Singapore Corporate News - 1 May 2008

CapitaLand profit hit by absence of fair-value gain

PROPERTY giant CapitaLand yesterday posted a 59.3 per cent year-on-year drop in first-quarter net profit to $247.5 million, from $608.1 million in Q1 2007 when the bottom line had been boosted by a $426.8 million fair value gain from the sale of 8 Shenton Way (formerly Temasek Tower).

The group said, however, that its assets under management (AUM) rose to $19.1 billion as at end-Q1 2008 from $14.6 billion a year ago. It now manages four listed real estate investment trusts and 13 private equity funds across Singapore, China, Japan, Malaysia and the Gulf Cooperation Council region.

CapitaLand also said in its Q1 results statement that it plans to originate new property funds in Asia, in particular China, following the increased institutional and private investors' interest for real estate investments.

The group is on track to grow AUM to $25 billion in three to five years. Its fund management arm, CapitaLand Financial, reported a 52.4 per cent year-on-year jump in Q1 earnings before interest and tax (Ebit) to $18.5 million.

Group revenue for the first quarter ended March 31, 2008, dipped 0.9 per cent to $631.3 million. Higher revenue from office and retail properties was offset by lower sales of development projects in Singapore. Singapore's share of CapitaLand's group revenue and Ebit slipped in Q1 this year against the year-ago period. The Republic made up 29.7 per cent of revenue in Q1 2008, down from 41.4 per cent in Q1 2007. Singapore's share of Ebit fell from 83.5 per cent in Q1 2007 to 55 per cent in Q1 2008.

At CapitaLand's annual general meeting on Tuesday, shareholders were told that 2008 full-year earnings are unlikely to match last year's $2.8 billion due to a lack of revaluation gains. However, the group should perform better at the operating level, chairman Richard Hu told shareholders.

In its results statement yesterday, CapitaLand said it expects sentiment in the Singapore residential sector to remain cautious until more stability emerges in global financial markets and economic conditions. 'However, earnings for our residential business in Singapore will be underpinned by brisk sales achieved in the last two years,' it added.

The group was silent on possible launches in Singapore this year, although it highlighted likely launches elsewhere, in China, Vietnam, Thailand and Kazakhstan.

Ebit from residential rose 11.7 per cent year-on-year to $151.5 million in Q1 2008, with the improvement contributed mainly by China, arising from marked-to-market gains on an investment.

Ebit from commercial strategic business unit fell 74.6 per cent to $138.6 million due mainly to the fair value gain for Temasek Tower in the same year-ago period. The retail SBU posted a 145.8 per cent jump in Q1 Ebit to $58.1 million largely on the back of unrealised forex gains arising from revaluation of US dollar-denominated loans as the Sing dollar strengthened against the US currency and the divestment gain of Xizhimen mall to CapitaRetail China Trust, but partly offset by higher operating expenses.

The Ascott Group's Ebit rose 35.3 per cent to $39.5 million, due largely to the portfolio gain from the divestment of the property at 6 Sarkies Road in Singapore and better revenue per available unit performance from Europe and Singapore operations.

CapitaLand also said that the group's net debt to equity ratio rose to 0.59 as at end-Q1 2008 from 0.5 as at end-Q1 2007. The group's gross debt stood at $12.4 billion as at end-Q1 2008 compared with $8 billion a year earlier.

Earnings per share fell from 21.8 cents in Q1 2007 to 8.8 cents in Q1 2008. Net asset value per share stood at $3.62 as at March 31, 2008, up slightly from $3.54 as at Dec 31, 2007.

On the stock market yesterday, CapitaLand closed 18 cents lower at $6.79.

SingPost Q4 net drops 10.6% to $34.5m

SINGAPORE Post posted a 10.6 per cent year-on-year fall in net profit to $34.5 million for the fourth quarter despite a 5.7 per cent rise in revenue to $119 million.

But for the full year ended March 31, net profit climbed 6.8 per cent to $149.3 million, with revenue up 8.4 per cent at $472.6 million. Q4 earnings per share fell to 1.793 cents from 2.014 cents.

What caused the Q4 fall in net profit was an 18.4 per cent or about $14.5 million jump in total expenses to almost $93 million. Besides the higher costs of labour, goods and administrative expenses, the period included a one-off impairment charge of $4.9 million for two properties.

The increase in full-year revenue was due to all business segments showing improvement.

Full-year mail revenue grew by 7.9 per cent to $365.3 million, underpinned by higher mail volumes and price adjustments.

Logistics revenue rose by 6.7 per cent to $68.6 million due to higher contributions from Speedpost, vPOST online shopping and shipping transactions, and warehousing, fulfilment and distribution.

