Singapore Corporate News - 15 Feb 2008

F&N posts 41.8% rise in Q1 net profit to $108.6m

FRASER & Neave has gotten off to a good start in the current financial year by reporting a 41.8 per cent jump in net profit to $108.6 million for the first quarter ended Dec 31, 2007, from $76.6 million for the previous corresponding period.

The profit attributable to shareholders included an exceptional gain of $5.4 million mainly from the disposal of properties. But even without including exceptional items, net profit for the quarter surged 33.2 per cent to $103.2 million from $77.5 million.

'This impressive profit growth stemmed from the progressive recognition of development property income and continued growth in food and beverage,' said the property, publishing and food and beverage group. Turnover for the quarter climbed 19.2 per cent to $1.32 billion from $1.11 billion the year before.

Earnings per share after exceptional items rose to 7.8 cents from 6.5 cents despite the increase in issued share capital, almost all attributable to the 14.9 per cent stake sold to Temasek Holdings. Net asset value per share strengthened to $3.81 from end-September 2007's $3.77.

Former SingTel head Lee Hsien Yang, who took over the chairmanship of F&N on Oct 15, said: 'The robust profit growth in this quarter clearly supports our strategy of industry-cum-geographical diversification. Our businesses in the core markets of Singapore, Malaysia, Indochina and Australia have all contributed strongly to the sterling results.

'The profit performance was led by the property division which has benefited from strong profits booked from earlier sales launches in Singapore and healthy rental rates achieved from new and renewed leases. The food & beverage division continued to benefit from its regional expansion strategy and turned in a set of sterling results.'

The property division saw profit before interest and tax (PBIT) rising 15 per cent to $66 million, benefiting from higher development margins.

During the quarter, the group secured a residential site at Boon Lay/Lakeside Drive through a tender, covering some 830,000 square feet of developable area. This mid-end segment site is expected to yield a potential pipeline of over 600 units. Including this, the group now has a total land bank of close to 3,000 residential units with total estimated saleable area of four million sq ft. Overseas, in China, Australia and Britain, it has over 34 million sq ft of residential and commercial development space.

Beer maker Asia Pacific Breweries, which is nearly 40 per cent owned by F&N, also delivered a healthy set of results with Q1 net earnings (after exceptionals) attributable to shareholders going up 5.4 per cent to $42.6 million from $40.4 million on a 19 per cent rise in turnover to $567.8 million.

Its chief executive Koh Poh Tiong said: 'Once again, Indochina (ie Cambodia, Laos and Vietnam) has excelled as our best performing region, reporting a robust volume growth of 37 per cent and a PBIT gain of 23 per cent . . . This stronger set of numbers is a testament to our intra-market growth strategy.'

F&N's soft drinks side grew 12 per cent in revenue on higher volume and a price increase but this was offset by higher raw material prices and input costs resulting in PBIT going up only 10 per cent.

The dairies division saw consolidated revenue rising twofold to $254 million but PBIT was a lesser 84 per cent to $7.5 million due to lower margins from its Thai operations and higher raw material and packaging costs.

Its glass containers segment registered revenue and PBIT growth of 10 per cent and 19 per cent, to $35 million and $4 million.

Revenue and PBIT for the publishing and printing segment declined by 2 per cent and 7 per cent respectively, due to the divestment of the Australia printing plant and lower profit from its printing division.

On the Singapore Exchange yesterday, APB saw its share price rise six cents to $13.56 while F&N ended 22 cents up at $4.93.

Divestment gain boosts WBL earnings

HELPED by a one-time divestment gain and improved efficiency in its businesses, WBL Corp yesterday reported a first quarter net profit of $40.2 million, more than five times the $7.4 million in the year-ago period.

Group sales for the three months ended Dec 31, 2007, climbed 4.5 per cent to $546.7 million, with the bulk of it coming from the technology division which contributed $372 million.

The Q1 $40.2 million net profit attributable to shareholders included a one-time $19.6 million gain mainly from the divestment of a small commercial building in Hong Kong and the bio-medical business.

The divestment was part of ongoing streamlining efforts. Excluding non- recurring items, operating net profit more than doubled from $8.6 million to $20.6 million.

The group saw improved profit margins from its subsidiary Multi-Fineline Electronix (M-Flex). Sales from the maker of flexible printed circuit boards went up 38.7 per cent to $267.8 million, while gross profit margins edged up to 16.7 per cent, from 8.5 per cent in the previous quarter.

On the other hand, WBL's other subsidiary MFS Technology saw its sales drop 41.6 per cent year-on-year to $62 million due to weaker-than-expected demand.

As part of a revamp, its technology solutions division - which comprises the Bluetooth business of Wearnes Technology Solutions and the system integration business of O'Connor's - will form part of the group's new core technology division. The group's automotive business saw a 3 per cent dip in sales to $100.7 million.

This was made up for by the property division, which recorded an 11 per cent jump in revenue to $32.9 million.

Its attributable profit more than doubled to $12.9 million, largely due to strong contribution from development projects in Suzhou and Shanghai.

