Singapore Corporate News - 20 Feb 2008

Evraz to buy up to 51.05% of Delong Holdings

UK-LISTED Evraz Group SA has entered into an agreement to acquire up to 51.05 per cent of China- based hot-rolled coil maker Delong Holdings for about $1.08 billion or $3.9459 a share.

Evraz - the Russian steel and mining giant whose principal assets include three leading steel plants in Russia - is buying the stake from Best Decade Holdings, which owns 77.08 per cent of mainboard-listed Delong, formerly known as Teamsphere. Best Decade, in which Delong chairman Ding Liguo is a substantial shareholder, intends to retain its remaining 26.03 per cent after the sale of the 51.05 per cent stake.

The agreement includes an initial sale of a 10 per cent stake to Evraz at $3.9459 a share. Evraz and Best Decade also have granted each other a six- month option which could see Evraz acquiring a further 32.08 per cent, also at $3.9459 per share.

The offer price is 12.74 per cent higher than Delong's closing price of $3.50 yesterday. The stock, which surged 48 cents or 15.9 per cent yesterday, has risen by about 71.6 per cent since the start of the year.

In addition, the beneficial owners of Best Decade further undertook to sell another 8.97 per cent of Delong to Evraz if certain conditions are met.

Subject to the exercise of the put or the call option, the agreement will lead to a mandatory general offer for Delong at the same price, valuing the company at about $2.1 billion.

Delong has a present market cap of about $1.87 billion.

Evraz - partly owned by Russian billionaire Roman Abramovich, who owns the UK's Chelsea football club - expects that Delong will maintain its head office in Beijing and said it does not see any 'material' changes to the management of Delong following the completion of the transaction.

Said Evraz CEO Alexander Frolov: 'This investment by Evraz in the Chinese steel sector, our first in the Asia Pacific region, is a critical strategic move to expand our global footprint.

'The Chinese steel market is the largest and fastest growing in the world. Delong has an established position in Hebei province, an important industrial region of China.'

Yesterday, Delong also warned of lower FY2007 net profit, even though group revenue for the period continued to grow, driven by growth in demand for steel products in China and expanded capacity.

'A tighter global raw material supply scenario continues to raise raw material costs resulting in pressures on gross margins,' Delong said. The firm will also recognise a forex loss in Q4. 'Owing to the decline of the US dollar against the renminbi, the group will recognise an exceptional charge on translational losses for the quarter,' Delong said.

Great Eastern earnings rise 15% to $547m

GREAT Eastern Holdings yesterday announced a net profit of $546.9 million for the full year 2007. The insurance company will pay a special bonus to policyholders of regular premium whole life and endowment policies bought on or before Dec 31, 2006.

The special bonus amounts to a total of $287.4 million. The combined bonus payout, together with the annual bonus of $799 million, will amount to a total of $1.086 billion. In Malaysia the face amount of the special bonus is close to RM900 million (S$394 million).

Chief executive Tan Beng Lee said the group has exceeded its 2008 profit after tax target of $500 million. 'The payment of this special bonus is in line with our commitment to give the best value to our customers,' he said in a statement. 'The strong investment returns of the participating funds in recent years have contributed to a strong surplus position for the participating funds.

'Part of this surplus will therefore be distributed back to policyholders in the form of this special bonus. We will continue to provide the best possible returns to our policyholders and to pursue service excellence to meet customer expectations.'

The special bonus is paid in addition to the usual reversionary and cash bonuses for all participating policies.

The bonus amount ranges from 25 to 100 per cent of the usual reversionary bonus or cash bonus for whole life policies, and from 25 to 50 per cent for endowment policies. It will be distributed from April to August this year.

Net profits rose 15 per cent from $476.9 million earned in 2006. In the fourth quarter of 2007, group profit reached $144.6 million - a drop of 18 per cent compared to the 'exceptionally good performance' of the fourth quarter of 2006. The directors have recommended a final tax-exempt dividend of 16 cents plus a special final tax exempt dividend of 26 cents per share. This brings the total dividend payment for the fiscal year 2007 to 58.12 cents, including an interim dividend of 16.12 cents paid on Sept 6.

