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S'pore-listed firms post mild growth in earnings
Publication Date : 30-01-2014
Singapore-listed companies have so far reported modest growth in full-year earnings as the global economy recovers.
By Tuesday, 24 companies had reported full-year results, with S$4.99 billion (US$3.9 billion) in combined profits - down 1.2 per cent from the S$5.05 billion they made in 2012.
But this was mainly due to a sharp fall in earnings from Keppel Corp, which was hit by lumpy income.
Its full-year profit fell S$391.5 million, or 17.5 per cent, to S$1.846 billion, including revaluations.
Keppel is the world's largest rigbuilder, with infrastructure and property businesses as well.
The previous year's numbers had been boosted by one-off gains from unit sales at Reflections at Keppel Bay and gains from equity disposals.
But if Keppel was removed from the equation, the combined earnings of the other 23 early reporters would have exceeded that of the previous year.
"Some of the big companies dragged down (the overall numbers)," said OCBC Investment Research analyst Carey Wong.
Many of the early companies to report are real estate investment trusts (Reits). That helps to explain why the numbers are little-changed from 2012.
"Reits are very stable," said Wong.
Full-year distributable income at CapitaCommercial Trust dipped 0.6 per cent to S$236 million, and distributable income at Suntec Reit fell 0.9 per cent to S$211.2 million.
CapitaMall Trust's distributable income rose 10.6 per cent to S$367.3 million, on higher revenue from some of its renovated malls.
"We observed several key trends among the retail Reits' latest quarterly results," said a note by CIMB Research.
It said interest rates were unchanged from the previous quarter, and Reits still raised rents. But rising labour costs again limited expansion and operational plans of some retailers, said CIMB.
It has a "neutral" rating on the retail Reit sector owing to concerns about the rising operating costs and limited tenant growth due to foreign labour restrictions.
Full-year net profit at lifestyle products company Osim International rose 16.9 per cent to S$101.6 million as fourth quarter earnings rose 22.1 per cent to S$27.6 million.
"Osim's fourth-quarter results met our expectations," said DMG & Partners Research.
DMG said it remains positive on Osim as it is a proxy to the region's growing demand for lifestyle products.
A lot will depend on China for the rest of this earnings season - and for upcoming quarters, said OCBC's Wong.
"The market is pricing in a more cautious outlook," he said.
"If there are any issues with China, everyone will catch a cold. People used to say that about the United States, but now, more people are looking at China."
Investors have been concerned over China's slowing economic growth and its loosely regulated shadow banking sector.
Wong noted that Singapore banks "will show more colour when they report".
The three local banks - DBS Group Holdings, OCBC Bank and United Overseas Bank - are all slated to report earnings on February 14.
*US$1 = S$1.28