Reports » Singapore

Singapore stock market and companies daily report (Hyflux, Global Logistics Properties, Rotary Engineering) (November 02, 2012)

Contributed by Shares Investment

Hyflux Sees 3Q Earnings Improvement Of 15%
Hyflyx, a water solutions company reported a net profit increase of 15.1 percent on the back of a 76.8 percent jump in revenue for 3Q12. It saw its main sales contributor, the municipal sector, raking in more than double of revenue contributions of $148.7 million, compared to that of $72.5 million in 3Q11. Earnings per share for 3Q12 were up 31.2 percent to $0.0101, compared to $0.0077 in 3Q11. Its China market contributed 17 percent of the group’s revenue, compared to 25.2 percent a year earlier. Also, revenue contributions from its Middle East and North Africa markets also saw significant changes in terms of revenue contribution size, as it only made up three percent of group’s revenue compared to 29.8 percent last year. The rest of its revenue contribution came from Asia. Hyflux said that although global economic uncertainties will continue to have an impact on the pipeline of water infrastructure projects in its key markets, it will focus on driving technology and innovation to provide cost-effective solutions.
Significance: The shift in revenue contributions from its different markets shows a changed reliance in key market, to Asia, where it stood at a solid 80 percent for Hylfux’s revenue, compared to the 45 percent a year ago. This significant change could possibly mean more potential expected for its Asia market.

GLP Further Enhances Fund Management Platform
Global Logistics Properties (GLP) will be contributing 30 of its properties in Japan to a real estate investment estate corporation in Japan (J-REIT). J-REIT will be focusing on owning and operating logistics facilities in Japan. Standing at approximately US$2.6 billion for its initial consideration, GLP is expecting to raise a net US$1.3 billion from the sale of the assets. The proceeds, which will be used mainly for investment in China and Japan is a significant transaction for GLP. GLP’s deputy chairman Jeffery Schwartz noted that this transaction is consistent with several key elements of GLP’s strategy, recycling capital to fund expansion in high-growth markets and growing GLP’s strong fund management platform. Currently, GLP has 68 wholly owned logistics facilities in Japan, and an additional 15 owned via joint venture also in the region. GLP will also act as the property and asset manager of the J-REIT. It has mentioned that it will hold an interest in J-REIT, but specific details on the size of the stake is still not certain.
Significance: This transaction is expected to drive long-term shareholder value as it monetises a considerable proportion of GLP’s portfolio and will generate stable recurring income for GLP, diversifying its earnings base.

Rotary Engineering Takes A Nosedive With $62m Loss In 9M12
Rotary Engineering posted a net loss of $62 million for the nine month ended 30 September 2012, compared to a net gain of $22.7 million during the same period last year. The fall in earnings was due to the problems encountered at the tail end of the construction phase of the SATORP project that had resulted in additional cost and lower gross margin. Rotary derives about 46 percent of its revenue from the Middle East, on par with contributions from Singapore, with Asean and others contributing about 8 percent. Apart from the SATORP project, Rotary has two other projects in the Middle East. This includes a US$250 million contract for Fujairah Oil Terminal in the United Arab Emirates and a US$34 million deal to build 17 field storage tanks in Saudi Arabia relating to the US$1.2 billion Shoaiba II Combined Cycle Power Plant Project in Shoaiba, some 120 km south of the Red Sea city of Jeddah.
Significance: Despite this temporary hindrance, Rotary’s business model remains robust with order book to date standing at $492.5 million, and projects targeted to be completed and delivered progressively up to 2014. As at 30 September 2012, the firm’s cash and cash equivalents stood at $143.7 million with a net cash position of $50.7 million.