Singapore Corporate News - 13 Feb 2008

NOL Q4 net up almost four times to US$196m

NEPTUNE Orient Lines has reported a fourth-quarter net profit of US$196 million, almost four times the US$50 million for the previous corresponding quarter.

The near quadrupling in earnings for the quarter ended Dec 28, 2007, was accompanied by a 22 per cent rise in revenue to US$2.42 billion.

For the 2007 full year, net profit surged 44 per cent to US$522.8 million on the back of record box volumes and improved freight rates. Full-year revenue rose 12 per cent to a record US$8.2 billion.

In 2006, full-year profit was US$363.7 million. The 2006 year included a US$100 million impairment in value of goodwill arising on consolidation, which was offset by writeback of net deferred tax liabilities of US$119 million.

Earnings per share for 2007 rose to 35.72 US cents from 25 US cents for 2006. The group has recommended a final dividend of 10 cents per share.

'Our business model with its focus on yield, value-added services, high asset utilisation and cost management has again delivered a good financial performance,' said chief executive Thomas Held.

In terms of business segments, liners still contributed the lion's share (84 per cent) of 2007 revenue, with a healthy 15 per cent increase to US$6.9 billion. Earnings before interest and tax (Ebit) also rose at a quick clip in the group's mainstay liner sector, growing 56 per cent to US$533 million from US$341 million in 2006. Turnover at the logistics business was up marginally at US$1.32 billion.

NOL attributed the results to higher volumes (12 per cent up), especially on the transpacific and intra-Asian trade lanes, as well as improving freight rates in the key trades throughout the year. Also helping were better yield management and cost mitigation efforts.

Several successful rate restoration programmes helped raise average revenue per forty-foot equivalent container (FEU) by 4 per cent to US$2,740 while strong momentum saw fourth quarter average revenue per FEU rising 11 per cent to US$2,865 quarter-on-quarter. For the full year utilisation was strong at 96 per cent even as average capacity expanded by 11 per cent.

'New rates are being negotiated in the transpacific and NOL is one of the few companies still making money in this trade,' said Dr Held.

NOL also announced yesterday that from this year, it will report the results of a new container terminals business unit - APL Terminals. The group produced pro forma accounts showing that if the unit had been operating as a separate unit in 2007, it would have delivered revenue of US$609 million and Ebitda of US$113 million. The terminals unit comes under 18-year NOL veteran Steve Schollaert.

NOL expects the ongoing financial market volatility and a slowing US economy to cause a moderation in the US trades. But the Asian-linked trades will offset this, the group added. 'The impact should not be as it was five years ago as we have more intra-Asian and Europe trades now,' said Dr Held.

NOL shares closed 11 cents higher at $3.31 yesterday.

Jade Tech in deal to sell loss-making unit



JADE Technologies Holdings is selling its wholly owned, loss-making subsidiary Jade Precision Engineering (JPE).


The company has entered into a sale and purchase agreement with United Pacific Industries (UPI) for the disposal of JPE. The proposed disposal is expected to be completed on Feb 24, with final settlement on March 8. Upon completion, JPE will become a wholly owned subsidiary of UPI.

JPE, with annual sales of $35 million in 2007, manufactures stamped, etched and plated leadframes for the semiconductor industry. JPE has been loss-making since 2001. As at Sept 29, 2007, JPE had accumulated losses of $21 million.

The actual consideration for the sale of JPE will be based on a 75 per cent discount on JPE's unaudited net tangible assets as at Feb 23, adjusted by eliminating all outstanding inter-company balances owing by JPE which will be waived by the company and its subsidiaries.

The estimated total consideration is $6 million, which will be paid to Jade in the form of new UPI shares up to a maximum limit as prescribed in the sale agreement, and with the balance in cash. The maximum limit is 43 million new UPI shares, which represents approximately 7.8 per cent of the existing issued shares of UPI or 7.2 per cent of the enlarged share capital.

'The proposed disposal thus means that the company would sell a heavily and continuously loss-making subsidiary,' Jade said.

'In fact, the proposed disposal is in the interest of the company and shareholders as a whole as it could improve the results without the continuing JPE losses being a drain on the group's resources.'

