StockNews - UOB emerges tops in profits ranking

United Overseas Bank was the most profitable bank in Singapore, netting profits of S$1.7 billion in FY05. This was against the net profit of S$1.3 billion for OCBC and S$0.8 billion for DBS. Looking forward most analysts are still expecting DBS to perform better for FY06. However, UOB is deemed to be the least risky play for banks at the moment due to its lower valuation currently. Moreover UOB has not risen as much as DBS and OCBC for the past 2 years.

As my personal opinion, UOB is the best bank stock to hold be it in the long run or short term investment. UOB's strategy of expansion has yielded results better (with its Philippines acquisition as the major mistake). On the other hand DBS' lower profit for FY05 was due to a S$1.1 billion goodwill impairment charge of its HK operations.

However, there are downside risks to UOB, as 2 major listed companies, UOL and Haw Par both holds a substantial stake in UOB and should they dispose UOB shares for shareholder returns, price of UOB will be depressed.

StockNews - C&O Pharmaceuticals purchases distributor company

C & O Pharmaceuticals, which recently announced an FY05 revenues totalling HK$295.8million and a net profit of HK$96.0million will purchase 100% of Shenzhen Liancheng Medicine Company Limited. With the company having a net cash position after disposing of its bank loans in 2005, this acquisition looks set to be a good fit for the company as it allows the company to expand its distribution within mainland China, which is currently the fastest growing pharmaceuticals market in the world.

C & O's purchase price of RMB45million represents a 45.1% premium over Shenzhen Liancheng's audited net asset value of RMB31million. However this transaction includes a profit guarantee of RMB13.5million by Shenzhen Liancheng for the year ending 31 December 2005, meaning that it will be earnings accretive for C & O. In addition Shenzhen Liancheng also possesses an export/import licence in the PRC which makes the premium to the purchase price worth it.

PropNews - Ho Bee and Sentosa

Recently, Ho Bee won another tender for the purchase of another land parcel at Sentosa. The bad news is that this land parcel was bought at a much higher price compared to its previous sites. Analysts have indicated a selling price for units at this land parcel to stand at around S$1,200-S$1,300 psf. This comes down to around a 25% increase to the average selling price of its initial Berth by the Cove Condominium which was at around S$830psf. It will also be one of the most expensive condominiums sold in Sentosa to date.
So far, Ho Bee has a total of 5 projects on Sentosa, and they are:
1) The Berth by the Cove: Leasehold Condominium (94% sold)
2) Berthside: Leasehold Terrace Housing (100% sold)
3) Coral Island: Leasehold Bungalows
4) Paradise Island: Leasehold Bungalows
5) The Baywater Collection: latest plot to be purchased.
However, the good news is that Ho Bee recently announced that net profits soared by 130% to S$38m in FY05. Much of this has got to be its timing in the first buyer of land in Sentosa to develop the Berth by the Cove. With the prospects of Genting and Universal Studios being the favourites to win the Sentosa Integrated Resort bid, the land sales that follow including the Quayside collection will likely spur an increase in the prices of land in Sentosa, further boosting prospects for Ho Bee.

StockNews - Landwind & China Hongxing both report profits

Landwind Medical, a recent listing in SGX as well as one of the many China-based companies, is a major distributor and manufacturer of medical imaging equipments. Besides distributing for major brands like Philips and Siemens, it manufactures its series of portable ultrasound scanners. With a huge distribution coverage across China, it has reported that revenues for FY05 increased 29% to RMB247.2million. At the same time, net profit before tax increased 19% to RMB61.0m and net profit after tax in increased by 9% to RMB56.2m. On top of that, its order book as at 31 Jan 2006 stands at RMB85.4m, twice compared to that in the previous year. The order book calculates all completed and invoiced sales.


China Hongxing, another recently listed China play, is one of the larger manufacturer of sports shoes and markets it under its own proprietary brand, Erke. Its main competitors in China includes Anta, Li Ning and not to mention global giants like Adidas and Nike. However with sales being targeted at second tier cities, China Hongxing has reported an increase in turnover by 34.2% to RMB899.6m for FY05. This was accompanied with a surge in net profit to RMB127.5m which is a 44.6% increase from FY04. This increase could be attributed to increase in the number of Erke specialty stores from 1,600 in 2004 to as much as 2,100 by end of 2005, increasing brand visibility and driving sales.

