August 11, 2023


Tapestry to Buy Capri Holdings in a Deal Valued at US$8.5 Billion

Coach parent Tapestry will buy Michael Kors owner Capri Holdings in a deal valued at US$8.5 billion, creating a U.S. fashion powerhouse to challenge larger European rivals for a bigger share of the global luxury market. U.S. luxury firms have consistently lagged their European peers in scale, limiting their ability to compete better. Paris-listed LVMH owns 75 brands, including U.S. jeweller Tiffany and fashion labels Louis Vuitton and Dior. The deal will also bring under one roof Tapestry’s more affordable luxury brands Kate Spade, Stuart Weitzman and Capri’s Jimmy Choo and Versace labels. The combined company generated more than US$12 billion in global annual sales in the previous fiscal year, Tapestry said. That compares with about US$87 billion for LVMH last year and roughly US$23 billion for another European rival Kering. Tapestry will pay Capri shareholders US$57 per share in cash, representing a premium of nearly 65%. The equity value of the deal is US$6.69 billion, as per Reuters calculations.

Shares of Capri hit over a six-month high of US$54.52 and closed up 56% at US$53.90, while Tapestry closed down 16% at US$34.67 as investors baulked at an US$8 billion bridge loan taken by the company for the deal. The acquisition is also a bulwark against a looming slowdown in demand for luxury goods in the U.S. as sticky inflation forces customers to cut back on discretionary spending. The deal will help Capri revive its Michael Kors brand under “better management” at Tapestry after weak sales in the past few quarters, analysts said. Both companies have grown through acquisitions. In 2017, Tapestry – then known as Coach – bought handbag maker Kate Spade for US$2.4 billion. In the same year, Capri, formerly known as Michael Kors, acquired British shoemaker Jimmy Choo for US$1.2 billion. A year later, Capri bought Versace for US$2.2 billion.

The acquisition of Capri could also mark a revival in deal-making in the U.S. luxury space while European majors have snapped up high-end brands. Last month, Gucci-owner Kering said it was buying a 30% stake in Italian fashion label Valentino. LVMH closed its US$15.8 billion acquisition of Tiffany in early 2021. The deal, which is expected to be immediately add to Tapestry’s adjusted profit, is expected to close in 2024. The transaction is estimated to generate savings of more than US$200 million within three years of closing, the companies said. Separately, Capri reported a 9.6% drop in its first-quarter total revenue to US$1.23 billion, but beat analysts’ expectations of US$1.20 billion, according to Refinitiv IBES data. Its adjusted profit came in at 74 cents per share, also topping estimates of 71 cents. The company added that because of the announced deal it does not intend to provide any financial guidance at this time, and has withdrawn its previously issued forecast.

Brazilian Airline Azul Reported Narrower Second Quarter Loss

Brazilian airline Azul reported a narrower second-quarter loss, beating market expectations, and it provided its first updates after completing a broad restructuring plan earlier this year. Sao Paulo-traded shares of Brazil’s largest airline in number of flights and cities served jumped as much as 8.9% after the report, making it one of the top gainers on Brazil’s Bovespa stock index, as analysts voiced optimism about the company’s future. Azul posted an adjusted loss of 1.33 real per share for the three months ended in June, an improvement from the 1.77-real loss seen a year ago. The loss was less than the 1.49-real loss per share projected by analysts polled by Refinitiv, with earnings before interest taxes depreciation and amortisation (EBITDA) also beating expectations at 1.15 billion reais (US$237.34 million). Chief Financial Officer Alex Malfitani told reporters in a news conference that expectations are for an EBITDA of 6 billion reais or more in 2024.

After inking deals in March with aircraft lessors to give them equity and tradable debt in exchange for lower payments, the airline announced in June an exchange offer to delay the maturities of bonds expiring in 2024 and 2026 and later raised US$800 million in notes due 2028.  Chief Executive John Rodgerson dubbed the second quarter one of Azul’s most important ever because of the progress it made on that front. Azul said it plans to complete the renegotiations of its obligations with lessors and equipment manufacturers no later than September, estimating lease payments to be reduced by 1.5 billion reais in 2023 and 1.1 billion in 2024. 