UPI is a diversified investment holding company incorporated in Bermuda and listed on the Hong Kong Stock Exchange. Brian C Beazer, the chairman of Jade, is also the chairman of UPI. Mr Beazer has a shareholding interest of about 24.56 per cent in UPI and a stake of less than 2 per cent in Jade, the company said.

Yoma in the black with $21m Q3 profit

YOMA Strategic Holdings achieved a $21.06 million net profit for its third quarter ended Dec 31 - a turnaround from a $13.82 million loss a year earlier, thanks mainly to the completed acquisition of a 27 per cent interest in Winner Sight Investments (WSI).


This completion translated to a rise in the group's other income to $22 million from $9 million the year before, and comprised mainly a $19.3 million termination fee to adjust its equity stake from 75 per cent to 25 per cent and negative goodwill of $2.5 million arising from the acquisition. 'The acquisition of WSI marks Yoma's successful foray into the PRC real estate sector,' said Yoma chief executive and chairman Serge Pun. 'We are actively sourcing for real estate projects in the PRC where Yoma can add value.'

During the quarter, the group enjoyed steady growth in housing sales and development rights, construction-related activities and professional services, lifting its revenue 11 per cent year on year to $2.44 million.

For the nine months ended Dec 31, Yoma also swung back into the black, chalking up a $20.4 million net profit - versus a $14.12 million net loss a year earlier - thanks to a 31 per cent jump in revenue to $7.77 million and the completion of the WSI stake acquisition.

The group said the real estate market in Myanmar showed signs of activity in the last quarter, and it plans to capitalise on this by initiating developments such as the Ivory Court Residences, a project in Myanmar that comprises 12 three-bedroom townhouses with staff quarters.

Yoma said it will continue to look for growth opportunities in China's real estate market after the completion of its acquisition of a 27 per cent stake in Grand Central Building, formerly known as Zhong Bei Building, in Dalian last December. The project is in progress and marketing activities for both the office tower and commercial centre have started.

Yoma has also incorporated a subsidiary - V-Pile (Singapore) - to engage in the business of micro piling and other niche sub-structure services in Singapore.

China Essence reports 85% jump in Q3 net profit


CHINA Essence Group yesterday reported an 85 per cent year-on-year rise in net profit to 100.8 million yuan (S$19.9 million) for its third quarter ended Dec 31, 2007. Revenue for the three months almost doubled from 166 million yuan to 330.3 million yuan.


The third-quarter results brought nine-month net profit to 174.7 million yuan, up 69 per cent. Revenue climbed 63 per cent to 588.8 million yuan.

The group, which is a leading potato-processing producer in China, saw a rise in sales volume for its potato starch products as a result of increased orders from existing and new sales distributors.

Average selling prices also went up, helped by rising consumer prices and China's implementation of anti-dumping regulations on potato starch producers from the European Union since February 2007.

Earnings per share for the nine months climbed to 0.45 yuan from 0.27 yuan.

Overall gross profit margins dipped from 47.4 per cent to 45.6 per cent because of an increase in the cost of potatoes.

Zhao Libin, chairman and chief executive of China Essence, said: 'This quarter has certainly been one of our most impressive quarters. Our approach has been one of systematic, gradual expansion and we are extremely pleased at how our strategy has translated into sound business performance these first nine months of the year.' China Essence shares closed at 64 cents yesterday, down half a cent.

Vicom full-year net profit accelerates 31% to $13.5m


A NEW mandatory smoke test and a rise in the number of vehicle inspections combined to boost Vicom's 2007 full-year net profit by 31.1 per cent to $13.5 million.

Vicom, which is the vehicle inspection unit of ComfortDelGro, posted a 13.7 per cent increase in revenue to $64.7 million for the year ended Dec 31, 2007.

It said that its revenue and operating profit for the vehicle inspection business last year were higher by $3.1 million and $1.3 million respectively, thanks largely to the addition of the Chassis Dynamometer Smoke Test business. The new test became mandatory on Jan 1, 2007, for diesel-engined vehicles. These vehicles have to pass it during periodic inspections before their road tax can be renewed.