WBL said it is cautiously optimistic about its outlook because of the uncertain global economic situation.

'We expect M-Flex, our property business in China and the automotive group to remain profitable,' said CEO Tan Choon Seng.

'We are cautious but still optimistic as our stronger balance sheet and lower gearing put the group in a stronger position to respond to any uncertain market conditions.'

The group said that its net gearing ratio was almost halved to 0.12 times. Better capital management and improved profitability enabled it to reduce borrowings while increasing its net cash flow.

As of Dec 31, WBL has cash and cash equivalents of $264.3 million.

Based on the weighted average number of shares, earnings per share went up to 19.1 cents, from 3.5 cents in the year-ago period. Net asset value stood at $3.37, from $3.22 as at end-September 2007.

Shares of WBL ended down two cents at $4.08 yesterday.

Olam plans trust backed by agricultural assets

OLAM International plans to publicly list a trust backed by agricultural assets within two to three years, its chief executive Sunny Verghese said yesterday, as the group, a global commodities supply-chain manager, reported a 26 per cent rise in second-quarter net profit to nearly $37.9 million.

Olam's revenue rose 33.2 per cent to $1.96 billion for the three months ended December 2007.

The group's sales are classified under four broad segments: edible nuts, spices and beans; confectionery and beverage ingredients; food staples and packaged foods; and fibre and wood products.

All segments grew strongly, with over two-thirds of growth coming from increased volumes, with the rest coming from improved margins, said Mr Verghese.

Q2 earnings per share rose 26 per cent to 2.43 cents.

However, selling, general and administrative expenses also rose by over 50 per cent to $74.3 million, with 'a significant portion of this increase' due to overhead expenses from Olam's multiple acquisitions in 2007 of firms like Queensland Cotton, Universal Blanching, and others.

To lighten its balance sheet, Olam will set up a trust, private at first, to accumulate and hold assets, said Mr Verghese.

When the trust reaches a critical size of US$250 million, which would make it worth the expense, Olam will list it, he said. At present, Olam owns about US$150 million worth of 'trustable' assets.

Mr Verghese also said Olam is nearing the end of a three-year growth plan detailed three years ago after its IPO. The group has evolved from a single-country, single-product trader to one with operations in over 56 countries and in over 14 main agricultural products.

He said Olam would seek to raise capital - via equity or equity-linked notes - soon, to support its next three years of growth.

The group plans to become 'the most diversified agri-commodities company' in the world. It wants to be trading in 19 products and to be 'top three' suppliers of those products, within six years.

Mr Verghese said economies of scale are necessary in the business, and that going forward, the 'people who prosper are people who control supply'.

Owners of production assets - like plantations - would reap a disproportionate part of profits, he said. Olam wants to be in 85 per cent of the key producing countries for the commodities it deals in, he said.

The group plans some US$200 million worth of capital expenditure over the next three years. It aims to build an integrated sugar milling chain, as well as obtain mid-stream processing facilities for coffee, peanuts, fertiliser and other goods.

Portek in the red with $1.1m loss in first half

PORTEK International found itself in the red for the first half ended Dec 31, 2007 with a net loss of $1.1 million, against a net profit of $1.7 million for the previous corresponding period.

The port operator and equipment and services provider said the loss attributable to shareholders was due to asset impairments and provisions amounting to $6.2 million.

Of the $6.2 million, about $3 million was due to provisions for loss of equipment which was in transit across the Pacific. Portek said it is pursuing insurance claims for this equipment.

Another $3 million was due to equipment and inventory write-downs in Portek's China and Indonesia subsidiaries as the group steps up its efforts to streamline and restructure its operations and channel its resources to profitable units.

Revenue for the six months grew 34 per cent to $62.4 million from $46.6 million, with gross profit more than doubling from $12.6 million to $28.6 million.

Terminal operations continued to grow strongly and accounted for $35.3 million or 57 per cent of turnover. This was due to Portek's successful breakthrough in securing a 25-year concession to manage two multipurpose ports in Gabon, as well as organic growth at its existing ports.

The engineering business contributed $27.1 million or 43 per cent of group turnover. Demand for the group's port equipment services came from established markets like Singapore, Indonesia and Thailand, and new markets like Pakistan and Portugal.

Portek also notched up growth in the amount of cargo handled in the first half, with a 16 per cent rise in containers moved to 330,000 20-foot equivalent units (TEUs) from 280,000 previously.

Portek is a turnkey provider of equipment, services and solutions for the global port industry, as well as an operator of container and bulk terminals. The group's port operation and management portfolio include terminals in Indonesia, Algeria, Malta and Gabon.

Portek shares closed half a cent higher at 44.5 cents yesterday.

Challenger earnings rise 56% as annual revenue tops $136m

BULLISH retail climate and a shopfront expansion strategy were cited as Challenger Technologies surpassed $100 million in annual revenue for the first time in its 23-year history

The longstanding Singapore IT retail chain, established in 1984 and listed in 2004, posted revenues of $136.1 million for the financial year ended Dec 31, 2007. This was a 47 per cent increase from revenue of $92.3 million for 2006.