Group gross premiums totalled $5.99 billion for 2007, a rise of 11 per cent from 2006. Profits from insurance operations came to $537.3 million, an increase of 33 per cent. Profits from investments in the shareholders' fund totalled $111.5 million. This was a drop of 17 per cent, as the last quarter included a one-off tax exempt dividend and capital reduction payment totalling $31.5 million.

Pre-tax fees and other income totalled $105.6 million, a rise of 31 per cent due to an increase in assets under management and performance incentive fees received from some managed accounts. Total assets rose 11 per cent to $46.52 billion.

Parkway Life's maiden results beat forecasts

PARKWAY Life Reit has beaten forecasts in its maiden results.

It reported a distributable income of $13.64 million for the period between Aug 23, when it was listed, and Dec 31, 2007. This was 5.81 per cent better than its projection of $12.89 million. This led to a distribution per unit (DPU) of 2.27 cents, higher than the forecast 2.14 cents.

Riding on the momentum, the Reit's manager expects to do better than its forecast for FY2008.

'We've got a (yield) forecast in the IPO, which is 4.9 per cent,' said Justine Wingrove, CEO of the Reit's manager, Parkway Trust Management. 'I think it's fair to say we're likely to go in excess of that, but I obviously can't say too much.'

Parkway Life Reit holds the Mount Elizabeth, Gleneagles and East Shore hospitals under its asset portfolio. Independent valuer DTZ Debenham Tie Leung recently valued the portfolio, which includes 68 medical offices and retail units and 559 parking lots, at $831.5 million. This is 7.3 per cent higher than the appraised value of some $775 million in July last year.

Gross revenue was $16.9 million, 5 per cent higher than the forecast of $16.09 million. This was because the actual adjusted hospital revenue for the period was higher than the minimum rent assumed in the forecast. The increase in adjusted hospital revenue was largely driven by a rise in foreign patient revenue, higher consumption of diagnostic outpatient services and contribution from Parkway Cancer Centre.

The biggest rental contribution came from Mount Elizabeth Hospital, which accounted for $10.6 million. Gleneagles Hospital raked in $5.5 million, while the balance came from East Shore Hospital.

The Reit manager is targeting acquisitions in Singapore, China, India, Japan, Malaysia and Thailand to grow its portfolio. Some of the property types it is pursuing include warehousing facilities for pharmaceutical companies, nursing homes, hospitals and medical offices. It does not rule out development projects as well, but will cap them at 10 per cent of its asset base. Immediate acquisition targets are unlikely to come from Parkway Holdings, said Ms Wingrove.

'I think with Parkway, it's just there for us,' she said. 'And so, yes we are looking at it . . . but we need to take advantage of third-party acquisitions if there's an opportunity, because we don't have an automatic right for those.'

When asked by the media on what she thought of Parkway Holdings' recent record bid for a hospital site at Novena, Ms Wingrove said she believes that Parkway Holdings did a lot of analysis before submitting the bid for $1,600 per square foot per plot ratio.

As a Reit manager, Parkway Trust would look at the Novena property at a later date before deciding on the appropriate course of action.

Net asset value per unit came to $1.36. Parkway Life Reit has also attained a 'BBB+' credit rating by Fitch Ratings. The counter last traded at $1.20.

AIS beats forecasts with 61% jump in Q4 net profit

Advanced Info Service (AIS), Thailand's top mobile phone operator, reported a better-than-expected 61 per cent rise in quarterly earnings yesterday, as it started booking interconnection (IC) fees from other operators.

AIS, Asia's eighth-largest wireless company by market value, was expected to see strong earnings growth in 2008 helped by a recovery in consumer confidence after the December general elections, analysts said.

AIS shares ended 1 per cent higher at 104 baht (S$4.68) yesterday. The main Thai stock index rose 1.3 per cent.

'Booking IC is good news, which should boost 2008 earnings,' said Finansa Securities in a note to clients.