There were also more inspections of passenger cars last year, as a result of the increase in the new car population three years earlier, and fewer deregistrations. Cars have to undergo their first vehicle inspection when they are three years of age. Vicom added that the revenue and operating profit from test and inspection services were also higher in 2007 compared to the previous year by $5.3 million and $0.9 million respectively, as the market for test services improved.

The vehicle inspection business, and test and inspection services, are Vicom's two biggest business segments. The former accounted for 31.3 per cent of last year's total revenue, while the latter made up 57.9 per cent.

But the company said that operating expenses rose by 10.1 per cent to $48.0 million, due mainly to the higher expenses incurred in supporting the increased business in Setsco, a testing and inspection company in the aerospace and manufacturing industries.

Basic earnings per share rose to 15.93 cents from 12.30 cents, with the group proposing a final dividend of 2.75 cents a share. Net asset value per share was 68.17 cents, against 73.39 cents a year ago.

Looking ahead, Vicom expects the volume for the vehicle inspection business to improve in 2008 when the high number of vehicles registered in 2005 are due for their first inspection. As for the non-vehicle inspection and testing businesses, it said that the outlook remains favourable in line with the anticipated positive economic prospects.

Mercator's Q3 profit jumps to US$14.4m


INDIA and China-focused dry bulk shipping group Mercator Lines yesterday reported a net profit of US$14.4 million for the three months to end-December, up from US$2.4 million a year earlier.


Revenue for the third quarter of its 2008 financial year more than doubled to US$43.1 million, from US$20.9 million for the corresponding period in the previous year.

Mercator attributed the rise in revenue to improved vessel day rates and to an increase in the number of operating days.

Managing director and chief executive Shalabh Mittal said: 'Riding on the continued high demand for dry bulk shipping from China and India, the group plans to actively seek growth opportunities in these emerging markets moving forward and will continue to optimise returns through strategic chartering.'

The group said that its balance sheet remained strong, with US$153.9 million in cash and cash equivalents at the end of December.

Mercator plans to acquire a very large ore carrier scheduled for delivery between September and December this year and two chartered-in post-Panamax vessels scheduled for delivery between May and September next year. The group will also explore further opportunities to expand its fleet through suitable acquisitions, it added.

Mercator said that the main drivers behind global dry bulk demand were India's need to increase coal consumption until at least 2012 to drive its national energy projects, and China's rising demand for coal, steel and iron ore.

The group plans to continue with the strategic chartering of its fleet to optimise its contract mix. This means relying mainly on fixed-rate, long-term contracts for the bulk of its income.

'By maintaining approximately 70 per cent of our fleet on long-term fixed-rate contracts, we have limited exposure to freight rates volatility,' said Mr Mittal. 'We lay great emphasis on these contracts which help bring stability and visible cash flows to the company while tapping opportunities to generate higher returns during periods of higher rental rates.'

Mercator's share price ended three cents higher at 47 cents yesterday.

Aztech wins $253m material supply deal

AZTECH Systems said yesterday that it has secured a contract for the supply of construction material worth about $253 million.

The original equipment manufacturer (OEM) secured the contract through its wholly owned subsidiary, AZ United Pte Ltd.

The contract is projected to be executed in three stages. The first stage, over a six-month duration, is valued at $23 million. The first delivery is expected to begin by the end of March.

The subsequent two stages of the contract valued at $92 million and $138 million respectively, are to be executed upon confirmation from the buyer, said the company.

The maker of networking products, such as ADSL (Asymmetric Digital Subscriber Line) modems and gadgets such as Internet phones and MP3 players, has its manufacturing base in Dongguan, China, and its headquarters in Singapore.

The group said it expects the project to have a positive impact on its revenue and earnings per share for this financial year and the next. Aztech Systems earlier this month reported 2007 full-year net income of $18.18 million, down 9.3 per cent from 2006's $20.04 million.

Full-year sales totalled $268.31 million, an increase of 12.3 per cent from $239 million in 2006.

Its fourth-quarter net profit came in 28.7 per cent lower to $5.56 million, battered by the appreciation of the yuan and the Singapore dollar against the US dollar.