Retail recorded a 10.8 per cent increase in revenue to $61.6 million, as increased contributions from financial services and retail products offset the decline in agency and bill presentment services.

Said Wilson Tan, SingPost's group chief executive officer: 'We will focus on enhancing productivity and efficiency to better support our business growth. Barring any significant changes, we expect operating costs to stabilise.'

SingPost has proposed a final dividend of 2.5 cents per share (tax exempt one-tier), unchanged from the previous Q4. This is to be paid on July 18.

Together with the interim dividends of 1.25 cents paid out for each of the first three quarters, the total dividend for the year will total 6.25 cents per share.

As part of its efforts to cater to consumers' needs, SingPost is looking into expanding its services and reach.

DMrocket, a one-stop direct mail centre, was launched during the year. SingPost also expanded its hybrid mail business into Hong Kong and Thailand.

It also launched two new remittance services - Visa money Transfer and Cashome to Indonesia and an investment fund with Prudential Asset Management.

Despite the fall in Q4 net profit, SingPost remains upbeat about its outlook.

'We will continue to implement strategies to drive revenue in our core business of mail and logistics and also continue to leverage on our retail network. We are re-purposing our post offices to reap better yield,' said Mr Tan.

'We believe the group is positioned to tackle the challenges ahead and also on track for continued growth.'

SingPost shares closed 0.9 per cent higher at $1.16 yesterday.

Cosco to be more careful in announcing new deals

STUNG by previous sharp reactions to adverse news about contracts, Cosco Corp (Singapore) has instituted a new policy of not announcing newbuilding contracts till after the first instalment has been paid. The solitary order cancellation for a US$202 million oil rig project last month caused a sharp sell-off in the company's shares.

Cosco went on to reiterate that all instalments due on the 113 new ship buildings it has currently have been received as at the close of books for the quarter, including the seven outstanding ones mentioned in an earlier Bloomberg report.

Reflecting the group's buoyant results, first-quarter net profit attributable to equity-holders doubled to $83.9 million. Turnover for the three months ended March 31 also doubled from $355.8 million to $717.7 million.

The key ship repair, shipbuilding and marine engineering division, which contributed 91 per cent of total revenue, had a robust growth in turnover to $653.1 million from $306.9 million previously. The rise came on the back of progressive revenue recognition for the group's healthy stream of high-value offshore marine engineering and ship conversion projects and also contributions from the shipbuilding segment, Cosco said.

Gross margin also improved from 26 per cent to 28 per cent as the group worked on raising revenue per ship repaired. Cosco plans to move up the value chain to focus on higher value-added jobs like tankers, chemical tankers and container ships. By percentage, revenue from ship repair has been halved from 42 per cent in the previous corresponding quarter to just 21 per cent in the first quarter of this year.

The group has a healthy year-to-date order book of US$7.09 billion for progressive delivery up to 2011. In line with this, Cosco is adding capacity and expansion plans are on track to support these projects. 'To support our growing order book, our capacity expansion is on track,' said Cosco Corporation president and vice-chairman Ji Hai Sheng.

While posting its 21st consecutive quarter of growth, Cosco is mindful of the challenges ahead and is preparing for them. The company recognises that rising steel and labour costs and a depreciating US dollar will be issues it has to face.

Already, steel prices and foreign currency movements have proved to be a double-edged sword as, under miscellaneous gains, the group posted an $18.2 million gain on sale of scrap metal but this was offset by an $18.4 million forex loss. This resulted in a 63 per cent fall in other gains to $6 million.

Cosco said that it would factor such rising costs in pricing for future projects and diversifying its forex exposure. Customers have so far 'been able to accept' a rise in prices, Mr Ji said. 'Set on an even keel with our multiple key earnings pillars of offshore engineering, ship repair and conversion and shipbuilding, our group is cautiously optimistic of our ability to sustain growth and profitability in 2008 even against the challenging backdrop,' he added.

Cosco shares closed eight cents higher at $3.16 yesterday.

CDL Hospitality Q1 available distribution surges

CDL Hospitality Trusts (CDLHT) has announced income available for distribution of $23.6 million for Q1 2008, a 91.5 per cent increase over the corresponding quarter last year.

CDLHT, a stapled group comprising CDL Hospitality Real Estate Investment Trust (H-Reit) and CDL Hospitality Business Trust (HBT), said income available for distribution per stapled security for the quarter rose 63.4 per cent year-on-year to 2.86 cents or 11.50 cents on an annualised basis.

Citing the 6.6 per cent year-on-year increase in visitor arrivals to Singapore in the first quarter of 2008, Vincent Yeo, CEO of M&C Reit Management Ltd, the manager of H-Reit, said: 'As Singapore's largest hotel owner by number of rooms, we are well positioned to take advantage of the very robust demand for transient accommodation in Singapore.'