VinFast Received Go Ahead for Nasdaq SPAC Listing

Vietnamese electric vehicle maker VinFast said it expects to start trading on the U.S. Nasdaq as soon as next week after its merger into a special purchase acquisition company (SPAC) was approved. Shareholders of Hong Kong-based Black Spade Acquisition, a blank-check company, voted to approve the merger with VinFast. VinFast, in a joint statement with Black Spade, said it would list on the Nasdaq under the ticker symbol VFS “on or around August 15”. In July, over 80% of the shareholders in the SPAC had opted to redeem their shares before the merger. The SPAC merger will not raise new capital for VinFast but the company’s founder Pham Nhat Vuong has championed a U.S. listing as the carmaker seeks to expand in the U.S. market and is building a plant in North Carolina. The merger had valued VinFast at US$23 billion, the two companies said. In comparison, the current market capitalisation of U.S.-listed EV makers Rivian and Lucid are US$21 billion and around US$17 billion respectively.

It leaves VinFast’s existing shareholders, including parent company Vingroup and Vuong, Vietnam’s richest man, with 99% of shares in the company. “The voting results today are a vote of confidence in VinFast from Black Spade shareholders,” VinFast’s global head Thuy Le said in the statement. VinFast had filed for an initial public offering on the Nasdaq last December, but in May announced plans to list through a merger with Black Spade. Other EV makers including Faraday Future, Nikola Corp and Lucid have listed via SPAC deals but the market for such deals has faced increased scrutiny from investors and regulators. VinFast has shipped around 3,000 EVs to the United States from its plant in Haiphong, Vietnam. It started to deliver its first VF8 EVs in March. It has not announced U.S. sales figures. VinFast’s first quarter revenue dropped 49% from the previous year and it posted a net loss of US$598 million. In 2022, the company posted a loss of US$2.1 billion. It has not yet made a profit.

Vuong, who is also chairman of Vingroup, Vietnam’s largest conglomerate, told Vingroup shareholders in May that VinFast expected to sell as many as 50,000 EVs this year and could break even as soon as the end of 2024. The company has previously missed some of its internal delivery targets and faces competition from established rivals led by Tesla, which have been driving down prices and bringing a range of new EVs to market. Black Spade was founded by the private investment arm of Lawrence Ho, son of the late gambling mogul Stanley Ho.

Alibaba Group First Quarter Revenue Up 14% to 234.16 Billion Yuan

China’s Alibaba Group Holding reported its strongest quarterly revenue growth in almost two years as its domestic e-commerce unit focuses on low-cost products to attract consumers amid a sober economic environment. The Chinese e-commerce giant posted first-quarter revenue of 234.16 billion yuan (US$32.29 billion), up 14% from the prior-year quarter which was hit by strict pandemic lockdowns. The figure beat analysts’ estimates of 224.92 billion yuan, according to Refinitiv data. The company’s U.S.-listed shares rose as much as 5.6% to US$100.1. Alibaba’s net profit rose 51% year-on-year. The latest revenue figure represents an improvement from flat to 3% growth in the past four quarters. However, fears have grown about China’s economy, which has faltered after an initially brisk recovery from the lifting of COVID curbs late last year. China reported it tipped into deflation in July at the consumer price level – a development expected to further weigh on shoppers’ will to spend.

Revenue in the first quarter to end-June was helped by a recovery in consumer purchases on Alibaba’s Taobao and Tmall marketplaces, boosted in part by the 618 shopping festival, China’s second-largest online shopping event, in June. Competition has increased recently from rivals known for offering low-cost products, such as PDD Holdings’ Pinduoduo and ByteDance’s Douyin, both of which pose major challenges to Alibaba. In response, Trudy Dai, CEO of Taobao and Tmall Group, said Alibaba would invest more to attract bargain hunting consumers, especially young people, older people and shoppers from China’s lower-tier cities. A 6.5% increase in daily active users in June for the Taobao app – which tends to sell lower cost merchandise than brand-dominated Tmall – was cited as one indicator of improvement. Sales at Cloud Intelligence Group, a major growth driver outside of e-commerce, reported the smallest revenue growth among the group’s six business units of 4%, but the division’s underlying profit more than doubled as its workplace collaboration tool, Dingtalk, helped to reduce costs.

