Singapore Daily Bulletin – 13/02/13

Business Conditions Improved In 4Q 2012: BT-UniSIM Survey
According to the latest BT-UniSIM Business Climate Survey, which polled 161 firms in January, Singapore’s business conditions improved in the fourth quarter of 2012. The number of firms that recorded contraction in sales was largely unchanged from the third quarter while new orders improved across the board. However, more firms – in particular large and foreign ones – reported lower profits, with more recording profit decline of up to 10 percent. Looking into the next six months, firms have become less pessimistic as those expecting conditions to deteriorate declined to 45 percent from 59 percent in the third quarter. The remaining 39 percent expect conditions to stay the same while 17 percent are hopeful of better prospects. In addition, the survey forecasts gross domestic product (GDP) growth of 2.2 percent to 2.5 percent in the first quarter of this year.

Significance: The survey’s forecast of GDP growth comes in higher than the 1.5 percent expansion recorded in first quarter 2012. Also, it corresponds with the earlier released purchasing managers’ index (PMI) that crossed the important 50-point mark, indicating a pick-up in activities is on the horizon.

Epicentre Fell Into The Red In 1H13
Epicentre Holdings, the Apple Premium Reseller, fell into red for the six-month period ended 31 December 2012. Revenue edged down 3.9 percent to $89 million from $92.6 million as the Malaysia and Singapore markets posted lower sales as a result of more conservative consumer buying behaviour while the China market failed to meet expectations in light of challenging market conditions. Gross profit margin narrowed to 11.6 percent from 13 percent due to lower margin contributed by Apple branded products as well as aggressive promotional bundle created to promote sales. The company’s expansion plan, which saw its outlets increased from 14 to 19, incurred higher rental and related expenses that weighed it into losses of $0.5 million compared to profit of $1 million in 1H12.

Significance: Epicentre expects business conditions to remain challenging in the near term. The group will remain focus on widening distribution network in existing markets, while continue enhancing operational efficiency and monitoring expenses in the face of higher cost environment.

ComfortDelGro FY12 Profit Up 5.6%
ComfortDelGro Corporation saw its profit rose 5.6 percent from $235.6 million to $248.9 million for the full year ended 31 December 2012. Revenue edged up 3.9 percent from $3.4 billion to a record $3.5 billion as all of its business units, except the driving centre business, registered growth – the bus and taxi businesses accounted for more than 87 percent of the growth. In Singapore, bus revenue at SBS Transit increased 6.1 percent to $600.9 million helped by higher average daily ridership that offset a dip in average fares while taxi revenue increased 10.1 percent to $824.5 million on the back of higher rental income from a larger fleet, increase in new replacement taxis and higher volume of cashless transactions. The group has proposed a final dividend of $0.035.

Significance: ComfortDelGro expects its Singapore operations to register growth going forward. Nonetheless, as with all markets it operates in, it will continue to experience cost pressures.