Singapore Corporate News - 1 Mar 2008

UIC profit more than doubles to $1.17b

UNITED Industrial Corporation (UIC), which counts Singapore Land as a subsidiary, has racked up $1.68 billion worth of valuation gains for the 2007 financial year, taking its net profit to $1.17 billion, more than double 2006's $492.1 million.

Key buildings like Singapore Land Tower at Raffles Place and Marina Bayfront at Raffles Boulevard have both increased by over 70 per cent in value.

Singapore Land Tower is now worth $1.49 billion, up from $868.4 million a year ago, while Marina Bayfront is now worth $70 million, up from $40 million a year ago.

UIC's portfolio, which includes other properties like The Gateway at Beach Road and Marina Square, is now valued at about $5.48 billion, up from about $3.77 billion a year ago.

The valuations were done by DTZ Debenham Tie Leung.

In its financial statement for FY2007 released yesterday, UIC said that net profit of $1.17 billion comprised $123.6 million from operations and $1.05 billion from fair value gain on investment properties.

Revenue for the year was up 62 per cent to $528.4 million, and was attributed to higher sales of residential properties and revenue recognition on a percentage of completion basis, contributions from Pan Pacific Singapore Hotel (Panpac), and higher rental income.

Gross rental income for FY2007 was up 17.6 per cent to $226.1 million while gross revenue from sales of properties (held for sale) increased by 131 per cent to $157.6 million.

Gross revenue from hotel operations was $77.9 million.

In the year, UIC's Marina Centre Holding acquired the remaining 50 per cent interest in Hotel Marina City, which owns the Pan Pacific Singapore hotel.

UIC reported that earnings per share (EPS), excluding net fair value gain, were 9 cents for FY2007, up from 5.5 cents. Including net fair value gain, it was 85.3 cents, up from 35.7 cents.

SingLand, which also released its full-year results for 2007 yesterday reported a fair value gain of $1.46 billion.

Net profit for the year was $1.36 billion, up from $100.4 million a year ago.

Revenue increased by 34 per cent to $271 million for the year. It was attributed to the contribution from Panpac and higher rental.

SingLand said that gross rental income of $187.4 million increased by 20 per cent or $30.6 million.

While net profit was $1.36 billion, SingLand said that $137.5 million was derived from operations and $1.22 billion was from fair value gain on investment properties.

Excluding fair gain, EPS was 33.3 cents per share, up from 24.3 cents. Including fair value gain, EPS was 329.1 cents, up from 24.3 cents.

Singland directors have proposed a first and final dividend of 20 cents per share, amounting to $82.5 million, while UIC directors have proposed a first and final dividend of 3 cents per share amounting to $41.3 million.

SembCorp Q4 net profit falls 61% to $152m

SEMBCORP Industries posted strong fourth-quarter and full-year operating results for 2007 but its bottomline dived because of losses over 'unauthorised' foreign exchange transactions and the inclusion in the previous year of huge one-time gains.

For the three months ended Dec 31, 2007, net profit attributable to shareholders after exceptional charges of $31 million dived 60.7 per cent to $151.8 million from $386.3 million a year earlier. The comparative Q4 2006 period had net exceptional gains of $258 million, contributed largely by a $153.2 million tax benefit from the use of tax losses relating to its ill-fated Solitaire venture and an $83 million impairment writeback.

Before the exceptional items, Q4 net profit rose 42.5 per cent to $182.8 million from $128.3 million a year earlier, on a 10.7 per cent increase in turnover to $2.53 billion from $2.28 billion.

Q4's $31 million one-time charges took into consideration exceptional gains of $276.6 million from the sale of various assets and the group's share of $302.92 million in losses from the 'unauthorised' foreign exchange transactions of former finance head Wee Sing Guan at subsidiary SembCorp Marine.

There was also a writeback of $42.36 million in tax overprovisions for Q4 but this was partially offset by a 47.9 per cent drop in net non-operating income to $27.3 million from $52.4 million.

For the 2007 full year, the group, the world's second-largest builder of offshore oil rigs, reported a 49 per cent drop in net profit attributable to shareholders to $526.2 million from 2006's $1.03 billion, which included exceptional gains of $650 million that were largely due to the sale of subsidiary SembCorp Logistics. Before exceptional items, net profit attributable to shareholders rose 49.3 per cent to $557.2 million.

Full-year revenue rose 15.1 per cent to $8.62 billion from $7.49 billion, while earnings per share after exceptional items was down 49.5 per cent to 29.57 cents from 58.58 cents. Net asset value per share rose to $1.70 at end-December last year from $1.59 a year earlier, and the company has proposed a final dividend of 15 cents a share.