This was the last earnings announcement under Daniel Zhang, who will step down from his roles as the Group CEO and Chairman in September to focus on leading its cloud division. The cloud unit is expected to seek an IPO soon, with Alibaba in May saying it would spin off the division to pursue an IPO within 12 months. The CEO role will be handed over to Eddie Yongming Wu, chairman of Alibaba’s Taobao and Tmall Group, while Executive Vice Chairman Joseph Tsai will take over as chairman. Regulatory concern has eased for China’s tech giants, including Alibaba, this year, with Chinese authorities keen to boost private sector confidence. This was the first set of quarterly results for the US$241 billion market-value behemoth since it split its business into six units, which many experts said could also ease scrutiny over the tech giant.

Ralph Lauren First Quarter Net Revenue Up Slightly to US$1.50 Billion

Ralph Lauren forecast current-quarter sales largely below Wall Street expectations, as demand for its pricey sweaters, shirts and outdoor wear tapers amid a broad slowdown in U.S. luxury spending. After a robust spending spree last year, affluent shoppers in the U.S. have now cut back on luxury goods purchases as sticky inflation and high interest rates have spooked even the wealthy. Ralph Lauren saw a 10% drop in quarterly revenue in North America, joining luxury names from LVMH and Gucci-owner Kering to Canada Goose in reporting weaker demand in the region, also hurt by shrinking wholesale orders. While Ralph Lauren’s core higher-income customers remained resilient, CFO Jane Nielsen said the company was cautious on North America where the sector was growing increasingly promotional. But she added the market was expected to improve sequentially in the current quarter. Meanwhile, sales in China surged more than 50% in the first quarter ended July 1, as demand picked up following the lifting of COVID-19 restrictions. That drove Asia revenues up 13% to US$378 million.

However, China’s recovery has been slower than expected, with concerns mounting around consumer spending, in a hit to the luxury sector that had heavily banked on a sharp China rebound to bolster sales. Ralph Lauren expects second-quarter revenue to be flat or rise slightly from a year earlier, compared to analysts’ estimate for a 3.3% rise. It reiterated annual sales forecast. Net revenue rose slightly to US$1.50 billion in the first quarter, while analysts had expected a marginal drop. Adjusted earnings of US$2.34 per share also topped Refinitiv estimates of US$2.13.

Zurich Insurance Reported Better-than-Expected Half-Year Operating Profit

Zurich Insurance reported a better-than-expected half-year operating profit, helped by its Life business and price hikes aimed at mitigating higher insurance claims from unpredictable weather. Europe’s fifth-largest insurer posted a business operating profit (BOP) of US$3.72 billion, little changed versus a year earlier, while analysts in a company-provided poll had on average forecast US$3.62 billion. BOP in its Life business grew 11%. CEO Mario Greco told journalists that Zurich’s current trajectory meant the company now intends to exceed the group’s financial targets for 2025, which were announced in November. Insurers globally have faced losses from unexpected events such as natural disasters, the war in Ukraine and COVID-19, and have responded by raising prices or restricting coverage to shield their profits. Zurich said in a statement that it raised prices by about 6% in the first half.

Despite climate change hurting insurers, Zurich earlier this year quit the United Nations-convened Net-Zero Insurance Alliance, joining peers like France’s AXA, and Germany’s Allianz which have also departed. BOP at Zurich’s property and casualty business dropped 6%, due in part to a higher combined ratio – a measure of underwriting profitability in which a level below 100% indicates a profit. That ratio for the unit grew to 92.9%, from 91.6% a year earlier.

