Nov 9, 2012

ASEAN - ASEAN Market Preview: Integrated Micro-Electronics, Total Bangun, Fraser & Neave, Singapore Airlines

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The S&P 500 dropped for a second day and closed below its 200-day moving average for the first time in five months.

The moving average is a measure of the market’s long-term trend, and a significant breakthrough that level would be seen as a sign of weakness. Just minutes before the closing bell, stocks accelerated their declines and the S&P 500 fell more than 1 percent.

Since reaching a 52-week closing high of 1,465.77 on September 14, the S&P 500 has dropped 6 percent. On Wednesday, a day after Democratic President Barack Obama defeated Republican Mitt Romney in the U.S. election, the benchmark S&P 500 dropped more than 2 percent for its biggest one-day percentage decline since June 1.

Investors worry that if no deal is reached in Congress over some $600 billion in spending cuts and tax increases due to take effect early next year, the struggling U.S. economy could fall into recession.


The SIA Group registered a net profit of $168 million in the first half of the 2012-13 financial year, a decline of $71 million (-30%) over the same period last year. This was mainly attributable to lower non-operating items as the Parent Airline Company last year benefited from a higher surplus on the disposal of aircraft and spare engines.

Group operating profit increased $8 million (+6%) year-on-year to $142 million. This was contributed by the improvement from the first quarter (+$61 million), albeit off a low base following the Japanese earthquake in the corresponding quarter last year. However, the $61 million increase was partially offset by a weaker second quarter (-$53 million), with the widening of losses from SIA Cargo as the air freight market remained soft.

Group revenue grew $294 million (+4%) to $7,571 million, on the back of 8.0% growth in passenger carriage, partially set off by a 3.4% decline in yields. Group expenditure rose by $286 million (+4%) to $7,429 million, principally on account of higher fuel cost (+$112 million, or +4%), arising from higher fuel volume uplift as capacity grew 5.1%. Other variable costs also increased in line with the capacity growth.

The operating results of the airlines’ companies in the Group for the first half of the financial year are as follows:

- Parent Airline Company Operating profit of $169 million ($53 million profit in 2011)

- SilkAir Operating profit of $37 million ($34 million profit in 2011)

Operating performance first half year 2012-2013

The Parent Airline Company recorded an 8.0% increase in passenger carriage (in revenue passenger kilometres) during the half year, exceeding the 5.1% capacity expansion (in available seat-kilometres). As a result, passenger load factor improved by 2.1 percentage points to 79.6%.

SilkAir’s capacity growth of 23.1% was closely matched by the increase in passenger carriage, pushing passenger load factor marginally higher to 74.4%.

Singapore Airlines took delivery of two A380-800s, reinstated two B777-200ERs that had been leased to another airline, decommissioned two B777-200s and returned one B777-300 on expiry of its lease during the second quarter. As at 30 September 2012, the operating fleet of the Parent Airline Company comprised 101 passenger aircraft – 58 B777s, 19 A330-300s, 19 A380-800s and five A340-500s – with an average age of 6 years 4 months.

SilkAir took delivery of one A320-200 during the quarter, and as at 30 September 2012 its operating fleet comprised 22 aircraft – 16 A320-200s and six A319-100s. SIA Cargo’s fleet remained unchanged at 13 B747-400 freighters. Scoot took delivery of two B777-200s, bringing its total fleet to four aircraft. It also launched inaugural flights to Bangkok, Taipei and Tianjin during the quarter.

With the commencement of the Northern Winter schedule on 28 October 2012, the Parent Airline Company is operating daily B777-200 services to Yangon. The new flights have replaced seven of SilkAir’s 16 weekly A320-200 services and increased combined seat capacity by 55%. A new Singapore-Riyadh-Jeddah routing is also operating three times a week, replacing existing services to Riyadh via Dubai and Jeddah via Abu Dhabi. Additional capacity has also been mounted to London, Mumbai and Perth, while frequencies to Barcelona, Istanbul and Milan have been reduced. Services to Abu Dhabi and Athens have been suspended.

Visakhapatnam has been introduced as a new destination in SilkAir’s network, while frequency has been increased to existing destinations, including Hyderabad, Kochi, Kota Kinabalu, Kunming, Phuket and Thiruvananthapuram. Scoot has also expanded its network to include Tokyo, and will be adding Shenyang and Qingdao.


Fraser & Neave Holdings Bhd’s earnings rose 11.2% to RM73.60mil in the fourth quarter ended Sept 30, 2012, boosted by the recognition of deferred tax asset.

It said on Thursday it benefited from the recognition of RM19mil deferred tax asset (DTA) on the remaining lines upon their commercial production. The DTA was the Halal hub tax incentive granted to the Pulau Indah plan.

F&N’s revenue fell 12.8% to RM868.36mil from RM995.46mil. Its operating profit declined 10.9% to RM65.23mil from RM73.23mil. Earnings per share were 20.4 sen compared with 18.4 sen a year ago.

It proposed a final single tier dividend of 23 sen per share together with a special single tier dividend of 15 sen per share.

Explaining the fourth quarter results, F&N said the group no longer manufactured and distributed Coca-Cola products in FY12 financial year.

“Notwithstanding the absence of the Coca-Cola business, group revenue had exceeded that of the corresponding quarter last year,” it said.

On a comparable basis and excluding last year’s Q4 revenue contribution of RM161mil from Coca-Cola, group revenue rose 4% to RM868mil aided by strong export volume growth in soft drinks and dairies Malaysia divisions.

