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Singapore stock market and companies daily report (Yangzijiang Shipbuilding, HTL International Holdings) (August 12, 2010)

Contributed by Shares Investment

By Shares Investment

US Stocks Plunge On Recovery Worries
The Dow Jones Industrial Average fell 2.5% to 10,378.83 as investors lost confidence in the global economic recovery following the Federal Reserve’s grimmer outlook and softening growth in China. The S&P 500 was down 2.8% and the Nasdaq tumbled 3%. US trade deficit widened more than expected in June amid a surge of consumer goods from China and other suppliers, while US exports fell, according to a government report. Earlier, China reported that the pace of growth investment and factory output slowed in July, raising worries about the outlook for Chinese domestic growth, which has been expected to drive the global recovery. Oil sank to settle at US$78.02 a barrel in line with tumbling global equity markets as investors set aside a positive International Energy Agency report on demand. Gold erased early gains to trade flat as losses in the equity markets prompted investors to sell assets across the board.

Yangzijiang Registers Quarterly Record For 2Q10 Profit
Yangzijiang Shipbuilding posted Rmb800.5m in net profit for 2Q10 – a quarterly record – as it delivered more vessels during the period. Lifting net profit by 32%, Yangzijiang’s 2Q10 revenue grew 23% YoY to Rmb3.07b with the progressive rise in the new yard’s productivity. Higher margin contracts also raised gross profit margin by 1% point from a year ago to 25%. For 1H10, the group’s net profit rose 27% YoY to Rmb1.09b on the back of a 25% increase in revenue to Rmb4.6b. Yangzijiang’s order book stood at 124 vessels with a total value of US$5.2b as at June 30. According to group executive chairman Ren Yuanlin, the group’s M&A strategy would focus on expanding shipbuilding capacity, vertical expansion to improve profitability and diversifying into the offshore sector to increase long-term market share. The group is also seeking out new ventures to supplement its earnings.
Significance: With its robust 2Q10 performance and strong foundation in shipbuilding business, Yangzijiang is well positioned to leverage on its strong balance sheet to further increase its market share, especially with shipbuilding industry at its consolidation stage.

HTL International’s 2Q10 Profit Rises 67% To $7.8m
HTL International Holdings (HTL) has reported a 66.9% YoY increase in 2Q10 net profit to $7.8m. Revenue edged up 2.6% to $164m, with all markets recording stronger sales despite global economic volatility. For 1H10, the company boosted revenue by 10.2% to $315.1m, led by the North American market. Sofa sales in all markets rose 14.7% to $289.3m. Despite a weaker euro and already-high European sales, HTL was heartened by a 3.6% increase in sofa sales in this market – its biggest – to $180.8m. But home furnishing sales remained flat at $25.9m from a year earlier. 1H10 net profit dipped slightly to $17.6m from last year’s $19.5m. HTL pointed out that 1H09 net profit was ‘boosted by an exceptional net foreign exchange gain of $14.2m’.
Significance: With the bulk of its revenue coming from Europe, HTL may face a challenging environment going forward as austerity measures to fix Europe’s debt problems could hurt businesses and consumers still reeling from the economic downturn.

This article is contributed by Shares Investment. Visit Sharesinv.com for the latest Singapore, Malaysia and China stock market news and reports.