Cathay Pacific Airways to Buy Up to 32 Airbus A321neo and A320neo Aircraft

Hong Kong’s Cathay Pacific Airways said it intends to purchase up to 32 Airbus A321neo and A320neo aircraft to invest and upgrade its fleet, bringing the carrier’s new aircraft deliveries up to more than 70. “These aircraft feature the latest technological enhancements to provide a quieter, more comfortable, and more fuel-efficient journey for our customers,” Cathay Group Chief Executive Officer Ronald Lam said. Cathay flagged that it would be taking delivery of 32 new single-aisle Airbus aircraft by 2029 without revealing whether the aircraft would be bought or leased. The new aircraft will join the fleets of Cathay Pacific by 2029 and is expected to cover destination routes in the Chinese Mainland and elsewhere in Asia, Cathay added. The company, however, did not disclose a purchase value for the new orders.

Cathay has already taken delivery of 13 of its initial order for 32 A321neos that it placed in 2017, with the new purchase adding up to another 32 single-aisle Airbus aircraft to the Group’s fleet, it said. Separately, the airline earlier reported a profit of HK$4.3 billion (US$550.23 million) for the first half of 2023, its best interim result in more than a decade and a turnaround from loss in the prior three years.

Savills Posted a 72% Slump in Half-Year Profit

Savills said it has “reduced” its annual expectations after the real estate adviser posted a 72% slump in half-year profit as high interest rates battered transaction volumes in global property markets. Transaction activity in the global property markets has remained weak ever since the onset of the pandemic, particularly in the office and retail segments, while elevated interest levels and tighter credit conditions have further punctured deal appetite. Savills said group underlying profit before tax fell to 16.3 million pounds in the six months ended June 30, from 59.2 million pounds in the same period last year. “Market participants, whether investors or occupiers, seek greater certainty on the trajectory of interest rates over the next 18 months, something which has become somewhat clearer in recent weeks than for much of the period,” CEO Mark Ridley said in a statement.

The London-headquartered firm said its expectations for the year as a whole had “reduced somewhat” against the backdrop of uncertain market conditions. Revenue from its biggest transaction advisory business – of assisting clients with all related-correspondence in a transaction – fell 20%. Savills, which has operations in more than 70 countries, said transaction volumes in the UK tumbled about 60% year-on-year, and about 46% below the five-year average. The British company said China has also been slow to recover since pandemic restrictions were lifted. CEO Ridley told Reuters that high availability of spaces, particularly in the office segment, is leading to a longer-than-expected recovery delay in the group’s China market. The company said continental Europe had experienced the most significant reductions in activity, particularly in Germany, France and the Nordic region.

Allianz Second Quarter Profit Up 18%

German insurer Allianz was optimistic on its outlook for the full year after reporting a better-than-expected 18% rise in second-quarter net profit. The company, one of Europe’s largest financial services groups, pointed to strength at its property and casualty division, helped by lower claims from natural disasters. Allianz stuck to its target of 2023 operating profit between 13.2 billion and 15.2 billion euros, but the insurer’s finance chief was upbeat on the outlook. “It’s hard to imagine we won’t end up in the upper half” of that range, Giulio Terzariol, chief financial officer, told journalists.

The second quarter result marks a recovery from a year earlier, which was dampened by volatile markets in the wake of the invasion of Ukraine. The company also had to deal with a problem at one of its funds units last year, which was hit with a fraud case that resulted in US$6 billion in settlements and fines. Allianz’s CFO pointed to some markets, like Britain and Australia, where it needed “to do work” to lift profitability. Terzariol said Allianz was increasing its rates in Australia and expected improvements later this year. Net profit attributable to shareholders of 2.337 billion euros in the three months through June compares with 1.977 billion euros a year earlier. The figure surpassed a 2.308 billion euro consensus forecast.


Singapore Economy Grew 0.5% in the Second Quarter

The Ministry of Trade and Industry (MTI) announced that the 2023 GDP growth forecast for Singapore has been narrowed to “0.5 to 1.5 per cent”, from “0.5 to 2.5 per cent”. The Singapore economy grew by 0.5 per cent on a year-on-year basis in the second quarter of 2023, extending the 0.4 per cent growth in the previous quarter. On a quarter-on-quarter seasonally-adjusted basis, the economy expanded marginally by 0.1 per cent, a reversal from the 0.4 per cent contraction in the first quarter of 2023.