The group attributed the strong operating performance to the strong showing of its utilities and marine & offshore engineering businesses with full-year profit after tax and minority interests (Patmi) from the utilities sector rising 19 per cent to $230.2 million, thanks to better contributions from its Singapore and UK operations. The marine & offshore engineering sector's contributions to group Patmi soared 71 per cent to $220.1 million due to higher turnover and operating margins from its rig-building and ship-repair businesses as well as better contributions from its associates.

Group president and chief executive Tang Kin Fei said: 'Sembcorp's strategic focus on our core businesses and growing the businesses overseas has paid off as can be seen by our strong operating results. Our utilities business has further secured and renewed $2.2 billion worth of long-term contracts, thereby broadening our base. Meanwhile, our marine & offshore engineering business clinched $5.4 billion worth of contracts in 2007. Its total net orderbook todate stands at a solid $7.4 billion with orders stretching to 2011. We are also increasing our focus on our water business.'

SembCorp shares slipped 11 cents to $4.81 apiece yesterday.

STX Pan Ocean profit quadruples to US$497m

MAJOR Korean shipping line STX Pan Ocean kept pace with the booming sector by almost quadrupling its 2007 net profit to US$497 million from US$128.3 million previously. Revenue nearly doubled to US$5.82 billion from US$2.95 billion in 2006.

The exceptional performance was underpinned by overall sales growth in its business segments and especially the dry bulk sector, STX said. Earnings per share rose to 27.4 US cents per share from 7.5 US cents previously.

Unsurprisingly, the dry bulk business was the chief growth engine with sales in this segment doubling to US$5.3 billion and gross profit nearly tripling to US$651 million. Breakbulk liner service sales rose 40 per cent to US$1.1 billion, due largely to increases in freight rates and steel product exports from China to Europe, the Middle East and Southwest Asia, STX said.

Tramper sales also went up to US$1.8 billion from US$711 million previously due to higher charterage and freight rates of STX's owned fleet and long-term chartered vessels which were previously secured at lower charter costs. Largebulk sales more than doubled to US$2.3 billion from a combination of higher charter-out rates and expansion in operating fleet to 107 vessels from 93 vessels, STX added.

'Set against a bullish market, our strategy to increase our proportion of charter-out business to capture the robust commodities demand and capitalise on higher spot-rates contributed to the overall profitability of our dry bulk segment,' STX chief executive Lee Jong Chul said. 'Indeed, our gross margins were boosted to 12 per cent in FY2007 from 9 per cent previously.'

Despite a decline in the Baltic Dry Index at the beginning of the year, STX is confident of the underlying demand-supply fundamentals of the shipping industry and believes that the dry bulk market will continue to boom, the group said. In addition, STX also plans to further its diversification into the non-dry bulk segment. It plans to expand its tanker and car-carrier operating fleet, penetrate further into the LNG business and expand routes in its container segment.

'STX believes that dry bulk demand-supply will remain balanced in 2008 with no unexpected supply growth. In fact, there are even some signs of delays in dry bulk vessel deliveries from the lack of technology in some start-up shipyards in China and the recent rapid increase in steel plate prices,' said Mr Lee. 'Barring unforeseen circumstances, such as a global economic recession, cooling-down measures by China or a faster-than-expected delivery of new vessels, we believe that the current dry bulk market is on track on its 'Super Cycle',' he added.

STX shares closed seven cents higher at $3.06 yesterday.

HPL earnings up 52% at $150m

HIGHER hotel revenues and valuation gains pushed the net profit of Hotel Properties Ltd (HPL) 52 per cent higher to $150.1 million for the year ended Dec 31, 2007.

Group revenue increased 29 per cent to $459.8 million from the previous year, largely attributable to the group's hotels and resorts division. Earnings per share rose to 30.73 cents from 20.70 cents.

HPL said it continues to recognise further fair value gains from investment properties, which amounted to $101.1 million in FY2007.

With the fair value gains, pre-tax profit was $178.4 million. Excluding fair value gains, pre-tax profit would have been $77.3 million, it said.

The group's finance cost increased by 44.5 per cent to $40.8 million due to higher borrowings as a result of new investments, including participation in en bloc purchases.

HPL declared a final dividend of 5 cents per share per share.

It said the outlook for the tourism industry in Singapore and the region remains good. 'However, there will be challenges arising from the threat of a recession in the United States, the rise in inflation and tight credit environment.'

UE's net profit up 5-fold on revaluation gains

CONSTRUCTION and property company United Engineers (UE) said yesterday that its net profit rose five-fold to $176.2 million for 2007 - from 2006's $34.83 million - on the back of revaluation gains.

UE saw a fair value gain of $186 million on the value of UE Square, as well as fair-value adjustments and gains from the divestment of investments.

