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Singapore Daily Bulletin – 05/11/12

StarHub Posts 21.8% Jump In Net Profits
For the nine months ended 30 September, StarHub reported a 21.8 percent increase in earnings to $271.4 million on the back of a 4 percent rise in operating revenue to $1,767.5 million. The increase in profitability was attributed by improved sales of equipment, which increased 19 percent on the back of higher selling price of smart devices, and higher service revenue year-to-date, contributed by a 5.7 percent rise in fixed network services, 7.7 percent increase in Pay-TV and 3 percent increase in broadband revenue. The group posted a 27 percent year-on-year jump in profits to $96.2 million while operating revenue inched up 2.4 percent to $585.9 million for the quarter. StarHub introduced tiered data pricing earlier this year to tap on the potential of monetising data as well as TV Anywhere that will allow its subscribers to watch TV content on tablets or any platform, to deliver stronger revenues in 2013 and 2014.

Significance: The rise in over-the-top players who deliver TV content over the Internet could weigh on StaHub’s Pay-TV segment. Nonetheless, its mobile outlook and demand for iPhone 5 should continue into the fourth quarter and remain high with the year-end festive season.

GEH Reports Record Earnings On Sale Of APB and F&N
Great Eastern Holdings (GEH) turned in $619.6 million in earnings for the third quarter financial results ended 30 September, which included a one-time post-tax gain of $421.6 million arising from the sale of its shareholdings in Asia Pacific Breweries (APB) and Fraser & Neave (F&N). GEH posted a $40.4 million net profit a year ago. Excluding this gain, earnings was $198 million, underpinned by continued growth in underwriting profit and mark-to-market gains on investments. GEH also recorded stable total weighted new sales for the quarter at $202.5 million. The steady sales performance reflected the overall higher demand for regular premium products, which was offset by the lower sales of single premium products resulting from a limited availability of appropriate underlying investments due to the low-interest-rate environment.

Significance: Despite the extraordinary gain in net earnings for the period, GEH has yet to decide on the use of the one-off gain and whether the company might declare a special dividend is unknown at the moment.

Federal International (2000) To Sell Vessel For US$52m
Marine logistics provider, Federal International (2000), announced that its subsidiary, Eastern Jason Fabrication Services has entered into a memorandum of agreement with PT Eastern Jason for the sale of its vessel “Federal II” as a floating, storage and offloading vessel (FSO) for US$52 million. In connection with the proposed disposal, the company is also intending to enter a contract with a shipyard, PT Pratama Unggul Lestari, to convert “Federal II” to a FSO. The sale price is in line with the valuation by Ritchie & Bisset (Far East) and the company’s own estimates of the value of the vessel, which also took into account the cost for the conversion of the vessel into a FSO and potential earnings from the sale. The proceeds from the sale of the vessel will be used to repay borrowings and serve as general working capital for the company.

Significance: The company notes that the sale is an opportunity for the vessel to be profit generating after a conversion to FSO as the vessel has been off-hire since November 2010 and has been incurring impairment costs. The disposal will help to improve the company’s cash flow.