CapitaLand Investment 1H2023 PATMI Down 19% to S$351 Million

CapitaLand Investment Limited (CLI) registered total PATMI for 1H 2023 of S$351 million, down 19%, attributed to improved operating performance across most sectors even in the face of high interest rates, offset by lower portfolio gains compared to 1H 2022 as the cautious dealmaking environment slowed asset recycling transactions. CLI’s Operating PATMI stayed stable at S$344 million for 1H 2023, supported by higher earnings from the lodging business across all markets and lower operating expenses, partially offset by higher interest costs and the absence of event-driven performance fees from two private funds exited in 1H 2022.

Revenue of S$1,345 million for 1H 2023 was marginally lower year-on-year due to lower contribution from the Real Estate Investment Business (REIB), partially mitigated by higher Fee Income-related Business (FRB). The lower REIB revenue of S$932 million was due to loss of contribution from properties divested in 2022 and lower contribution from properties in China. FRB revenue grew 9% year-on-year to S$519 million, supported by stronger recurring fund management fees and higher fee-related earnings (FRE) from lodging management as well as contributions from new management contracts. EBITDA for 1H 2023 was S$757 million mainly due to lower portfolio gains from asset recycling, the absence of contribution from divested assets in 2022 and lower performance fees from funds. These were partially mitigated by improved performance from the lodging management business.

ST Engineering 1H2023 Profit Attributable to Shareholders Up 0.2% to S$280.6 Million 

Group revenue in the first six months was $4.86b, 14% higher year-on-year (y-o-y) driven by higher contributions from all its three business segments. Group EBITDA of $711m was 16% higher y-o-y. Group EBIT was $444m from $385m, an increase of 15% y-o-y. Group Profit before tax (PBT) and Group Profit attributable to shareholders (Net Profit) were flat y-o-y at $351m and $281m respectively, with net profit increasing a mere 0.2%. In the same period last year, Commercial Aerospace segment recorded a one-off pension restructuring gain of $72m. Adjusting for this gain and other one-off items, Group Net Profit on a base operating performance basis (BOP) would be 26% higher y-o-y at $300m, despite higher finance costs.

In 2Q2023, the Group secured new contracts of around $4.7b, comprising $2.3b in Commercial Aerospace, $1.9b in Defence & Public Security and $0.5b in Urban Solutions & Satcom. For 1Q2023, the Group previously announced $4.9b in new contracts, bringing the total value of contracts secured for 1H2023 to $9.5b.

First Resources 1H2023 Net Profit Down 44.1% to US$71.5 Million

First Resources Limited achieved EBITDA and net profit of US$132.9 million and US$71.5 million respectively, on the back of US$448.8 million in sales for the six months ended 30 June 2023 (“1H2023”). The net profit declined by 44.1%. The Group recorded an improvement in sales volumes during 1H2023, although it was more than offset by the effect of lower average selling prices as compared to the corresponding six months in 2022 (“1H2022”), when palm oil prices were driven to historical peaks due to the tightening of global vegetable oil supplies from the Russia-Ukraine war and Indonesia’s temporary ban on palm oil exports. First Resources continues to be in a net cash position of US$28.2 million as at 30 June 2023, with gross gearing ratio at 0.18 times and cash and bank balances of US$286.4 million.

On the back of its healthy financial position, First Resources has declared an interim dividend of 2.50 Singapore cents per share. On the production front, the Group harvested 1,556,775 tonnes of Fresh Fruit Bunches (“FFB”) in 1H2023 as compared to 1,630,328 tonnes in 1H2022. Crude palm oil (“CPO”) production recorded an uptick of 1.6% to 406,648 tonnes in 1H2023 (1H2022: 400,159 tonnes), with CPO yield remaining stable at 1.8 tonnes per hectare. The Group expects production to pick up seasonally in the second half of the year.