AIS, 21.4 per cent owned by Singapore Telecommunications, posted a net profit of 5.13 billion baht for the three months to end-December, up from 3.19 billion baht a year earlier and 3.51 billion baht in the previous quarter.

It beat an average 3.75 billion baht forecast in a Reuters survey of 10 analysts.

The firm posted a full-year net profit of 16.3 billion baht, up 0.2 per cent from 16.26 billion baht in 2006.

The market leader was expected to post a 17 per cent rise in net profit for 2008, according to Reuters Estimates.

AIS booked about 2.5 billion baht in revenues from interconnection charges, in which a caller's network pays a fee to the receiving party's, in the fourth quarter of 2007.

'Excluding interconnection revenues, AIS revenues and other operations improved in the fourth quarter and we expect it to carry on in 2008,' Pornrat Janjarassakul, head of corporate planning and investor relations, told Reuters.

The mobile phone operator, valued at US$9.6 billion on the Thai bourse, has about 50 per cent of the domestic mobile market. Fourth-quarter sales were aided by the company's gradual increase on tariffs for new customers last year.

For more earnings details, see the company's website at www.investorrelations.ais.co.th.

AIS added a net 901,000 new subscribers in the fourth quarter, up from 513,000 in the previous quarter.

That compared to the 894,000 net additions of rival Total Access Communication in the same period.

AIS had 24.1 million subscribers at the end of December, up 23 per cent from a year earlier.

Average revenue per user for prepaid clients, which make up about 90 per cent of total, was at 227 baht, up slightly from 222 baht in the previous quarter, it said.

AIS stock, which trades at 20 times forecast 2008 earnings, rose 8.9 per cent in the fourth quarter, outperforming a 1.5 per cent rise of the main Thai index.

Unisteel profit falls 6.1%, hit by forex losses

UNISTEEL Technology saw full-year 2007 net profit fall 6.1 per cent to $47.5 million from a year ago as several factors including foreign exchange losses offset the growth in revenue.

The weakening of the US dollar against other currencies including the Singapore dollar resulted in $3.1 million foreign exchange losses for the financial year ended December 2007, Unisteel said.

As well, the value-added tax levied on the export of fasteners by the group's subsidiaries in China increased from 4 per cent to 12 per cent, while steel, a core component of the group's raw materials, saw prices appreciate significantly, it added.

Earnings per share fell 6.6 per cent to 11.81 cents.

Unisteel said group revenue grew by 18.7 per cent to $274.8 million. Growth across all business segments as well as the maiden contribution from wholly owned subsidiary JC Metal Pte Ltd (JCM) accounted for the higher sales.

Revenue from the group's fastening and engineered components segment grew by 9.6 per cent to $204 million due to sustained demand from hard-disk drive related customers and contribution from JCM. The surface treatment segment saw a 7.9 per cent rise in revenue to $34.7 million, lifted by initiatives in increasing in-sourcing of surface treatment services within the group.

Said Bernard Toh, Unisteel's executive chairman: 'To constantly stay ahead and remain competitive, we will build on our continuous pursuit of innovation with a view to expanding and diversifying our customer base.'

The company has proposed a final dividend of 3.5 cents per share and a special dividend of 1.5 cents per share. Together with the interim dividend of 2.4 cents as well as a special dividend of 1.1 cents paid out for the first half, total dividend payout for FY2007 amount to 8.5 cents per share.

Unisteel shares closed 2 cents up at $1.29 yesterday.

Pan United posts 12% fall in FY2007 net

INFRASTRUCTURE and logistics firm Pan United saw net profit dip 12 per cent to $33.3 million for the year ended Dec 31, 2007, even though revenue climbed 45 per cent to $437 million as the building sector turned up.

The fall in net profit, caused by a significant gain from the sale of a ship in the fourth quarter of the previous year, belied growth in Pan's core operations.

Excluding the previous year's $7.7 million gain and other exceptional items, net profit rose 16 per cent to $34.2 million.