Revenue for the year fell 12 per cent to $539.8 million, from $614.1 million the year before. The company's engineering and construction (E&C) division - from which it made most of its revenue in 2006 and 2007 - reported a 21 per cent slide in revenue to $405.9 million in 2007.

UE said that yearly comparisons of E&C results are not meaningful as progress billings vary from project to project.

The group's integrated facility management division, which includes property development, lifted revenue 19 per cent to $138.1 million in 2007. This was mainly due to higher rental income and occupancy in an improving economy, UE said.

Earnings per share rose to 80.4 cents, from 16.1 cents in 2006.

The company has declared a dividend of 10 cents a share for 2007, comprising a normal dividend and a special dividend of five cents each. It will also pay a dividend of 7.5 cents for each preference share.

UE, which had an order book of $1.1 billion at end-2007, said that it will continue to carry out large building and infrastructure projects in Singapore and the region in 2008.

'Additionally, the rapidly developing economies of China, Middle East, Indonesia and Vietnam are expected to contribute to the region's strong demand for infrastructure development,' UE said.

UE's shares closed 12 cents up at $3.84 yesterday.

KS Energy's full-year profit up 45% at $73.8m

INDONESIAN tycoon Kris Wiluan's KS Energy (KSE) expects to finalise deals in the coming months to charter its jack-up rigs and liftboats (jack-up service rigs) to Mexico, the Middle East, Thailand and Malaysia, boosted by its recent acquisition of Oslo-listed Atlantic Oilfield Services (AOS).

'We expect to go aggressively overseas this year,' Mr Wiluan, KSE's chairman and chief executive, told BT. The oil services group also wants to buy more rigs to enable it to cater to booming demand from the oil and gas industry.

KSE yesterday reported a 45.5 per cent jump in full-year net profit to $73.8 million for 2007, on the back of a 36.4 per cent increase in revenue to $402.7 million. Earnings per share rose 47 per cent to 31.27 cents from 21.3 cents in 2006.

The bulk of its revenue in 2007 came from Singapore, which contributed $222.9 million or 55 per cent of total revenue. 'This year it will be reversed, the bulk of our revenue will be from overseas,' said Mr Wiluan. KSE said that it 'expects to be profitable' in 2008. Its share price ended one cent higher at $2.34.

Mr Wiluan said that the integration of AOS - which brought with it offshore rigs and vessels as well as manpower expertise - into KSE has 'effectively enhanced its capabilities ... enabling it to embark on high value and high margin projects in the oil and gas industry'.

With AOS' international accreditations, KSE is now able to tender directly for oil and gas industry projects, he added, thus moving KSE up the value chain.

'Within a year, we have enlarged the operations of KSE, brought on stream additional jack-up rigs, new charter and management contracts, and most importantly, enhanced and expanded the quality and competencies of our human capital,' he said.

Next, KSE will review the quality of the combined oil and gas vessel fleet - currently comprising six land rigs, four workover/pulling units, three liftboats, five jack-ups and two vessels. The aim is to divest non-core assets to enable KSE to buy better quality assets and to repay borrowings, Mr Wiluan said.

KSE's expansion saw its borrowings balloon from $51.3 million at end-2006 to $360.6 million at end-2007. As at Dec 31, 2007, its net gearing stood at 1.41 times.

KSE is paying a final cash dividend of 3 cents, taking its total dividend for 2007 to 9 cents a share.

YHI to supply wheels to F1 team

WHEEL maker YHI International will supply its Advanti brand of wheels to Formula One team Scuderia Toro Rosso (STR) - a move that is expected to raise the value of its proprietary brand.

At an interview yesterday, managing director Richard Tay said that the agreement would see the firm sponsor 400 pieces of Advanti wheels to STR over a three-year period, covering 18 races in all.

Also, YHI has set aside some US$2 million to promote the Advanti brand for each of the next three years.

Indeed, efforts appear to have borne fruit as new and existing customers approached YHI on the distributorship of its Advanti wheels after an auto show in the United Kingdom early this year. This, said Mr Tay, is 'something that didn't happen before'.

In the race for more brand coverage, YHI will showcase the race car with its sponsored wheels at auto shows in Dubai, Frankfurt and Las Vegas later this year. Two product launches in Sepang and Shanghai are also scheduled this month and in October respectively.

There are plans to grow its tyre business, and enter the car battery business under its own brand, Neuton. If YHI succeeds in growing its distributorship network for its own brands, Mr Tay said, it would gain more pricing power.

His aim is to grow the production of the company's proprietary branded wheels to 50 per cent of its capacity by year-end. The company now produces three million wheels each year, of which more than 30 per cent are under in-house brands. YHI also provides contract manufacturing services for players such as OZ SpA, which is now 35.5 per cent owned by the company.