As China gears up for the 2008 Olympics, sales of sports shoes and apparels looks set to increase. Furthermore from the case of Landwind and China Hongxing, we have seen that sales in 2nd tier cities in China have been rising, indicating more affluence of residents in these cities. Landwind's cheaper proprietary products could also look forward to a boost as a result.

WiseVest - Aerospace Sector

ST Aerospace, the aerospace engineering division of SGX-listed ST Engineering announced its expansion of hangar in Singapore. The new hangar, to cost S$25m to build will be located near ST Aviation Services Co. (SASCO) Changi facility and will enable ST Aero to expand its maintenance, repair & overhaul (MRO), allowing it to capture more customers on the back of increasing air transport in the region.

Speaking of air travel, budget carriers in the region will hurt profits of national carriers like Thai Airways, SIA, MAS and Garuda Indonesia. Furthermore with Australia closing the door on SIA for the lucrative Sydney-LA route, airlines stock are frankly still not a good buy now. Rather, to bank in on the popularity of air transport, look to companies providing indirect services in this sectior. For example, SIA Engineering company and SATS which provides MRO and catering services. Rumors abound a few months back on the possibility of SIA Engineering being acquired by ST Aero which could be a good fit and adds to synergies in making ST Aero a worldwide player in the MRO sector.

For small caps, look at Inter-Roller Engineering, whose business is indirectly within the air transport services sector. Inter-Roller specializes in installing baggage handling systems in airports in the region. On the back of massive investment by India and China in building new airports and upgrading systems of their airports, Inter-Roller has seen their order book to a record S$220m. It was recently awarded a new contract worth S$42m to install a baggage handling system in one of China's largest airports to cater to 40m passengers. This project is expected to complete in 2007.

StockNews - LMA purchases new technology

LMA International N.V., the innovative manufacturer of airway management devices, announced that it has acquired the intellectual property and distribution rights to an innovative lithotripsy device from a Swiss inventor and engineering team.

By purchasing 50% of the equity of LMA Urology Limited, a Seychelles-incorporated company, for US$3.84 million, LMA will gain access to the exclusive intellectual property rights of an innovative lithotripsy device known as "Stonebreaker".

Lithotripsy is a procedure to obliterate kidney stones in the bladder, ureter or kidney, a condition that affects more than 2 million people in the US and Europe every year.

This product is currently undergoing the approval process in Europe and is expected to receive the CE mark in the second quarter of 2006. Application for FDA approval for the US market is expected to commence in the second half of 2006.

According to LMA International's press release, the "Stonebreaker" device represents a breakthrough in size, power, portability and clinical effectiveness and is expected to be very attractive to existing interventional urologists worldwide.

In addition, LMA has identified a further 25 major market urology distributors with whom separate distribution arrangements will be negotiated. Sales and marketing of the new product will be managed independently of LMA's core airway management business and a management team with the relevant expertise will be put in place to focus on developing this new business. The high-quality Swiss-made device is expected to offer both technical and clinical advantages compared to current treatment options and offers the potential to make the lithotripsy procedure more affordable and accessible to a wider number of physicians and their patients."

Upon entering the lithotripsy market, LMA will then compete wih well established companies like Microvasive Urology, ACMI, Dornier MedTech, Karl Storz, Coloplast, Astra Tech, Bard Urological.

This deal seems to add future prospects to growth for the company as it embarks on new ventures beyond their mainstream airway management devices. If this venture proves successful, LMA would be more confident in increasing its product offerings and would grow on to be one of medical device manufacturers that offers diverse range of services.

Furthermore this purchase seems to add on to profits as half of the payments are made upon reaching certain revenue targets. On top of that, LMA is treading cautiously on this deal but is able to puchase the remaining shares in LMA Urology.

WiseVest - China Fishery expands its fleet

Recently listed in SGX, this stock have climbed up on the back of record profits and it is now expanding its fleet of fishing boats. Upon entering the vessel operating agreement (VOA) with Alatir, China Fishery Group (CFG) would expand its operations of super-trawlers in the Pacific Ocean to 14.