Net profit was $7.06 million, up 56 per cent from $4.53 million a year ago. Earnings per share rose 42 per cent to 3.61 cents.

The group now has a total of 17 retail outlets, including its flagship mega- store at Funan DigitaLife Mall and eight superstores.

'The start of this year has so far been very encouraging and we think consumers will continue to spend in 2008,' said Challenger CEO Loo Leong Thye.

'We are optimistic of the retail industry in Singapore in view of many government-led initiatives to transform Singapore into a tourism hotspot.'

Mr Loo said that the company intends to keep expanding, and disclosed that three new outlets have been slated for year-end launches. A regional expansion strategy using a new franchising business model is also in the works, he said. 'Franchising will be another way to grow.'

For dividend payout, Challenger had proposed a final tax-exempt one-tier dividend of 2.30 cents per share for its fiscal year 2007. This, together with the interim dividend of 1.00 cent paid for the first half of 2007, represent about 95 per cent of the group's 2007 net profit.

Challenger shares closed half a cent higher yesterday at 27.5 cents.

Eu Yan Sang Q2 profit dips 7.6%

TRADITIONAL Chinese medicine company Eu Yan Sang yesterday reported a 7.6 per cent drop in net profit to $3.11 million for its second quarter to Dec 31, 2007.

Revenue rose 12 per cent year-on-year to $50.9 million, but cost of sales jumped 16 per cent to $25.2 million because of dearer raw materials.

For the six months to Dec 31, revenue was 23 per cent higher at $104.8 million. Cost of sales also rose 23 per cent, but lower operating expenses saw net profit rise 7 per cent to $6.29 million, from $5.87 million a year earlier.

Earnings per share for Q2 on a fully diluted basis came in at 0.85 cent, down from 0.92 cent. For the half year, earnings per share rose to 1.72 cents from 1.61 cents.

Profits for the previous financial year were boosted after results were restated as a revaluation gain in December 2006 was transferred to retained earnings to comply with FRS 40 on investment properties. The company also recorded a one-off gain of $2.7 million in H1 2007 on disposal of its elixir business and sale of properties in Hong Kong.

Eu Yan Sang opened 14 new stores in the half-year period, outpacing its target of 10 to 12 stores a year, leading to higher expenses.

The company saw strong revenue growth across its core retail and wholesale businesses, chalking up 13 per cent and 43 per cent gains respectively for Q2. However, its clinic operations slumped 31 per cent after its Australian clinic business was sold last October.

The company also has two restaurants, one in Singapore and another in Kuala Lumpur. The latter, recently opened, is seeing strong business, said Eu Yan Sang chief executive Richard Eu. The company has also secured licences to several products in China.

SingXpress spends $37.9m on acquisitions

SINGXPRESS yesterday announced that it has agreed to acquire Singapore Service Residence Pte Ltd, SingXpress International Pte Ltd and Anglo French Travel Pte Ltd, as well as the loan advanced to two of the target firms. The total consideration for the acquisitions is $37.9 million, to be satisfied by the issue of new shares.

AusGroup's interim profit up 47%

AUSGROUP, an engineering service provider for the oil and gas and resource mining sectors in Australia, saw its profitability increased for the half year ended Dec 31, 2007. Net profit jumped 47 per cent to A$12.1 million (S$15.5 million) while revenue increased 60.4 per cent to A$202.2 million. EPS improved to 3.1 Australian cents, compared with 2.1 cents for the previous corresponding period.

Fung Choi net rises marginally

FUNG Choi Media Group has reported a 0.4 per cent gain in its Q2 net profit to HK$62 million (S$11.3 million). Revenue went up 24.8 per cent to HK$349.8 million.

Afor earnings climb 34.3% at half-time

AFOR Ltd, a one-stop premium retailer specialising in the sale of Apple brand products and its complementary products, said net profit grew 34.3 per cent to $2.2 million for the first half ended Dec 31, 2007. Revenue rose 28.7 per cent to $32.5 million from $25.3 million a year ago.

Federal ventures into coal-mining business

FEDERAL International (2000) Ltd said it has ventured into the coal-mining business in Indonesia through Alton International Resources Pte Ltd (AIR), a company which is 51 per cent-owned by its wholly owned subsidiary, Alton International (S) Pte Ltd. AIR is currently in discussion with owners of the local mine concessions for at least three mines which are in the production stage. Federal said it expects to achieve an annual turnover of $15 million from the coal-mining activities.

Vita turns in $4.1m loss as revenue slips

VITA Holdings has posted an interim loss of $4.1 million, from a profit of $182,000 in the year-ago period. For the six months ended December, revenue fell 23.8 per cent to $8.7 million.

Asian Micro records $1.3m interim loss

RECYCLING firm Asian Micro Holdings has reported a half-year loss of $1.3 million, from a profit of $945,000 in the year-ago period. Turnover slipped 2 per cent to $11.1 million.