Gross revenue for the quarter of $27.9 million was 55.1 per cent higher while net property income was $26.1 million, up 55.8 per cent.

Average occupancy rate for H-Reit's Singapore hotels - Orchard Hotel, Grand Copthorne Waterfront Hotel, M Hotel, Copthorne King's Hotel and Novotel Clarke Quay - actually fell marginally by 0.2 percentage points to 84.4 per cent.

However, Mr Yeo said this was more a function of the Reit manager, 'managing for RevPar (room revenue per available room) growth'.

Mr Yeo also revealed that its market mix had changed with more business being contracted through corporate clients.

Indeed, RevPar increased by 37.7 per cent from $151 in Q1'07 to $208 in Q1'08.

Average daily rate (ADR) of $247 was 38 per cent higher compared to the same period a year ago.

The Singapore Tourism Board's figures for gazetted hotels here in March show that the average room rate was estimated at $238, while the average occupancy rate was estimated at 87 per cent.

Mr Yeo said that it was also on track to make its forecast annual acquisitions of $200-$300 million.

In the quarter, Mr Yeo said that six of the 24 extended stay suites at the Grand Copthorne Waterfront Hotel were completed and the hotel has received positive responses from potential guests during the pre-marketing phase. All the suites will be launched officially by the end of this month.

Mr Yeo also added that 'service apartments are within its ambit', and he would not discount the possibility of acquiring a service apartment in the future.

At the end of yesterday's trading, CDLHT's unit price rose 6 cents to close at $1.92 per unit.

A-iTrust distributable hits $45.8m

ASCENDAS India Trust (A-iTrust) yesterday reported net property income of $60.5 million for the 12 months ended March 31, 2008 - up 51 per cent from $40.2 million the year before.

The improvement was driven by a 50 per cent jump in property income to $102.7 million year on year.

Distributable income for FY2007-08 was $45.8 million. This translated to distributable income per unit (DPU) of 6.09 cents, or 9 per cent higher than the forecast of 5.6 cents.

Based on a closing price of $1.04 a unit on March 31, the annualised yield was 5.86 per cent.

For Q4, DPU was 1.64 cents. With Q3's DPU of 1.5 cents, a total of 3.14 cents will be paid on May 28.

A-iTrust was the first Indian property trust listed on the Singapore Exchange - in August last year. Its portfolio comprised four Indian IT parks at end- March.

A-iTrust said its asset portfolio has grown and the performance of its properties has improved. The occupancy rate for the portfolio is 96 per cent, and the renewal rate of expired leases is 92 per cent.

The trust is maintaining a distribution forecast of 6.85 Singapore cents made for FY2008-09 in its listing prospectus.

Jonathan Yap, CEO of the trustee-manager, said: 'We remain focused on actively managing the portfolio's income stability and enhancing returns through organic growth.'

The trust will continue to develop the land it owns and acquire new assets in a yield-accretive manner, Mr Yap said. 'We aim to do so through an optimised capital structure.'

Gearing for the trust was 4 per cent at the end of Q4, leaving it with about $300 million of borrowing capacity for developments or purchases before gearing reaches 35 per cent.

JPMorgan rated A-iTrust 'overweight' in early April, with a target price of $1.54. The trust's units closed two cents lower at $1.18 yesterday.

Hi-P Q1 net soars 64% to $24.7m

CONTRACT manufacturer Hi-P International has reported a 63.7 per cent rise in net profit to $24.7 million, with sales rising 35.3 per cent to $270 million for its first quarter ended March 31.

Basic earnings per share rose to 2.78 cents from 1.7 cents a year ago.

Revenue growth of the plastic-component maker was broad-based, with revenue from the wireless product segment rising 43.4 per cent to $163.3 million and from the consumer electronics segment climbing 24.6 per cent to $106.7 million.

The wireless product segment contributed 60 per cent to turnover, while consumer electronics accounted for 40 per cent.

Gross profit also leapt 55.4 per cent to $48.8 million, thanks to a more profitable product mix as Hi-P undertook more value-added services for its customers.

As a result, gross margins improved by 2.4 percentage points to 18.1 per cent - its highest since 2006.

Operating profit more than doubled to $34.3 million, as operating expenses fell 7.4 per cent due to reversions of excess bonuses accrued in FY2007, lower provisions for doubtful debts and greater cost efficiency.

However, Hi-P incurred currency losses of $7.1 million due to a weakening greenback.

'This was exacerbated by the record level of US dollar-denominated receivables that were converted during the quarter,' said Hi-P.

Said executive chairman Yao Hsiao Tung: 'Our customer diversification efforts, our past investments, our restructuring efforts, and the continuing improvements to our controls and processes are paying off.

