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The Weekly Round-Up: Keppel Corporation, Singapore Airlines and Sheng Siong

·4-min read
Aeroplane Landing Gear
Aeroplane Landing Gear

As earnings season kicks off, we review the results from two blue-chip companies and a supermarket retailer.

Keppel Corporation Limited (SGX: BN4)

Offshore and marine conglomerate Keppel pulled off a surprise first-half result with a sharp turnaround.

The rig builder reported a 15.5% year on year jump in revenue to S$3.7 billion, boosted by increased revenue from construction contracts and the sale of property.

The group swung into an operating profit of S$188 million, reversing the S$149.4 million operating loss booked the year before.

Net profit clocked in at close to S$300 million after improved results from its investment income and share of results of associates and joint ventures.

In line with the rise in profits, Keppel quadrupled its interim dividend from S$0.03 to S$0.12 in line with the better performance.

However, one negative was that operating cash flow remained negative, and the group’s free cash flow stood at negative S$549.3 million.

Still, CEO Loh Chin Hua sounded an optimistic note.

He reiterated that Keppel remains committed to its Vision 2030, and continues to execute its asset monetisation programme, with around S$2.3 billion of assets that has been monetised in the last nine months.

He also reminded investors that the group had performed better than 2019’s pre-pandemic first-half, excluding government grants and one-off items.

The conglomerate intends to hit the lower end of the S$3 billion to S$5 billion monetisation target by end-2023 and strengthen its balance sheet for more opportunistic acquisitions.

Investors should feel heartened by this set of results and feel encouraged by the CEO’s sanguine remarks.

Singapore Airlines Limited (SGX: C6L)

Singapore Airlines Limited, or SIA, released its fiscal 2022 first-quarter business update for the period ended 30 June 2021.

The carrier remained mired in losses and was unable to shake off the red ink as borders remained shut due to the pandemic.

However, total revenue enjoyed a 52.2% year on year boost as the airline progressively rebuilds its network.

There was a calibrated and gradual increase in passenger capacity, which ended the quarter at 28% of pre-COVID levels.

Cargo was the bright spot here, with revenue growing by 32.4% year on year due to an increase in cargo capacity and loads carried.

Operating loss narrowed significantly to S$274 million from S$1 billion in the same period last year, while net loss was reduced by nearly 64% year on year to S$409 million.

The group’s balance sheet was strengthened by the issuance of the S$6.2 billion of mandatory convertible bonds and SIA ended the quarter with S$13.7 billion in cash balances.

SIA continues to have one of the youngest fleets in the industry. Its operating fleet of 164 passenger aircraft and seven freighters have an average age of five years and eleven months.

The group is also working on slowly expanding its range of destinations, and expects to increase passenger capacity to around 33% of pre-COVID levels by the end of the current quarter.

The outlook for the airline remains uncertain due to the pandemic’s trajectory, but investors will be relieved to know that the group has sufficient liquidity to tide it over.

Sheng Siong Group Ltd (SGX: OV8)

Sheng Siong released a decent set of earnings for its fiscal 2021 first half (1H2021).

Revenue dipped by 8.8% year on year to S$681.7 million while gross profit inched down 6.8% year on year to S$192.5 million.

The decline was due to the high base effect from last year’s Circuit Breaker (CB) measures.

Other income dropped off sharply to S$7.5 million as government reliefs tapered off, resulting in a 12.1% year on year decline in net profit to S$66.1 million.

An interim dividend of S$0.031 was declared, slightly lower than the S$0.035 paid out last year.

The supermarket retailer has held its own even as demand tapered off after the initial CB period.

The group even managed to raise its gross margin further to 28.2%, a three-year high.

Further expansion may be slow as the pandemic had affected the supply of HDB shops, leading to delays in the bidding process.

In the meantime, Sheng Siong continues to nurture the growth of its China operations in Kunming.

Another two stores are slated to open in the second half of 2021, adding to the group’s existing two stores there.

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Disclaimer: Royston Yang does not own shares in any of the companies mentioned.

The post The Weekly Round-Up: Keppel Corporation, Singapore Airlines and Sheng Siong appeared first on The Smart Investor.

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