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Stocks In Focus SG (Olam, China Minzhong, Ntegrator ) – 30/08/13
Olam’s 4Q13 Revenue Jumps 26.2%; Earnings Slumps 48.1%
For its fourth quarter ended 30 June 2013, Olam International reported a 48.1 percent slump in earnings to $56.8 million although revenue jumped 26.2 percent to $6.5 billion. For FY13, revenue was up 21.7 percent to $20.8 billion while net profit attributable to equity holders dipped 2.2 percent to $362.6 million. The poor 4Q13 earnings was due to higher taxation levels where Olam made an income tax provision of $50.6 million against a net income tax credit of $8.2 million in the previous year as well as the prevailing challenging market conditions. Notably, Olam highlighted that the company has invested a lot into high tax jurisdictions in recent years and while the investments are profit-making, the higher tax incidence is also inevitable. Nonetheless, Olam’s underlying performance in most segments was robust. Its net gearing stands at 1.93 times, as compared to 2.2 times the previous quarter, and marginally higher than the 1.81 times at the end of the FY12.
Significance: Olam’s cash and cash equivalents stood at $1.3 billion, up from $601.8 million a year ago. Free cashflow has also improved to a negative $316 million from negative $661 million in 2012 and the firm aims to be free cashflow positive from FY2014 onwards, a target brought forward by a year after the attack by US shortseller Muddy Waters in November 2012.
China Minzhong’s FY13 Records 11.1% Jump In Net Profit To Rmb755.1m
Amid the challenging claim by short seller, Glaucus Research Group, China Minzhong Food Corporation announced a record net profit of Rmb755.1 million for the financial year ended 30 June 2013, an 11.1 percent surge from FY12’s Rmb679.6 million. The higher net profit was resulted from its broad-based revenue growth of 26.4 percent across both cultivation and processed business divisions, which grew 23.1 percent and 24.3 percent respectively. The group holds a healthy balance sheet with its net operating cash flow increased 164.4 percent to Rmb949.4 million, and with cash equivalents of Rmb826.4 million. Notably, both gross profit and net profit margin slipped slightly to 34.4 percent and 23.2 percent. China Minzhong has achieved success in industrialised farming of champignon mushrooms and will continue to replicate industrialised farming model for other high value crops across major cities in PRC and has plans to adopt the industrialised farming methodology for other types of edible fungi and high value crops as well.
Significance: China Minzhong has been actively expanding its market presence through tradeshows, marketing campaigns and the setting up of new sales representative offices across the globe. Besides established markets such as Asia, Europe and Americas, the group is also tapping on new markets such as South Africa and Canada to further fortify its position as a leading worldwide provider of food solutions. The group has proposed a final dividend of $0.01 per share. Separately, its shares are still in a trading halt until the release of its response to the claim made on 30 August 2013 after 5pm.
Ntegrator Bags 2 Contracts Worth $6.5m
Ntegrator International announced that it has secured two new contracts worth approximately $6.5 million from repeat customers, Myanmar radio and television (MRTV) and the Viettel group of companies. The contracts are to supply communications equipment to Myanmar and Vietnam. The contract with MRTV marks Ntegrator’s third order from MRTV in the year-to-date, reflecting the strong traction Ntegrator has made in Myanmar. The contract from Viettel is also a repeat order, for the supply of dense wavelength division multiplexing and synchronous digital hierarcy equipment to Viettel’s optical broadband network in Vietnam. The two new contracts are slated for delivery in the current financial year and are expected to contribute positively to the groups’s financial performance for the financial year ending 31 December 2013.
Significance: With these latest contracts, Ntegrator’s year-to-date order wins stand at a record of $71 million as at 30 August 2013, the highest since the group’s inception over a decade ago. Ntegrator has made good progress in its key markets in Indo-China and is set on finding more business opportunities from Myanmar and Vietnam.
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