'Not only are we able to deliver better margins, we have also significantly enhanced our working capital management; our gross cash position has reached $115.2 million - a record for the company.'

Looking ahead, the contract manufacturer said that Q2 net income and sales could be sequentially lower due to slower sales expected from its consumer electronics business. But Q2 revenue and profit are expected to be better than those of Q2 2007.

On a full-year basis, it forecasts higher revenue and profit.

Credit Suisse yesterday issued an 'outperform' on the stock with a target price of 80 cents. The shares gained three cents to close at 54 cents yesterday.

Keppel Land in Pearl River Delta project

KEPPEL Land said yesterday that it is developing a waterfront residential pro-ject in China's Pearl River Delta region.

Keppel Land is taking an 80 per cent stake in Sunseacan Investment, a Hong Kong company that will undertake the development. The remaining 20 per cent will be held by Sunsea Yacht Club, another Hong Kong company and the former owner of Sunseacan Investment.

Keppel Land had earlier announced that it was buying an 80 per cent stake in Sunseacan for HK$50 million (S$8.74 million) in cash. It will hold the stake through a subsidiary.

The luxury complex will be 35 km from Zhongshan city in Guangdong province and will cover 82 hectares. When completed, it is expected to yield about 300 villas with private berths on the Xijiang river and 2,500 condominium units and serviced apartments, with a total gross floor area of 408,000 sq m.

There will also be restaurants, berths for 550 boats and other recreational facilities.

Keppel Land's group chief executive officer Kevin Wong said: 'Waterfront living has become a worldwide trend. Keppel Land is confident this integrated development will present a new and refreshing lifestyle to home-buyers in China.'

Keppel Land said the deal is not expected to have a material impact on its consolidated earnings per share or net tangible assets per share for the current financial year.

Astra net rises 76% on vehicle, palm oil gains

PT Astra International, Indonesia's biggest publicly traded company by sales and 50 per cent owned by Singapore's Jardine Cycle & Carriage Ltd, said first-quarter profit rose 76 per cent on higher car and motorcycle sales and rising palm oil prices.

Net income climbed to 2.25 trillion rupiah (S$333 million) from 1.28 trillion rupiah a year earlier, the company said in a statement. Sales gained 47 per cent to 21.78 trillion rupiah.

Astra's first-quarter car sales rose to their highest in three years, benefiting from cuts in central bank borrowing costs. The company, which accounts for half of all cars sold in Indonesia, also gained from rising palm oil and coal prices.

The earnings are 'healthy enough in terms of growth as main sectors - vehicle sales, palm oil prices - are still growing,' said Jerome Jovellana, an analyst at PT Mandiri Sekuritas. Still, 'with oil prices rising, maybe growth may not be as high as in the first quarter'.

Astra sells Toyota's Avanza and Innova multi-purpose vehicles through 58 outlets in Indonesia. It also sells Honda motorcycles.

Astra's 'earnings momentum and earning visibility should remain strong in 2008,' Wilianto Ie, an analyst with CLSA Ltd said in a note to investors on April 14. The company's shares, which have fallen 27 per cent this year, lost 0.3 per cent to 20,000 rupiah yesterday. Earnings were announced after the market closed.

Higher Suntec Reit distribution

SUNTEC Real Estate Investment Trust, one of Hong Kong billionaire Li Ka-shing's two property trusts in Singapore, said it will distribute S$37.6 million to investors for the second quarter ended March 31 after rents at its properties rose.

This is 34.2 per cent higher than for the year-ago period. The trust, which owns offices and a shopping mall in Singapore, will distribute 2.5185 Singapore cents a share for the three months, up 26 per cent.

DBS appoints new CEO as a group director

DBS Group Holdings has appointed new chief executive Richard Stanley as a director of the group. He joins the bank today, replacing Jackson Tai who stepped down at the end of last year. Mr Stanley, 47, was Citigroup's country officer for China, based in Shanghai.

New appointments at Straits Trading

WELL-KNOWN former banker Elizabeth Sam, 69, has been appointed an independent director of The Straits Trading Company. Mrs Sam previously held senior positions in the Ministry of Finance, the Monetary Authority of Singapore, and OCBC Bank.

The company also announced the appointment of David Goh Kay Yong, 46, the deputy chief investment officer of controlling shareholder Tecity Group, as a non-independent director. Straits Trading recently named Chew Gek Khim, who heads Tecity, as its new chairman.

Excelpoint Q1 income falls 19.3%; sale up

EXCELPOINT Technology has reported a 19.3 per cent year-on-year drop in net income to US$113,000 even though sales rose 10.2 per cent to US$124.6 million for the first quarter ended March 31, 2008.