Separately, YHI reported a 4.6 per cent drop in 2007 net profit to $26.3 million, even though revenue rose 13.8 per cent to $426.9 million. Earnings per share fell to 4.49 cents from 4.71 cents.

This was because FY2006 included a negative goodwill charge of $5.4 million from its investment in OZ SpA. Excluding the intangible item, its net profit would have risen 19 per cent.

During the year, sales from the manufacturing business segment increased by about 36.9 per cent to $152.8 million, primarily due to increased output from additional production capacity in Suzhou.

Turnover from the distribution business segment went up 4 per cent to $274.1 million, primarily driven by stronger sales in Asean and Oceanic operations.

Looking ahead, YHI said that distribution sales were expected to remain steady, but its manufacturing segment is expected to operate in a challenging business environment.

'Global aluminium prices remained volatile. If the aluminium prices continue to remain high, it will have an adverse impact on gross margins in our manufacturing business,' the company said.

YHI said that it would consolidate and strive for continual innovation and improvements in its production systems and is now embarking on various productivity measures to mitigate the increase in production costs.

Its directors have declared a first and final dividend of 1.35 cents per share, tax exempt one tier.

Straco's FY07 net up 84% to $6.2m

MAINBOARD-listed Straco Corporation, which operates China-based tourism attractions, has boosted its full-year 2007 earnings 84 per cent to $6.2 million.

The big improvement was on a 31 per cent jump in topline revenue to $24.2 million.

The result includes two months of earnings from Underwater World Xiamen, which it bought last October for $12.3 million. The company expects the Xiamen investment to contribute strongly to its bottom line this year.

In 2007, Straco also ventured into the cabaret business in China in a joint venture with Carl Clerico, a member of the family that owns Paris-based Moulin Rouge and Lido Paris. The first production by the joint venture company, Paris Plums, has performed to enthusiastic crowds in Shenzhen, Guangzhou, Shanghai and Beijing.

Straco's executive chairman Wu Hsioh Kwang expressed confidence in the company's key business units. 'The China tourism market remains very buoyant and this has enabled us to achieve double-digit growth, as overall visitorship reached 1.17 million last year,' he said.

'Our earnings per share increased 0.32 cent to 0.71 cent. We generated net operating cash flow of $11 million for the year, up 54 per cent from FY 2006.

'With the addition of Underwater World Xiamen, a major attraction on Gulangyu Island in southern China, we are confident the outlook for the group will remain bright,' he added.

China's economy grew 11.4 per cent in 2007 - the fastest pace in 13 years and the fifth straight year of double-digit growth.

Despite moves by the Chinese government to cool the economy, Straco expects continued strength in its operating environment, especially as tourist numbers increase this year for the Summer Olympics in Beijing in August.

The group is paying a dividend of 0.375 cent, a 50 per cent rise from last year. Based on the current share price, this works out to a yield of over 2 per cent.

Roxy-Pacific launches $39.9m IPO

LOCAL property group Roxy-Pacific Holdings has launched a $39.9 milllion initial public offering for a mainboard listing.

The company, which has interests in residential development and hospitality, is offering 133 million shares (which include five million vendor shares) at 30 cents apiece - representing 20.9 per cent of the company's enlarged share capital, which values Roxy-Pacific at almost $191 million.

Some 117 million will be placed out to institutional and other investors, while nine million shares are reserved for directors, management staff, employees and business associates, among others. The remaining seven million shares will be offered to the public.

Roxy-Pacific targets mainly the mass-market and mid-end segments of the property market. The developer launched six freehold residential projects with 229 units in all in 2006 and 2007. Demand for the properties was strong and only three units are left, said executive chairman Teo Hong Lim.

The company has another eight freehold residential sites in its landbank which could yield more than 300 units in all, Mr Teo said. It spent more than $100 million on the sites, which are all in what Mr Teo terms the 'city-fringe areas'.

'In the last few years, we identified the city-fringe - areas such as Thomson, Novena and Balestier - as locations with good opportunities and started concentrating our efforts and resources there,' Mr Teo said.

From the expected net proceeds of about $36.2 million, Roxy-Pacific will use about $15 million to expand its property development business. Another $10 million will be set aside to maintain, furnish, and/or upgrade its hotel, the Grand Mercure Roxy Hotel and to maintain and/or upgrade its investment properties in Roxy Square Shopping Centre.

Some $5 million is also earmarked to reduce short-term bank borrowings. The balance will be used for general working capital purposes.

The group's net profit rose 285 per cent to $7.7 million in the first half of 2007 compared with the same six months in 2006. Revenue for the period rose 125.5 per cent to $42.4 million.