Bumitama Agri 1H2023 Profit After Tax Down 45.3% to IDR 1.4 Billion

Bumitama Agri posted a 41.8 per cent drop in net profit to 759.8 billion rupiah (S$67.2 million) for the second quarter, from 1.31 trillion rupiah in the same period the year before. The group had lower revenue and margins for the three months ended Jun 30, based on financial results. Revenue was down 23 per cent to 3.9 trillion rupiah from 5.07 trillion rupiah, while gross margin was down 10.4 percentage points on the year to 34.4 per cent from 44.8 per cent. The latest results bring the group’s earnings for the first half of the fiscal year to 1.19 trillion rupiah, 45.4 per cent lower than the 2.18 trillion rupiah recorded in the same period the previous year. This translated to earnings per share of 686 rupiah, down from 1,247 rupiah in the previous corresponding period. Weakening palm product prices, together with increases in fertiliser and fuel prices, “significantly impacted” net profit for the period, the group said.

Revenue for the half-year period fell 16.4 per cent on the year to 7.5 trillion rupiah from 8.97 trillion rupiah, with declines from both crude palm oil (CPO) and palm kernel (PK) products. The average selling price of PK fell 50.5 per cent to 5,607 rupiah per kg, while CPO average selling prices dropped 18.2 per cent to 11,720 rupiah per kg. PK sales volume was down 8.6 per cent to 109,382 metric tonnes, while CPO sales volumes rose 10.5 per cent to 587,251 metric tonnes. The rise in CPO sales led to an increase in selling expenses by 26.4 per cent to 176.3 billion rupiah, comprising freight and loading expenses. General and administrative expenses were up 37.3 per cent to 343.4 billion rupiah on higher performance bonuses. The group recorded a foreign exchange gain of 174.3 billion rupiah, against a loss of 125.1 billion in the same period the year before. This was mainly due to translation gains from US dollar-denominated borrowings after the rupiah appreciated against the US dollar during the period. The profit after tax fell 45.3 per cent in H1 2023 to IDR 1.4 billion reported in the same period last year. The group’s board declared an interim dividend of S$0.0125 for the period, unchanged from the same period the prior year. The dividend will be paid on Sep 14, after books closure on Sep 5.

Sasseur REIT 1H2023 EMA Rental Income Up 8% to RMB326.0 Million DPU Down 2.6% to 3.322 Singapore Cents 

Sasseur Asset Management Pte. Ltd. (“SAMPL” or “REIT Manager”), the manager of Sasseur Real Estate Investment Trust (“Sasseur REIT”), announced that Sasseur REIT has achieved an EMA Rental Income for the first half year ended 30 June 2023 (“1H 2023”) of RMB326.0 million, up 8.0% year-on-year (“YoY”). The higher EMA Rental Income was driven by a 20.8% YoY rise in the variable component, underpinned by the portfolio’s strong outlet sales performance in 1H 2023 of approximately RMB2.3 billion, 20.5% higher YoY. In Singapore Dollar terms, EMA Rental Income for 1H 2023 was lower by 1.4% YoY at S$62.6 million, due to the impact of foreign currency translation.

The strength of the Singapore Dollar against the Renminbi as well as higher finance costs also affected distributable income which was lower by 2.4% YoY. Against the Singapore Dollar, Renminbi has depreciated 8.7% for 1H 2023 as compared to the same period in 2022. For 1H 2023, Sasseur REIT recorded a distribution per unit (“DPU”) of 3.322 cents, lower by 2.6% YoY. On a like-for-like currency basis, 1H 2023 DPU would have been higher by 8.1% YoY at 3.687 cents1 . The 1H 2023 DPU comprises the second quarter 2023 (“2Q 2023”) DPU of 1.473 cents which will be paid to Unitholders on 26 September 2023.

