Property companies and real estate investment trusts (Reits), among the early birds to report first quarter 2007 earnings,

Property companies and real estate investment trusts (Reits), among the early birds to report first quarter 2007 earnings, have done very well amid strong demand.

China companies too mainly posted healthy earnings but not an insignificant number of the 50 companies which last month unveiled Q1 numbers have turned in lower earnings or losses, showing that not all benefit even when the economy is going great guns. The Singapore economy is forecast to grow by between 4.5 and 6.5 per cent this year.

Getting little joy from the rosy economy were IT companies including United Test and Assembly Centre (Utac), Chartered Semiconductor, Memtech, Multi-Chem, Europtronic, Eucon Holding and Nera Telecoms, as the slump in chip and handphone prices shows no signs of easing up.

The whopper so far is property giant CapitaLand, which on Friday said first-quarter profit was a record $608 million - 4.7 times that achieved in Q1 2006. Its profit was boosted by sale of Temasek Tower and Samsung Hub.

CapitaLand reported a fair-value gain of $472.9 million based on the sale of Temasek Tower.

Conglomerate Keppel Corp was another winner, with a record net profit of $251.6 million, a jump of 48.2 per cent over the same period last year, as income from building oil rigs continued to pour in. Keppel’s key offshore and marine division - which builds oil rigs, among other activities - saw its profit surge 91 per cent to $151 million, while revenue rose 26 per cent to $1.5 billion.

The property division, mainly Keppel Land, posted a 73 per cent jump in net profit to $38 million, as turnover doubled to $318 million.

Several Reits, including those from CapitaLand’s stable, enjoyed high double-digit earnings growth.

A few companies reported lower earnings because of the absence of divestment gains. The Ascott Group said net profit for the first quarter ended March 31, 2007, was down to $9.7 million from $42.32 million a year ago - because earnings in Q1 2006 included a divestment gain of $40.5 million from the injection of 12 properties into Ascott Residence Trust.

Pan-United Marine said net profit fell 49 per cent to $11.2 million, because its year-ago profit of $21.8 million included a disposal gain of $16.1 million.

Printer SNP Corporation reported a 77 per cent drop in first-quarter net profit to $2.3 million, due to the absence of a one-time gain as seen last year. For the same period last year, the group made a net gain of $15.3 million from the sale of its educational publishing business.

Except for Venture Corp, which managed to secure new customers, the continued slump in the global electronics sector hit local IT and China-based companies hard.

Contract manufacturer Venture reported an impressive 43.3 per cent surge in first-quarter net profit, on a 32 per cent rise in sales to $968.9 million. Venture said the printing and imaging segment grew due to strong demand from established customers and success in new products for new customers.

But Chartered Semiconductor Manufacturing, which posted a 76 per cent slump in first-quarter net profit to US$5.3 million, has projected that earnings figures for the current second quarter could range between a net loss of US$5 million and a net profit of US$5 million.

It forecast that second-quarter revenue would be flat because shipments of 90-nanometre chips to the computer sector are likely to be lower.

Utac, which saw earnings fall 12.8 per cent, said this was due to lower test utilisation, slight price erosion and higher depreciation charges. The dynamic random-access memory (Dram) market experienced more severe price erosion than expected, it said. While Utac expects Dram volumes to stay healthy, it also expects continued erosion in the current second quarter.

Last month the Monetary Authority of Singapore said the global electronics sector should see a modest turnaround in the second half, but Singapore’s economic growth this year will be driven by the non-IT industries.

Of the 732 companies listed on the Singapore Exchange, 471 have a December year-end. But not all which follow the calendar year post quarterly results. The rule is that only companies with a market value of over $75 million have to report every three months.

Source: The Business Times, 02 May 2007