Profits were also hit by the introduction of labour restrictions in China that raised staff costs, Aztech chairman and CEO Michael Mun had said.

Robinson Q2 profit up 6.7% on higher sales

ROBINSON and Co said yesterday that its net profit for the second quarter ended Dec 31 rose 6.7 per cent from a year ago to $15.81 million led by stronger retail sales as the group expanded its footage and added new stores.

Its revenue for the quarter improved by a larger 32.2 per cent year-on-year to $142.57 million, thanks largely to its addition of 30,000 sq ft footage in Robinsons Centrepoint and the new stores in Malaysia, most of which were opened towards the end of the fiscal first quarter.

With these new stores, including the first Robinsons store in The Gardens, Mid Valley, two Marks & Spencer stores and six standalone boutiques for Coast, Trucco and Fat Face at various malls in Kuala Lumpur, revenue from Malaysia accounted for 10.9 per cent to the group's revenue, up from 5.3 per cent in the year-ago period.

But the group also incurred higher costs due to the opening of new stores and higher occupancy costs, with its total costs and expenses up 33.2 per cent year-on-year to $131.2 million.

Investment income and gains in the second quarter declined by 18.7 per cent to $7.58 million due mainly to the receipt of a one-off distribution from Raffles Holdings last year.

For the six months ended Dec 31, the group achieved a 16.6 per cent increase in net profit to $22.17 million on the back of a 27.5 per cent leap in revenue to $233.27 million.

Commenting on the group's performance, Robinson's CEO John Cheston said: 'We have been very encouraged by our pro-gress, having doubled the number of brands in our portfolio as well as the number of stores in Singapore and Malaysia.'

But he noted that topline sales in Malaysia are still below the group's internal expectations as the sharp spike in retail space in Kuala Lumpur has diluted sales density for most retail stores there. Volatilities in the global economy, including Singapore, is also expected to persist while the pressure of the rising cost in property and labour is not likely to ease even in this volatile period.

Hence, the group will stay vigilant of its costs even as it continues with its expansion plans, Mr Cheston said. The group will also continue to commit its resources towards strengthening its foothold in Kuala Lumpur over the next 12 months.

The board has decided to pay a one-tier tax exempt interim dividend of 10 cents per share amounting to about $8.6 million.

Robinson has been the subject of a $537.1 million takeover bid by Middle East-based Al-Futtaim, which offered to buy all the issued shares in Robinson that it does not already own at $6.25 per share.

ST Engg's US shipyard wins contract to build supply ships

ST Engineering said its US shipyard, VT Halter Marine, has secured a new contract to design and build two platform supply vessels (PSVs), which are used to support exploration and offshore production of energy.

The contract is valued at between US$45 million and US$55 million and construction is scheduled to begin in the second quarter of 2008, with delivery in 2010.

The contract was awarded by L&M Botruc Rental Inc, which operates one of the largest fleets of offshore marine transportation vessels in the Gulf, said ST Engg.

L&M is also one of the largest privately held supply boat companies and the sixth-largest boat company on the Gulf Coast, it said.

The vessels will be used to carry supplies, deck cargo and drilling fluids in supporting offshore operations.

They are 'highly automated and designed with sophisticated control and monitoring systems', and are equipped with technology that enables precise manoeuvring, ST Engg said.

Tony Cheramie, president of L&M Botruc Rental, said 'we knew we were choosing a shipyard that we were going to have a good working relationship with and at the same time was going to put out a good-quality product'.

L&M has many hulls built by VT Halter Marine in its fleet that it has been operating for years, he said.

The contract 'exemplifies VT Halter Marine's capability to produce a diverse range of vessels', said See Leong Teck, president of ST Marine.

'The current market requirements for PSVs with precise manoeuvring abilities fit well with VT Halter Marine's strategy to build a wide range of high-quality multi-market vessels,' he said.

This contract is not expected to have a material impact on the group's consolidated net tangible assets per share and earnings per share for the current financial year.

Wee Hur clinches 2 deals totalling $146.5m

RECENTLY listed Wee Hur Holdings, a building contractor in Singapore with a range of construction projects, has won two new contracts worth a total $146.5 million.

