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Stocks In Focus SG (DBS Group, Ley Choon Group, Civmec) – 01/08/13
DBS Group Reports 10% Rise In 2Q13 Earnings
DBS Group Holdings delivered a record half-year earnings of $1.8 billion for the six months ended June 2013, up 5.4 percent from a year ago. This was on the back of a 12.8 percent rise in total income to $4.6 billion on higher loan volumes and broad-based non-interest income growth. For the quarter, net profit was up 9.5 percent to $887 million while total income increased 18.7 percent to $2.3 billion. DBS’ 2Q13 profit was above the $862 million average forecast in a poll by Reuters. Meanwhile, its balance sheet remained strong as asset quality continued to be solid with non-performing loan rate remaining at 1.2 percent, unchanged from recent quarters. Loan-deposit ratio was also little changed at 90 percent and capital adequacy ratios continued to be comfortably above regulatory requirements. Separately, DBS announced that it had dropped its bid to take a controlling stake in PT Bank Danamon Indonesia Tbk, although it remains committed to expanding its presence in the country.
Significance: While DBS has been an outperformer in recent years, helped by double-digit loan growth and strong fee income, analysts note that the earnings momentum may slow due to weaker growth in China and its effect on Hong Kong, DBS’ second largest market, as well as a series of government measures to tighten lending in Singapore’s sizzling property market.
Ley Choon Group Announces Contracts Won Worth $63.9m And Placement To Hiap Hoe
Ley Choon Group Holdings announced that the Land Transport Authority has awarded two contracts worth approximately $63.9 million in total to the Company’s subsidiary, Ley Choon Constructions and Engineering. Both contracts are in relation to the planned maintenance of roads/ expressway, road related facilities and road structures. Executive chairman and chief executive officer of Ley Choon, Toh Choo Huat, said that the contracts were timely as Ley Choon have recently commissioned its second asphalt premix plant. Separately, Hiap Hoe has acquired 14.9 percent stake in Ley Choon for $14.5 million via a placement of 88.3 million shares at a placement price of $0.1642 per share. Hiap Hoe believes that the complementary businesses present opportunity for both companies to realise operational synergies and cost efficiencies, which will create value for investors.
Significance: Ley Choon’s order book stands at $219.7 million to date. The project wins demonstrates Ley Choon’s recognition of delivering consistent quality work in the field and in undertaking large-scale projects. The projects are in line with the group’s plan to build on its core competencies in Pipes and Road segment.
Civmec Wins Contracts Worth $100m
Civmec’s subsidiary, Civmec Construction & Engineering, an Australian based integrated multi-disciplinary heavy engineering service provider, announced it has recently been awarded a number of new contracts with aggregate worth of more than $100 million. Among the contracts, Civmec received three new contracts from Rio Tinto, Sedgman and OneSteel and several number of extension contracts including several of its LNG projects. The contract for Rio Tinto is a civil concrete works package and site work, designed to sustain production capacity at Yandicoogina iron ore mine. Sedgman awarded Civmec several contracts for the construction of a new processing plant for its Mungair gold. The contract for the Onesteel Metalcentre distribution facilities includes civil works and building contract for a complete facility. Civmec’s chief executive officer, Pat Tallon said that the contracts won demonstrates a continuing confidence in Civmec’s level of performance and expanding of its customer base.
Significance: Civmec’s order book is approximately $190 million as at 31 July 2013. The company is maintaining a high level of tendering activity in view of a growing number of opportunities and projects come onto the market.
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