Aspial Lifestyle 1H2023 Profit After Tax Up 5% to S$9.8 Million

The Group’s revenue increased by 62.0% to $228.8 million in 1H2023 and was $87.6 million higher for 1H2023 than 1H2022. The increase in revenue was primarily attributable to higher revenue from the retail and trading of jewellery and branded merchandise, the newly acquired jewellery business in 2H2022 and the increase in interest income from the newly acquired pawnbroking business, partially offset by lower revenue from the secured lending business. The retail and trading of jewellery and branded merchandise business reported a significant increase in revenue of 71.1% for 1H2023. The accelerated growth in retail and trading of jewellery and branded merchandise business is mainly due to the newly acquired jewellery business in 2H2022. Revenue contribution from the pawnbroking business increased by 28.7% to $31.4 million in 1H2023. This increase was primarily attributed to the higher interest income from its growing pledge book and newly-acquired subsidiary.

The secured lending business reported an 81.4% decrease in revenue in 1H2023 as compared to 1H2022. As compared to 1H2022, operating expenses in 1H2023 increased by $26.2 million. This increase was mainly due to higher marketing, staff, depreciation costs arising from the newly acquired jewellery business and Malaysian subsidiaries and higher foreign exchange loss. The increase in finance costs for 1H2023 was mainly due to higher borrowings and the significant increase in interest rates. The profit before tax of the Group increased from $11.5 million in 1H2022 to $12.4 million in 1H2023 mainly due to increase in revenue and gross profit, higher rental income and higher other income, offset by higher operating expenses and higher finance costs. The higher operating expenses included foreign exchange loss of $1.5 million in 1H2023 which is mainly due to exposure in the Malaysian Ringgit at our regional subsidiaries. Excluding this foreign exchange loss, the Group would have registered a profit before tax of $13.9 million for 1H2023. The profit after tax increased 5% to $9.8 million in 1H2023.

Mapletree Logistics Trust to Divest 8 Loyang Crescent in Singapore for S$27.8 Million 

Mapletree Logistics Trust Management Ltd., as manager (“Manager”) of Mapletree Logistics Trust (“MLT”), announced that HSBC Institutional Trust Services (Singapore) Limited (in its capacity as trustee of MLT) has entered into a Purchase Agreement with an unrelated third party for the proposed divestment of 8 Loyang Crescent in Singapore (“the Property”) at a sale price of S$27.8 million. JTC Corporation has granted in-principle approval for the transaction subject to the parties complying with the stipulated conditions. The proposed divestment is in line with the Manager’s strategy to rejuvenate the portfolio through selective divestments of non-core assets, providing MLT with greater financial flexibility to pursue investments in modern assets with higher growth potential.

Completed in 2001, the Property is a 6-storey cargo lift warehouse with a gross floor area of 14,522 square metres (“sqm”) on a land site of 7,921 sqm. The proposed sale price of S$27.8 million is 17.3% above the latest valuation of S$23.7 million as at 31 March 2023. The proposed divestment is expected to be completed by 2Q FY23/24. Following this, MLT’s portfolio will consist of 1891 properties. The divestment is not expected to have a material impact on MLT’s net asset value and distribution per unit for the financial year ending 31 March 2024.

Nanofilm Technologies Reported Net Loss of S$7.9 Million for 1H2023

The Group’s revenue in 1H2023 decreased by 34.4% year-on-year (“YoY”) to S$73.2 million from S$111.3 million for the six months ended 30 June 2022 (“1H2022”) whilst the Company’s adjusted EBITDA decreased by 72.4% YoY to S$10.4 million. PATMI fell by 143.2% to a net loss of S$7.9 million. As of 30 June 2023, the Company had a total cash balance of S$127.4 million. The Company proposes an interim dividend of 0.33 Singapore cents per ordinary share in view of its 1H2023 performance and full year outlook.

