The Straits Times / The Business Times News on OSIM

Latest earnings meet or exceed expectations

LATEST quarterly results reported by major Singapore listed companies have generally met or exceeded analyst expectations.

Companies like Singapore Exchange (SGX), DBS Group, SembCorp Marine, Keppel Corporation and StarHub posted strong gains for the quarter ended June, that came out ahead of market expectations.

Creative Technologies may have posted a full-year loss of US$118.2 million, the firm's worst showing in five years, but its loss for the fourth quarter ended June of US$12.7 million was better than the median estimated net loss of US$19.6 million analysts had expected.

Singapore's largest company by market capitalisation, Singapore Telecom, beat market expectations with a net profit of S$840 million for the second quarter ended June, up 5.8 per cent and ahead of analysts expectations of growth of no more than 5 per cent.

Singapore's second largest telco StarHub posted a 44 per cent rise in second quarter net profit to $75.7 million, which was 20 per cent higher than the median estimate of five analysts surveyed by Bloomberg News.

But another telco, MobileOne, saw an 8 per cent drop in net profit for the second quarter to $36.9 million, which was below market expectations.

Local banks enjoyed the benefit of a strong Singapore economy with DBS posting a better than expected 16 per cent rise in net profit of $549 million, excluding a one-time gain.

Strong trading in stocks and derivatives drove SGX's net profit for its fourth quarter ended June up 97 per cent - well ahead of a Reuters consensus estimate of 62 per cent - to $55.1 million.

Market favourite Keppel Corporation, a leader in rig building, saw second quarter net earnings jump 47 per cent to $196 million.

Among technology stocks, semiconductor test and advanced packaging service provider, STATS ChipPAC, announced a record net profit of US$18 million in the second quarter ended June 30, but warned of a slowdown in growth in the third quarter and said it will retrench 460 employees in the third quarter this year.

Chip foundry Chartered Semiconductor Manufacturing reported second-quarter earnings that came below market expectations and warned of a weaker third quarter.

Among small cap stocks, CLSA analyst Jason Wee said the weak results posted by Jurong Technologies and Sarin Technologies were well flagged.

Mr Wee noted that Osim International's recent results were stellar and the company is set to do even better in the second half. The healthy lifestyle products group's net profit in the three months ended June 2006 increased to $13.3 million from $12 million a year ago.

For the quarter ended June, the highest net profits were posted by United Overseas Bank and OCBC Bank with $1.13 billion and $795 million respectively, both of which were helped by massive divestment gains.

For the first half of this year, of the 436 companies that have released their financial results as of last Friday, total profit reported is $12.92 billion, up 30.6 per cent year on year. Of these companies, 83 per cent are in the black.

Looking ahead, DBS Vickers Securities sees the upswing in the oil and gas equipment and services cycle lasting another five years at least. It likes companies such as Cosco Corporation, Keppel Corporation, SembCorp Marine and Ezra Holdings.

With expectations of continued strength in Singapore's property market, analysts are also upbeat on prospects for property stocks.

DBS Vickers Securities said that Wheelock Properties' latest quarterly net profit of $26.5 million, up 42 per cent, came in ahead of its expectations, and it expects Wheelock to benefit from its land bank of prime properties as the high-end segment continues to lead the residential market growth.

Merrill Lynch is positive on the outlook for the Singapore real estate investment trust (Reit) sector, noting that the yield gap enjoyed by the average distribution per unit for Reits over the ten year government bond is undemanding from a global perspective.

As for banks, Citigroup analyst Robert Kong thinks the reflation theme in Singapore has run its course and says Singapore's mortgages remains sluggish despite improving residential property sales.