The VOA states that China Fishery is entitled to the proceeds of the sales of all the catches harvested by the vessels while Alatir receives a fixed charter hire of US$12,000 per vessel per day as well as a 20% share of the operating profits to be derived by China Fishery. This would generally refer that operating costs of CFG would be expected to increase though fixed assets and depreciation would be kept at its current rate for the FY06.

China Fishery has announced a net profit after tax of US$30.658million in FY05 compared with a net profit of US$17.653 in FY04. This would represent a prudal move by CFG to expand its operations in Asia Pacific.

StockNews - Australia Toll Holdings & SembCorp Logistics

Yesterday, SembCorp Industries (SCI) denied any deal being discussed with regards to its stake in associate company SembCorp Logistics (SCL). Currently, SCI holds 60.5% of SCL and at current market prices, this would translate to about S$763m. It has been suggested by many stockbroking firms that SCI is looking to divest its stake in SCL and its Engineering & Construction arm for some time especially since SembCorp Logistics failed JV with a European logistics firm last year. With divestment of its underperforming logistics & construction arm, SCI is likely to concentrate more on the profitable utilities business, and with a huge billion dollar expected to come in from the Middle East, there should be an upside to SCI's price. If any formal takeover offer is published, SembCorp Logistics could also become a new focus in the market.

StockNews - LCD TVs Industry

China's TCL Multimedia and France's Thomson have initiated a strategic alliance to buy large liquid crystal display (LCD) panels from LG.Philips. In the deal, TTE Corp., which is a TCL-controlled joint venture with Thomson, will receive constant supply of thin film transistor LCD (TFT-LCD) panels from LG.Philips, one of the few manufacturers of such devices which is essential in the production of large-sized LCD TVs.

The agreement comes less than two months after Dutch electronics giant Philips , a partner in LG.Philips, said it would pay 20 million euros ($24 millin) to triple its stake in TCL Multimedia's parent, China-listed TCL Corp. , to 7.46 percent from 2.46 percent.

The deal is similar to one signed earlier this month by TPV Technology Ltd. , the world's largest computer monitor maker and also a maker of LCD TVs, and LCD panel maker BOE Technology Group Co. Ltd. , TPV's largest individual stakeholder.

Under that deal, TPV agreed to buy LCD panels worth $2.3 billion from BOE over the next three years.

From the above 2 deals, there have been an increasing trend of new Asian companies that are edging their way into the LCD TVs market. This is mainly due to the consumer demand across Asia Pacific for upgrades into flat screen thin TVs. However, falling prices due to increased competition would likely hurt profits, but all is not lost as companies can look forward to replacement in the next 5 years as LCD TVs and Plasma TVs have shorter lifespans than mass-market CRT TVs.

StockNews - Companies and their rise in earnings

Several companies announced their results recently. Some of the stellar performers include WBL Corporation HTL International. For a start, sofa and furniture maker HTL reported a 4Q05 net profit of S$18m, being above expectations and WBL announced a net profit of S$26m, again above market expectations. Meanwhile the larger giants like SembCorp Marine reported a total FY05 net earnings to be at S@121.4m, which was slightly below market expectations. This has led to slight sell-off of its shares due to shortfall in earnings. However with the order book of SembCorp Marine still full, future outlook still remains bullish for the stock.

StockNews - Sincere Watch posts huge jump in earnings

Singapore-listed high end watch retailer Sincere Watch reported a more than six-fold leap in its third-quarter earnings to S$15.7 million from S$2.5 million. This is mainly due to exceptional gains from the sale of stakes in its Hong Kong-listed unit and lower operating costs. One other factors could be the increase in the influx of Chinese tourists into Hong Kong & Singapore with the Disneyland theme park and bullish sentiment on the economy. Moreover, the building of IRs in Singapore would also increase influx of high end tourism clientele. Being one of the largest and most reknowned watch retailer in Asia should continue to bode well for this company. The only drawback? This company's share is not heavily traded and volumes are thin so do not expect large fluctuations but rather look forward to a steady growth.
Another retailer to watch for could be FJ Benjamin. This company has similar trademarks like Sincere, with low volumes being traded daily but has shown moves into high end retailing with the holding of the Guess? and Girrard Perregaux franchise in some ASEAN countries, and is moving into distributing GAP & Banana Republic in Singapore. On top of that it has its own proprietary brand Raoul which is gaining success throughout Asia. Trading currently at around S$0.43-S$0.46, it seems a feasible investment as the company seems to be on track for growth.