The group announced yesterday that its wholly owned subsidiary, Wee Hur Construction Pte Ltd, has been awarded two projects for a residential development and a commercial development worth $99.9 million and $46.6 million respectively.

The first contract is for a residential development located in the prime Newton Road area. Awarded by a subsidiary of the Ho Bee Group, the condominium development consists of two 30-storey blocks comprising a total of 152 units, a basement car park, swimming pool and communal facilities. Construction of this project is expected to commence in May 2008 and be completed in March 2011.

The second contract, worth about $46.6 million, is the Phase 1 construction of a commercial building at Changi Business Park. This project was awarded by Ascendas (Tuas) Pte Ltd. Piling work for this project is expected to begin next month and be completed in August next year.

The two projects represent an approximately 61 per cent increase over Wee Hur's order book as disclosed in its IPO prospectus.

Some of Wee Hur's major ongoing projects include Park View Eclat with a contract value of about $73.0 million, a commercial building at Changi Business Park ($70.3 million) and a nine-storey hotel at Mohamed Sultan/Nanson Road ($43.3 million).

Said Wee Hur executive chairman and managing director Goh Yeow Lian: 'These two major contracts are testament to our ability to handle a wide array of projects. Given the positive construction industry outlook, we will continue to work hard to secure more higher-value projects, so that we can continue to perform well and deliver value to our shareholders.'

The latest contracts are expected to have a positive impact on Wee Hur's financial performance for the financial year ending Dec 31, 2008, the group said.

Centillion narrows Q4 losses to $1.6m

CENTILLION Environment & Recycling Ltd chalked up net losses of $1.64 million for the fourth quarter ended Dec 31, 2007, compared with net losses of $2.03 million a year ago. Revenue was $21.3 million - a substantial portion of which came from its new US subsidiary - up from $912,000. Cost of sales was $18.96 million, up from $1 million. The profit contributed by its US operation was offset by losses from the Singapore, China and UK plants.

SSC Q3 profit dives 91%

SINGAPORE Shipping Corporation's net profit for the third quarter ended Dec 31 was depressed, falling by 91 per cent year-on-year to $497,000 as revenue took a 52 per cent dive to $3.14 million. But the group expects the performance for FY2008 to remain profitable and will continue to source for suitable vessels to expand its current fleet and operations.

Union Steel H1 profit jumps 3-fold

UNION Steel's net profit for the first half ended Dec 31, 2007, jumped three-fold from $4.4 million a year ago to $13.16 million, despite a decline in revenue, thanks to divestment gains from four properties. The group said it expects to be profitable for the whole fiscal 2008.

Avi-Tech profit slips 12.9% in Q2

AVI-TECH Electronics' net profit for the second quarter ended Dec 31, 2007, fell 12.9 per cent from a year ago to $3.72 million. Revenue grew 7.4 per cent to $21.96 million. Increases in materials used due to higher proportion of revenue contribution from the engineering services business segment, increase in manpower and power cost as well as competitive pricing pressure pushed gross margins down from 34.3 per cent a year ago to 29.4 per cent.

Jurong Cement swings into black in Q3

THANKS to a slight increase in revenue and lower costs, Jurong Cement swung from net losses of $1.62 million a year ago to net profit of $6.69 million for the third quarter ended Dec 31, 2007. The improved performance arose mainly from Singapore operations as prices for building and construction materials increased and from efficiency gain. Going forward, the group will focus on its core Singapore operations in readymix concrete and mortar businesses to increase revenue and profitability.

Saizen Reit Q2 NPI up 77.8%

SAIZEN Reit net property income for the second quarter ended Dec 31, 2007, jumped 77.8 per cent year-on-year to 602.4 million yen (S$7.95 million) on the back of an 85 per cent surge in gross revenue to 851 million yen.

KTL wins US$7m contract

KTL Global said it has secured a five-year contract to supply up to US$7 million worth of wire ropes for crane equipment to the McDermott Group, a world-renowned engineering and construction company servicing the offshore oil and gas industry. KTL also announced a 24.6 per cent increase in net profit for the six months ended Dec 31 to $2.18 million as its revenue rose 47 per cent to $27.16 million.