an increase of 39.2 per cent. It attributed this to its property development sector which contributed $112.49 million. Its hotel sector contributed $23.63 million of the total consolidated turnover. Net profit more than doubled from $14.8 million to $30.4 million.

Azeus warns of earnings fall

AZEUS Systems expects to remain profitable for the year ending March 31, but sees substantially lower profits compared with FY2007. It said gross margin did not recover as much as expected due to more intensive price competition in the Hong Kong public sector market.