Group operating profit fell 10.9% to RM65.23mil from RM73.24mil mainly due to the absence of both the Coca-Cola contribution and a net reversal of provision from the divestment of the glass business.

For the financial year ended Sept 30, 2012, it said earnings fell 28.5% to RM274.03mil from RM282.13mil in the previous financial year.

Revenue declined 17.3% to RM3.238bil from RM3.915bil.

“Excluding the Coca-Cola’s revenue contribution of RM544mil last year, group revenue declined 4% mainly due to the loss of revenue in Thailand as a result of the factory closure caused by the flood and the absence of property sales. This shortfall had been narrowed by the double digit growth of the non-Coca-Cola soft drinks revenue of 10%,” it said.


Total Bangun Persada, an Indonesian construction company, expects its profit to grow 20 percent next year on booming construction deals.

The Jakarta-based company aims to post net income of Rp 210 billion ($22 million) in 2013, up from this year’s Rp 175 billion target. Revenue is forecast to jump to Rp 2.1 trillion next year, from 2012 target of Rp 1.9 trillion.

“We are confident of reaching that target next year,” Elvina Apandi Hermansyah, the company’s corporate secretary, said.

The company expects to generate construction contracts valued at Rp 2.1 trillion next year, more than its estimated value of Rp 1.8 trillion this year. The company secured total contracts worth Rp 2.1 trillion at the beginning of October. That value has already exceeded its full year’s target.

Robust economic growth in Indonesia, at 6.2 percent in the third quarter this year from a year earlier, helped spur the construction in Jakarta and other areas.

Total is also building Trans Hotel Bandung 2 for the CT Corp group, owned by tycoon Chairul Tanjung. Other contracts include the Hermitage Service Apartment in Menteng, Central Jakarta.

It is building commercial space for retailer Ramayana in various areas, including Lampung in Surabaya; Cilegon, Banten; Sorong, Papua; Klender, East Java; and Cibinong and Cibadak in West Java.

Total is also building an office building for Bank Pan Indonesia in Jakarta, and buildings at an industrial plant for cigarette-maker Gudang Garam in Gempol, East Java.

Its net income rose to Rp 134 billion in the first nine months of this year, from Rp 83.4 billion in the same period last year. Revenue increased to Rp 1.37 trillion in the period, from Rp 1.1 trillion a year before.


Integrated Micro-Electronics Inc. tripled its nine-month net profit year on year due mainly to its expansion in Europe and Mexico, better utilization of China plants and the reduction in overall expenses.

IMI, a leading worldwide provider of electronics manufacturing services and power semiconductor assembly and test services, posted a net profit of $5 million in January to September. This was up by 209 percent from $1.6 million posted in the same level last year.

Its nine-month consolidated sales revenues rose by 18 percent year on year to $495.7 million.

“Despite a highly fragile global economy, we expanded our revenues and net income on acquisitions as well as business expansions of key customers,” IMI president and chief executive officer Arthur Tan said in a statement.

Newly acquired subsidiaries in Europe and Mexico recorded $131.7 million in revenue in the first nine months while another subsidiary, PSi Technologies Inc., contributed $36.8 million.

The company’s operations in China and Singapore posted $210.6 million in combined revenue, 1.5 percent lower year on year due to reduced volume in a telecommunication infrastructure program and delay in the production of new models for an industrial electronics program.

Yesterday in Asia

Tokyo tumbled 1.51 percent, or 135.74 points, to 8,837.15, Sydney fell 0.72 percent, or 32.7 points, to close at 4,483.8 and Seoul lost 1.33 percent, shedding 25.83 points to 1,911.09.

Hong Kong skidded 2.41 percent, or 532.94 points, to 21,566.91 and Shanghai fell 1.63 percent, or 34.22 points, to 2,071.51.

Singapore slid 1.02 percent, or 31.02 points to 3,012.25.

City Developments sank 1.61 percent to Sg$11.64 and Jardine Cycle and Carriage fell 0.71 percent to Sg$47.36.

Taipei fell 0.61 percent, or 44.55 points, to 7,242.63.

Taiwan Semiconductor Manufacturing Co. was 0.55 percent lower at Tw$90.5 while leading smartphone maker HTC added 1.44 percent to Tw$211.5.

Manila rose 0.17 percent, or 9.42 points, to 5,446.71.

Wellington added 0.31 percent, or 12.15 points, to 3,955.25.

Fletcher Building was up 1.24 percent at NZ$7.34 and Contact Energy rose 1.52 percent to NZ$5.36 while Telecom was steady at NZ$2.38.

Kuala Lumpur shares ended down 0.27 percent, or 4.46 points, at 1,641.07.

Sime Darby lost 0.2 percent to 9.73 ringgit, IOI Corp fell 0.8 percent to 5.01 while Axiata rose 1.4 percent to 5.91.

Jakarta fell 0.52 percent, or 22.56 points, to 4,327.87.

Coal firm Indo Tambangraya slipped 1.9 percent to 41,150 rupiah and nickel company Vale Indonesia was down 1.9 percent at 2,600 rupiah.

Bangkok shed 0.46 percent, or 6.04 points, to 1,293.70.

Bangkok Bank dropped 0.85 percent to 174.50 baht, while Siam Cement lost 0.78 percent to 384 baht.

Mumbai fell 0.30 percent, or 56.15 points, at 18,846.26 points.

Private Tata Power fell 2.12 percent to 101.65 rupees while engineering giant Larsen and Toubro slid 2.04 percent to 1,634.4 rupees.

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