Analyz - Of Commodities & Soybeans

Increasing demand from China for commodities have pushed prices of steel, oil, rubber and other soft commodities into the high regions. Commodity prices looks set to remain high until 2008, as China is forecasted to maintain its economic growth in the years leading towards the Summer Olympics in China. One of the key commodities in view is that of Soybeans. China seems to have an insatiable demand for soybeans (in addition to pork) and it is possibly the largest importer of soybeans. One country to have benefited from it is Argentina and Brazil where large orders have come from. However, companies will be expected to benefit from this demand and rising prices of soybean. Noble Group (S$1.410), one of Singapore's largest listed commodities trader will most probably see increase in profits especially so when it deals in various commodities. Another 2 company to watch are China plays like Celestial Nutrifoods (S$0.950) and Pine Agritech (S$1.330). Pine Agritech has nearly doubled in value since Dec 2005 when it was trading at S$0.69 and this could be related to their high tech production of soybean and soybean related products in China catering to one of the largest soybean consumers in the world.

StockNews - SembCorp looks set to clinch mega deal in UAE

A team from SembCorp Utilities have gone on to United Arab Emirates to discuss the bid for a project involving the building of a water desalination plant that would have a capacity of around 100 million gallons per day (roughly around 1/3 of Singapore's capacity). Such a project will most likely add international recognition to SembCorp on top of the financial revenues it will reap. SembCorp emerged as the highest bidder in the project with a bid price of more than S$1.3 billion. As a result it has been picked as one of the 2 front-runners in this project which also involves a purchase of 40% of stake in an UAE power plant.

PropNews - Far East buys another Orchard Rd property

Business Times Singapore reported today that Far East Organization will be buying Angullia Mansions, a prime freehold property beside Four Seasons Park for S$120 million. With development costs and the ability to incorporate up to 60 apartment units with sizes averaging 2000 sq. ft., analysts are expecting the new development by Far East to be able to break even at just a price of S$1,400 psf. This would be significantly lower than the Orchard Turn site which has only a leasehold site of 99 years and requiring a breakeven of at least S$2,000 psf.
This new acquisition comes on the rush by Far East to purchase properties in the Orchard Rd area. In addition to partially owning Far East Plaza, Far East Shopping Centre, Lucky Plaza, Orchard Shopping Centre, and some other retail buildings around Orchard Rd, it also owns and operates the Orchard Parksuites, Elizabeth Hotel, Regency House and Orchard Parade Hotel. This portfolio makes Far East the largest private property owner in the Orchard Rd belt.

Analyz - SATS, SIA Engineering, ST Engineering

Since the speech by MM Lee of Singapore on the need for SIA to focus on its core airline business, there have been talks of merging SIA Engineering (SIAE) with ST Engineering. Now both associates of SIA, SIAE and SATS have jumped and SATS today announced its wide scope cooperation agreements, with SATS providing technical consultation businesses and managing the Karachi flight kitchen of national carrier Pakistan International Airlines (PIA). By expanding gradually abroad with up to 13 JVs overseas already, SATS is improving investor relations and developing long term partnerships in the airline catering and services sector. Furthermore this will also make SATS more recognized to foreign carriers, who would be more comfortable with working a trusted name like SATS in Singapore, enhancing its solid standing.

StockNews - Biosensors defends suit successfully

Biosensors yesterday successfully defended itself from the suit filed at the Hague by Canada based Angiotech Pharmaceuticals and Boston Scientific. By the success of this, Biosensors will be able to continue producing its Axxion drug-eluting stents in the Netherlands, allowing it to distribute it throughout Europe and worldwide where respective regulatory approvals have been obtained. Biosensors closed at $1.20 yesterday, up from $1.05 on the last day of trading before the long CNY break. More upside can be seen as it dropped from $1.38 in Nov 2005 when news of the lawsuit breaks.