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Singapore stock market and companies daily report (SATS, OSIM, Tiger Airways) (February 08, 2012)

Contributed by Shares Investment

SATS’ 9M12 Earnings Dip 14.1% Amidst A 31% Jump In Revenue
SATS reported a net profit of $120.8 million, 14.1% lower than a year ago even as revenue rose 31% to $1.25 billion. SATS was a beneficiary of the growth in flights and cargo handled at Changi Airport in addition to higher revenue contribution from SATS HK. However, higher expenditures caused the group’s operating profit to drop 3.5% to $120.7 million. During 3Q12, SATS recognised a loss of $5.5 million on the disposal of UK-based Daniels. SATS also witnessed a growing number of flights handled as well as unit services which grew 13.3% and 10.5% respectively supported by the seasonally high travel season from October to December 2011. In tandem with higher passenger traffic, gross meals increased by 4.1% and unit meals by 3%. Separately, its joint venture with Creuers Cruise Services for the management of the Singapore International Cruise Terminal (ICT) is not expected to be profitable in its first year of operations. However, SATS remains confident that, given the ICT’s ability to take larger ships, it will prove to be a profitable venture in the medium to longer term.

Significance: SATS opines that its aviation business in 4Q12 will likely slowdown due to seasonally lower demand as well as the anticipated slowdown in the Singapore economy. However, SATS feels the recent announcements by some carriers to increase capacity and add new routes would present organic growth opportunities for SATS.

OSIM Posts Record Earnings For FY11
OSIM International, the well-being and healthy lifestyle products group recorded an 8.8% increase in FY11 revenue over FY10 to $553.7 million. Net profit surged 37.9% to hit a record of $69 million. The broad based growth for FY11 was supported by increased sales and better margins from increased productivity per outlet and per employee. Sales were also boosted by the launch of innovative products. During the year, OSIM spent $13 million in capital expenditure on the setting up of new outlets as well as upgrading existing ones. In China, OSIM opened 23 new outlets but closed 21 outlets bringing its total retail presence there to 272 outlets in 47 cities. According to chief financial officer, Peter Lee, OSIM intends to further grow with a targeted net increase of 50 stores in 2012.

Significance: OSIM notes that its RichLife brand is currently unprofitable and intends to rationalize some of the 104 current outlets it has. In addition, OSIM had acquired GNC Taiwan for $6.6 million in January-12 which is expected to be earnings accretive, bringing onboard an additional 34 outlets.

Tiger Airways CEO Set To Leave By 3Q12
Tiger Airways chief executive, Chin Yau Seng is preparing to leave the budget carrier after putting in place a necessary structure for sustained recovery and growth. Chin who was a senior executive with SIA, was installed as the chief executive officer of Tiger after the departure of Tony Davies who was dispatched to lead the beleaguered Tiger Airways Australia, following its suspension by the Civil Aviation Safety Authority Of Australia. In a filing with the SGX, Tiger said that Chin had been a distinctive leader during the intervening period and had “stabilized the group, and set it on a course of steady progress and improved governance.” Tiger is now turning its sights towards the global search for a new CEO.

Significance: During his six months at the airline, Chin is widely accredited with cutting Tiger’s losses after the grounding of its entire fleet in Australia. As a result, some analysts are turning cautiously optimistic on the company, signaling the acknowledgement of the viable growth strategy the group has adopted.