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Stocks In Focus (SingTel, XMH Hldgs, YHI Int’l) – 20/05/13
Optus Unveils Plan For Australia’s First Multi-Band 4G Network
SingTel’s Optus announced its network plans and strategy beyond 2014, including rolling out Australia’s first multi-band 4G network. “Reaching these milestones is just the beginning. Our focus over the coming year is to continue strengthening our 3G network, growing our 4G network, and expanding our 4G technologies to include TD-LTE, starting with the launch of TD-LTE in Canberra,” said Günther Ottendorfer, managing director of Optus Networks. Currently, 4G networks in Australia run on FD-LTE, which uses two separate frequency channels, one for data traveling in each direction. TD-LTE is a new flavour of 4G technology, where the upload and download of data happens on the same frequency, but at different times.
Significance: Optus will be the first Australian carrier to take its network to the next level with a combined TD/FD-LTE 4G network. Moving forward, it aims to expand coverage for both types of 4G in the coming year to reach over 70 percent of the metro population by mid-2014. Currently, Optus’ 3G coverage reaches 98 percent of the Australian population.
Credence Capital Fund II Purchases 36m New XMH Shares
XMH Holdings announced that Credence Capital Fund II (Cayman) has agreed to subscribe up to 36 million new shares at an issue price of $0.2774 each, raising net proceeds of $9.9 million. The purchase price represents a discount of 4.3 percent to the weighted average trading price of $0.29 per ordinary share of XMH on 17 May 2013, being the last full market day immediately preceding the execution date of the subscription agreement. Credence is a Southeast Asia private equity fund, providing growth stage capital and expertise to small and medium enterprises within the advanced manufacturing, information communication technology, services, logistics and consumer sectors.
Significance: The net proceeds are primarily used to fund the proposed development of the JTC land which XMH has recently acquired, and which the firm intends to construct new premises to, amongst others, accommodate new assembly and production lines and increase general warehousing capacities.
YHI’s 1Q13 Earnings Drop 73.5% To $1.5m
YHI International’s earnings for the first quarter ended 31 March 2013 fell 73.5% to $1.5 million while revenue dropped 12.7% to $120.4 million. The weaker performance was due to lower demand for company’s products in both distribution and manufacturing businesses. Subsequently, YHI’s gross profit margin declined to 21.6 percent in 1Q13 compared to 22.4 percent a year ago. Executive chairman and managing director, Richard Tay highlighted that YHI has recently set up a new office in Philippines; started distributing its propriety brand, Neutron Tyres in China, the Middle East and Latin America; and has obtained exclusive distribution rights for Otani Tires in Singapore and Hong Kong and Double Coin Tires in Cambodia. Meanwhile, the firm has also inked a new Formula One sponsorship for supplying the Advanti Racing brand of alloy wheels to Mercedes AMG Petronas Formula One Team.
Significance: Despite lower results, YHI’s balance sheet remains healthy with net assets of $265.6 million. In view of the continuing uncertainties in the global economy, YHI expects global demand to remain weak. The firm also expects volatility in raw materials prices such as aluminium and currencies to continue in 2013.
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