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Singapore Daily Bulletin – 07/11/12

HTL’s 3Q12 Bottomline Falls 8.2%, 9M12 Jumps 4-Fold
Sofa maker HTL International (HTL)’s 3Q12 earnings dropped 8.2 percent to US$1.4 million despite a 7.4 percent jump in revenue to US$148.2 million, mainly due to increased input costs, in particular the leather prices. However, earnings for the nine month period quadrupled to US$6.9 million from US$1.7 million, mainly due to a net forex gain against a net forex loss of US$5.1 million a year earlier. To fund the group’s increased trade and other receivables, as well as increased inventory, HTL’s net borrowings rose 30 percent to US$68.9 million over the nine-month period. With the higher working capital required to fulfil turnover growth, HTL also reported a negative free cash flow of US$10.4 million in 9M12 compared to a positive US$15.6 million in 9M11. Moving forward, HTL said it will continue to expand market share internationally, particularly in North America and the Asia Pacific.

Significance: The operating environment and forex market for HTL remain challenging and volatile respectively. Notably, HTL expects to face continuing pressure on margin, especially in managing rising input costs as well as passing these cost increases to its customers in time.

CCFH Back In The Black For 3Q12
CCFH returned to the black for the third quarter ended 30 September on the back of a 48.6 percent jump in revenue. The improved revenue was mainly contributed from both bedlinen and children wear business under the Retail Division, as well as increase in revenue from original design manufacturing division. Gross profit margins increased significantly from 13.5% in 3Q11 to 34.7% in 3Q12, due to a decrease in price of cotton which is the key raw material. Earlier in September, CCFH announced that it had entered into a non-binding Memorandum of Understanding with Mata Brait (Mata), a Malaysian company involved in logging and rubber plantations, to acquire a stake in Mata and jointly develop an agro-forestry project in Papua New Guinea.

Significance: Moving forward, CCFH will continue to grow its existing children fashion and bed linen businesses, with the aim to further enhance its growth in the Asian market. The collaboration with Mata also enables the firm to enter agro-forestry business and own profit-generating assets that are expected to generate sustainable long-term returns for its shareholders.

SATS Posts 25.4% Jump in 2Q13 Earnings
SATS reported an encouraging set of results with 2Q13 earnings jumped 25.4 percent to $50.3 million underpinned by improved revenue growth and higher contribution from joint ventures. During the quarter, SATS handled 5.5 percent more flights, while the number of passengers handled jumped 4.9 percent to nearly 10 million. Gross and unit meals increased 6.1 percent and 5.6 percent respectively, reflecting the passenger traffic growth momentum at Singapore Changi Airport. Meanwhile, cargo throughput in 2Q13 improved 2.7 percent quarter on quarter but fell 2.6 percent year on year. As at 30 September 2012, SATS’s cash and cash equivalent stood at $323.5 million as compared to $163.4 million a year ago.

Significance: SATS expects to see continued growth in its food business despite prevailing uncertainties underpinned by the seasonal uplift in the third quarter and raw material costs. That said, SATS emphasised that a decline in air cargo throughput is likely to continue in the coming months.