Singapore Daily Bulletin – 12/11/12

Record Profit of $1.9b For 3Q12 Posted By OCBC
Analysts expectations were surpassed as Oversea-Chinese Banking Corporation (OCBC), Singapore’s second largest bank reported a record net profit of $1.85 billion, as compared to the $513 million in the corresponding quarter in 2011. This was mainly driven by the $1.13 billion divestment gains from the sale of stakes in Fraser and Neave and Asia Pacific Breweries. Excluding the investment gain, net profit would have been $724 million, which was still above analysts’ expectations of $655 million. The growth seen was mainly attributable to higher net interest income, improved trading performance and increased profit from life assurance. When asked about what OCBC plans to do with the proceeds from the sale, chief executive officer Samuel Tsien mentioned that a decision on OCBC’s final dividend will be made later, and that OCBC will be consistent in its approach and will be making use of the proceeds from its non-core activities to put it to core activities.

Significance: The surpassed analysts’ expectations in terms of earnings performance, without the inclusion of divestment gains reflect OCBC’s sustained growth ability. That said however, expectations of further net interest margin squeeze going forward could still put a dampener on overall growth sentiment.

Nam Cheong Records All Time High Annual Vessel Sales
Nam Cheong, a leading global offshore marine player and Malaysia’s largest Offshore Support Vessel (OSV) builder has announced the sale of four Anchor Handling Towing Supply vessels worth a total of US$45.13 million, which brings the total count of vessels sold in 2012 to 18, an all-time record high for annual vessels sales in its corporate history. Nam Cheong’s executive director, Leong Seng Keat, mentioned that 2012 has been the year in which Nam Cheong has seen the most number of vessels sold. Leong expressed that Nam Cheong is please that customers return to Nam Cheong for repeat purchases, which is a testament to the quality of its vessels and demonstrates its customers’ confidence in Nam Cheong to deliver what they need on time. Leong further added that Nam Cheong will continue to expand its customer base with new regional clients.

Significance: Nam Cheong’s order momentum continues to be strong with its order book surpassing the one-billion mark. Also, the surpassing of its order book in terms of the one-billion mark, with a total contract value of RM1.3 billion signals further sustained momentum for the OSV builder.

Dukang Distillers’ 1Q13 Bottom line Jumps 74.7%
Despite the first quarter being a lull period for the baijiu business, Dukang distiller managed to post a 67.6 percent and 74.7 percent jump in sales and earnings respectively for the quarter ended 30 September 2012. In line with the top line growth, Dukang’s selling and distribution expenses grew 96 percent to Rmb50 million due to additional advertising and promotional activities via TV commercials, bus and rooftop advertising in Henan and beyond. According to Dukang, 「Dukang」baijiu has been recognised as baijiu of choice for the political and commercial banquets in hometown Henan Province and is looking for an expansion outside its stronghold. In light of the continuous expansion of the Chinese baijiu market, Dukang Distiller has already rolled out its plan to add another 40 percent or 3,000 tonnes of grain alcohol capacity for the「Dukang」brand.

Significance: Dukang distiller’s prospect looks positive for the next two quarters as festival seasons traditionally boost the sales of baijiu products in China. More importantly, premium baijiu remains attractive amongst the Mainland Chinese.