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Stocks In Focus (Yangzijiang Shipbuilding (Hldgs), Sheng Siong Group, Suntec REIT) – 26/04/13
Yangzijiang Profit Falls 29.5%; Secures US$0.6b In New Orders Year-To-Date
Yangzijiang Shipbuilding (Holdings) posted a 29.5 percent slide in net profit to Rmb717.2 million for its first quarter ended 31 March 2013, down from Rmb1 billion a year ago. Revenue for the quarter dropped 22.2 percent to Rmb2.9 billion, from Rmb3.7 billion a year earlier, due mainly to lower contributions from its core revenue driver, the Shipbuilding related segment. Gross profit margin improved to 36.1 percent due to improved performance of Investment segment. “The shipbuilding industry has been in a downturn for some time now, and we believe that we have hit the trough as we recently saw signs of renewed activity within the industry. As such, we have been actively engaging interested ship owners in the hopes of winning new orders for the group in the near term,” said executive chairman Ren Yuanlin. Including the new order wins totaling US$597.1 million year-to-date, Yangzhijiang’s outstanding shipbuilding order book stood at US$3.3 billion as at 26 April 2013, comprising of 65 vessels.
Significance: Despite the difficult operating environment, Yangzijiang still maintained shipbuilding gross profit margins at 26 percent, unchanged from 1Q12. The group’s balance sheet remained in a strong position with cash holdings of Rmb8.1 billion and low net gearing of 4.9 percent.
Sheng Siong’s 1Q13 Core Net Profit Jumps 31.3% To $10.5m
Sheng Siong Group reported core net profit of $10.5 million for its first quarter ended 31 March 2013, up 31.3 percent from $8 million last year, mainly due to higher revenue and gross margin. However, after taking into consideration 1Q12’s non-core items which were the one-time gain of $10.5m arising from the sale of the old warehouse and the under provision of prior year’s tax amounting to $1.6m, net profit fell 37.6 percent from $16.8 million in 1Q12 to $10.5 million in 1Q13. As at the end of 1Q13, Sheng Siong’s cash and cash equivalents stood at $123.1 million as compared to $149.1 million as at the end of 1Q12, mainly because of a change in the timing in paying staff bonuses. As a sign of financial strength, the firm remained debt free as at 31 March 2013.
Significance: Moving forward, Sheng Siong expects to see pressure on manpower and input costs. Food inflation may also increase input costs, as food prices are susceptible to sudden disruption in supply caused by weather, diseases or other unforeseen events. Nonetheless, the firm is cautiously optimistic that its supermarket business serving the mass market should remain resilient to these challenges.
Suntec REIT’s DPU Falls 9.2% To 2.228 Cents
Suntec Real Estate Investment Trust (Suntec REIT) announced a distribution per unit of 2.228 cents for 1Q13, down 9.2 percent from 2.453 cents a year ago. Distributable income for the three months ended March was $50.3 million, 8.4 percent lower compared to a year ago, mainly due to the partial closure of Suntec City Mall and Suntec Singapore for the asset enhancement initiative works. Gross revenue during the quarter was 32.2 percent lower at $49.7 million. “In March 2013, we further closed another portion of Suntec City Mall next to Promenade MRT station to execute Phase 2 of our AEI works. Notwithstanding this substantial closure, out of the distribution income of $50.3 million in 1Q13 only $2.7 million from the sale proceeds of Chijmes was utilised for capital distribution,” said chief executive officer of Suntec REIT’s manager Yeo See Kiat.
Significance: As at 31 March 2013, Suntec REIT’s overall committed occupancy for the office portfolio stood at 99.7 percent as at 31 March 2013. Looking ahead, Suntec REIT’s current priorities are to focus on the opening of Phase 1 of the Remaking of Suntec City and the smooth execution of the subsequent phases of the AEI, as well as focus on its proactive lease management.
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