Pan's industrial and trading arm - which sells building materials such as cement, ready-mixed concrete and asphalt, and refined petroleum products - grew net profit almost four times to $27.5 million on a 60 per cent surge in revenue to $346.8 million.

The sharp rise in revenue was due to 'higher average selling prices of ready-mixed concrete, reflecting higher raw material costs', said Pan. 'Strong construction demand and cost management measures' helped it improve margins in the segment.

However, its port and shipping divisions - the first provides transhipment and warehousing services, while the second offers bulk shipping services - saw contributions decline.

Higher operating costs, depreciation charges, interest cost and the commencement of income tax dragged net profit for the port segment down 18 per cent to $6.6 million.

The shipping division, which recorded the previous year's exceptional gain from a vessel sale, saw net profit sink to $3.5 million, from $13.5 million the year before.

Pan's chief executive Patrick Ng said the group will continue to invest to upgrade services for construction customers.

It is also 'pleased with the positive results' from trying to raise productivity at its Changshu Xinghua Port in Jiangsu, China, and plans to diversify the cargo mix.

Mr Ng said the group is expanding its shipping fleet progressively and expects the strong market to keep vessels well deployed.

Group earnings per share came in at 6.06 cents for FY2007, down 12 per cent. Directors have proposed a final tax-exempt dividend of 2.65 cents a share, payable in May and bringing the full-year dividend to 4.56 cents a share.

Pan's shares closed 3 cents higher at 72 cents yesterday.

Advanced posts 3-fold jump in profit to $12.1m

PROCESS technologies and equipment supplier Advanced Holdings yesterday reported a more than three-fold jump in net profit to $12.1 million for the year ended Dec 31, 2007.

The rise in profit attributable to shareholders came as revenue shot up to $87.3 million from $24 million in FY06. And despite a larger base of about 308 million shares in FY07, compared with 259 million shares in FY06, earnings per share and net asset value per share rose to 4.33 cents (from 1.42) and 21.67 cents (from 12.20) respectively. Cash in hand also rose, from $27.3 million to $50.9 million.

The company is recommending a final dividend of 0.75 cents a share, bringing the total payout for the year to 1.25 cents per share, compared with 0.6 cents in FY2006.

Advanced attributed its strong performance to contributions from the petrochemical and chemicals industry, which accounted for 63.3 per cent of revenue. The oil and gas sector contributed 21.6 per cent of revenue.

The company also cited an overall improvement in sales in key markets. China continued to be a major growth driver, with sales more than trebling to $53.3 million. Revenues from new markets such as the Middle East and Europe/US were $12.2 million and $5.2 million respectively, while revenue from Asia, particularly Vietnam, increased to $16.5 million from $7.7 million a year earlier.

'Riding on the continued boom in the global energy market and the sustained industrial growth in the region's fast-growing emerging economies, we enjoyed improved performance in all our key markets,' said Advanced managing director Kar Wong.

Advanced expects future growth to come especially from the Middle East and China, where there is significant demand from the oil and gas, petrochemical and chemical, and environmental industries. It said it will continue to explore merger and acquisition opportunities, including acquiring technology, know-how and intellectual property. It will also intensify its efforts in the environmental and clean energy businesses, which Dr Wong expects to show positive growth.

Yeo Hiap Seng posts 40% earnings rise

YEO Hiap Seng recorded net profits of $2.53 million for the full year ended December 2007, a 40 per cent rise from the previous year. Revenue fell 7.3 per cent to $437 million.

Bright Orient expects to report loss

APPAREL manufacturer Bright Orient has issued a profit warning for the financial year ending December 2007. It expects to report a loss, due mainly to increases in raw material costs; reduction in the export value-added refund rate; and higher labour costs due to enforcement of new labour laws.

Rickmers Maritime beats projections

RICKMERS Maritime, a shipping trust which was listed in May last year, reported distributable income from operations of US$13.7 million for the fourth quarter ended December 2007. This is up 30 per cent from projections at the time of IPO. Revenues were 17 per cent higher than projected, at $16.8 million, thanks to early delivery of vessels. Rickmers will maintain its distribution per unit at 2.14 US cents per unit.