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Stocks In Focus (CH Offshore, OKH Global, Singapore Post) – 07/05/13
CH Offshore Earnings Fall; Tries To Recover Outstanding Debt
CH Offshore, an offshore service provider, which charters vessels to support the offshore oil and gas industry reported a 8.2 percent fall in revenue to US$35.7 million for the nine months ending 31 March 2013, from US$38.9 million a year ago. The decline in revenue was mainly caused by the absence of the sale of one vessel in the previous period, contributing a gain of US$3.9 million from the vessel sale, as well as lower revenue as two vessels is undergoing their first major overhaul after completing their respective contracts in January 2013. Likewise, net profit for the nine months ended March 2013, was 4.5 percent lower at US$24 million, despite a higher contribution from the share of results of associated companies. The group added: “As announced in the previous quarter, the total debt by a client amounting to approximately US$44 million remains outstanding. The company is taking appropriate actions and will continue to channel all efforts to recover the outstanding debts.”
Significance: The group remains in a strong financial position backed by a healthy cash flow and balance sheet. For the period ended 9M13, the group recorded cash surplus from operations of US$12.9m, and cash and cash equivalents of US$66.2m as at 31 March 2013 with no debt outstanding.
OKH Global Starts A New Chapter; Optimistic About Future
Industrial property developer OKH Holdings starts a new chapter as a listed entity today under the name OKH Global, after a $123.2 million reverse takeover of China-based information technology solution provider Sinobest Technology. The firm currently has three projects under development, which excludes the 30 year land parcel located at Buroh Crescent that it clinched in April 2013. Of the three projects, the two that are located near Admiralty MRT station – Primz Bizhub and Woodlands Horizon are already fully sold and over 50 percent taken up, respectively. Development and construction of the third project, near Tai Seng MRT station is expected to start this year, said OKH. Thomas Bon, OKH Global’s managing director said: “It does not expect to be hit by the Singapore government’s measures to cool the industry property market. Existing industrial buildings are not there aesthetically. Functionality-wise, some of them are also not there. The ceiling heights may not be high enough, the size of the cargo lifts may not be big enough.”
Significance: OKH plans to build more industrial spaces for lease, which will help the firm earn recurrent income. Among it is its project near the Tai Seng MRT station which will be its first build-for-lease development. The group has also been looking to venture abroad including second-tier cities in China and Malaysia but is taking its time conducting research and collecting data.
Singapore Post 4Q13 Net Profit Hit By One-Off Items
Singapore Post announced net profit for 4Q13 was 14.6 percent lower at $26.1 million. Excluding one-off items, however, net profit for the quarter grew 18.7 percent to $31.8 million. Revenue for the quarter grew 25 percent to $182.5 million, boosted by contributions from newly acquired subsidiaries as well as contributions from e-commerce related activities across all business segments. During the fourth quarter, the group saw growth in revenue across all its business divisions, with logistics making the largest advancement of 40.7 percent to $75.9 million. Mail revenue grew 20.1 percent to $115.7 million, lifted by the contribution of Novation Solutions, which the group bought last year. Excluding it, mail revenue growth would have been 9.8 percent to $105.8 million in 4Q13. Domestic mail volume fell for the sixth consecutive quarter, while the full year saw the first ever annual decline of 2.6 percent in letter mail volumes. However, growth in domestic and international e-commerce packets, as well as increased hybrid mall contributions boosted overall mail revenue.
Significance: According to SingPost, the prospects for snail mail appear challenging, with it expecting postal volumes to fall 30 percent by 2018, while at the same time the number of households is projected to increase by 30 percent. This will saddle the delivery system with greater costs. Hence it has planned to invest $100 million in sorting technology to enhance productivity.
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