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Stocks In Focus SG (China Aviation, GMG Global, Sheng Shiong) – 24/04/15
China Aviation Oil‘s net profit for the 1Q15 dropped 27 percent to US$14.4 million from US$19.7 million last year, with revenue nearly halved to US$2.1 billion. The company acknowledged the continued volatility in oil markets, in addition to macroeconomic weakness restraining global oil demand growth and uncertainties that continue to surround oil output projections.
Global Logistics Properties (GLP) announced that its joint venture GLP Japan Development Venture will be selling GLP Kobe-Nishi, a 392,000 square feet property in Greater Osaka, to GLP J-REIT for 7.2 billion yen ($81 million). GLP J-REIT is Tokyo-listed and focuses on operating logistics properties in Japan. GLP is the property and asset manager and owns 15 percent of GLP J-REIT. The sale crystalises a 38 percent development value creation margin for the venture within 14 months.
GMG Global‘s net profit for 1Q15 plunged 93.8 percent to $0.2 million while revenue dropped 33 percent to $150.7 million. The steep decreases were attributable to the fall in the average selling price of natural rubber and the unrealised foreign exchange loss as a result of depreciation of the euro against the Singapore dollar for the inter-company loans and advances granted to the African operations. The company foresees a challenging operating environment that will remain in view of the prevailing oversupply of natural rubber. Manpower cost is also expected to increase continuously, squeezing its profit margin in its operating markets.
Great Eastern posted a net profit of $220.5 million for 1Q15, slight drop of 5 percent from $231.6 million last year. However, excluding a one-off pre-tax gain of $31.9 million last year, net profit then grew 9 percent. The group continues to deliver growth in profit from insurance business. With several industry developments such as the launch of direct purchase insurance, a web portal that compare life insurance products as well as the implementation of GST in Malaysia, the group monitors and remains focused on improving and expanding the suite of products to meet customers’ needs and strengthen distribution capabilities.
Hong Leong Finance net profit grew 7.8 percent to $15.6 million for 1Q15 compared to $14.4 million last year. Revenue also gained 15.6 percent to $53.8 million. The group faces internal headwinds and challenges from a combination of lower productivity locally with a lead time for adjustment, manpower supply shortages, inflationary pressures and lacklustre property and motor-vehicle markets with a slowdown in GDP growth. The group remains focused on ensuring a healthy and robust balance sheet with careful underwriting risk parameters.
Sheng Shiong Group reported a 12.2 percent increase in net profit to $14.1 million in 1Q15, along with an almost 5 percent increase in revenue to $198.4 million from $189.7 million attributable to two new stores in Penjuru and Tampines Central bringing in comparable same store sales growth. The industry is expected to remain competitive while upward pressure on manpower cost persists due to government’s restriction on foreign labour supply. Finding suitable retail space for new stores remains a challenge but the key drive of the group’s strategy is to expand retail space in Singapore, particularly in areas where the group lacks in presence.
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