Singapore Daily Bulletin – 06/02/13

SGX Sails To A Strong Start In 2013
Trading activity on the Singapore Exchange (SGX) increased in January 2013, setting a positive tone for the year ahead. The average daily value of shares traded on SGX was 42 percent higher year-on-year at $1.8 billion for the month, as the daily average number of shares traded more than trebled to 4.77 billion shares from 1.29 billion shares. Part of the activity came from merger and acquisition related trading. Property and beverage group Fraser and Neave, which saw a two way bidding war end in mid-January 2013, accounted for 6 percent of total trading value in January 2013, the largest single contributor among the 30 members of the STI benchmark index. Overall turnover velocity, a measure that roughly estimates how many times each share is traded, improved to 62 percent in January 2013 from 51 percent a year ago. New stock listings were muted as just one initial public offering took place in January 2013 to raise $10 million, while new bond listings rose to $20 billion, up 48 percent on the year. The derivatives markets were also strong in January 2013. Average daily trading volume grew 75 percent year-on-year to 463,561 contracts.

Significance: According to Maybank Kim Eng, the pick-up was not simple a “January effect”, which typically props up market volumes and values as fund managers get back to work, because the year-on-year numbers show significant improvement. Hence, he is optimistic about the strong start in the equity market based on the sentiment in the first month.

SIA Engineering Lower Expenditure Boost 3Q13 Net Profit
SIA Engineering Company announced 3Q13 net profit which jumped 5.5 percent to $67 million, an increase bolstered by falling expenditure. Revenue for the quarter was 8.3 percent lower at $278.2 million, mostly due to lower fleet management and project revenue. Despite the fall in revenue, decreases in subcontract services and material costs, in addition to an exchange rate gain, held up the bottom line for 3Q13. Expenditure fell by $28 million or 10.2 percent, leading to a 9.9 percent improvement in operating profit to $31.2 million, against the same period a year ago. The share of profits from associated and joint venture companies, which represented 52.7 percent of the group’s pre-tax profits, came in 1.7 percent lower at $40 million during the quarter.

Significance: In a statement issued by the group it said: “The group’s core business is expected to remain stable in 4Q13. Prevailing uncertainties in the world’s major economies will continue to impact the aviation industry; therefore, we will maintain our focus on cost control and productivity improvements.”

FJ Benjamin Earnings Down 73%
Local retail group FJ Benjamin Holdings’ net profit for 2Q13 fell 73 percent to $1.3 million from $4.8 million a year earlier. This was in spite of an exceptional gain of $920,000 recognised from the sale of a 2,197 square foot office property in Hong Kong for $3.1 million. The bottom line was hit by lower revenue from its operations in North Asia which dropped by 36 percent during the quarter as well as weaker spending in Singapore and Malaysia during the festive season. Turnover for the period slid 12 percent year-on-year to $96.9 million, while earnings per share worked out to $0.23, down from $0.84 previously. Group turnover from the fashion business dipped one percent to $68 million but its timepiece business slumped 30 percent to $28.7 million. Nash Benjamin, chief executive officer of FJ Benjamin said: “Looking ahead, we expect business conditions to continue to be challenging, although renewed optimism in the Chinese economy at the start of the year may see demand picking up.”

Significance: The group will open new stores in the next two quarters, including two more Vincci (VNC) stores following the successful launch in November 2012. It also remains on track to open a luxury luggage Goyard store in Singapore in 4Q13 at Ngee Ann City, the second by the group after Hong Kong. By end-June 2013, it will have 2011 stores in its retail network, up from 191 stores a year ago.