Pan United Corporation 1H2023 Profit After Tax Up 17% to S$15.7 Million

In 1H 2023, the Group registered a net attributable profit of $15.9 million, an increase from $13.5 million in 1H 2022. The net attributable profit from continuing operations increased from $14.5 million to $15.2 million in 1H 2023. The Group reported a revenue of $360.2 million in 1H 2023, an increase of 7% from $337.4 million in 1H2022, driven primarily by the Concrete and Cement business. Revenue increased in tandem with the higher cost of doing business. Other than the cost of raw materials, subcontract costs and other direct costs, which had increased by 5% yoy, the Group also faced higher staff cost and interest expense due to a higher interest rate environment, in 1H 2023. The Group’s EBITDA was at $28.9 million in 1H 2023, up from $26.6 million in 1H 2022 and the EBITDA margin remained comparable yoy. The share of results of associate decreased by 44% yoy to $2.0 million in 1H 2023, compared to $3.6 million in 1H 2022 due to lower sales volume. As a result, the profit after tax increased 17% to $15.7 million.

Thakral Corporation 1H2023 Profit Attributable to Equity Holders Up 99% to S$7.4 Million

Thakral reported revenue of S$104.2 million for 1H2023, 62% higher than S$64.4 million attained last year. 94% of the total sales contribution came from the Lifestyle business which mainly constituted the sales of fragrance and lifestyle products to Greater China and DJI drones, digital action cameras, gimbals and their accessories to South Asia. Gross profit grew 63% year-on-year (“yoy”) to S$23.2 million for 1H2023 while gross profit margin remained similar at approximately 22% over the same period. Profit from operations increased by approximately 11% yoy to S$6.6 million for 1H2023. Operating margin fell by 2.9 percentage points to 6.3% for 1H2023 due mainly to expanded headcount and higher staff costs, including provisions made for ex-gratia retirement payments. As a result, profit attributable to equity holders increased 99% yoy to S$7.4 million for 1H2023.

The Group declared an interim dividend of 2 Singapore cents per share, representing a dividend payout of 34.3% on 1H2023’s attributable profit. The dividend declared translates to an annualised dividend yield of 7.3% based on the closing share price of S$0.55 on 10 August 2023.

Food Empire 1H2023 Net Profit After Tax Down 1.6% to S$26.6 Million

The Group recorded a revenue of US$198.2 million in 1H2023, a yoy increase of 11.8% compared to US$177.4 million in 1H2022 mainly due to a combination of higher volumes and higher pricing from most of the Group’s core markets. Despite higher revenue and better operating profits, the Group’s net profit after tax for 1H2023 decreased marginally to US$26.6 million, a yoy decrease of 1.6% compared to US$27.1 million in 1H2022 mainly due to unfavourable exchange rate movement coupled with negative contribution from associates (for 1H2023, share of associates’ losses was US$0.1 million compared to profit of US$4.0 million in 1H2022).

The Group’s generated net operating cash inflows of US$10.9 million in 1H2023 as compared to US$6.5 million in 1H2022 mainly attributed to better profitability. The Group’s cash and cash equivalents was US$106.6 million as at 30 June 2023, compared to US$125.6 million as at 31 December 2022 mainly due to the dividend paid in 2Q2023.

Centurion Corporation 1H2023 Profit After Tax Attributable Equity Holders Up 16% to S$38.3 Million

For 1H 2023, Group revenue increased 8% year-on-year to S$97.9 million on the back of strong revenue contributions from its purpose-built workers accommodation (“PBWA”) in Singapore and Malaysia as well as purpose-built student accommodation (“PBSA”) across the UK and Australia. The higher Group revenue was attributable to continued occupancy growth in its Singapore and Malaysia PBWA, Australia PBSA, as well as positive rental revisions across its Singapore, Malaysia, UK and Australia properties. Revenue from the Group’s PBWA segment increased 9% to S$73.3 million compared to S$67.0 million in 1H 2022 as a result of positive rental revisions and near-full occupancies at the Group’s Singapore Westlite PBWA as well as better occupancies and positive rental revisions at its Malaysia PBWA. The Group’s PBWA portfolio experienced a growth in financial occupancy to 96% in 1H 2023, from 86% in 1H 2022.

The Group recorded a net fair value gain of S$5.4 million in 1H 2023 due mainly to its investment properties in Singapore and Malaysia. Accordingly, net profit after tax derived from the Group’s operations for 1H 2023 was S$42.4 million, compared to S$35.1 million in 1H 2022. Excluding fair value adjustments, net profit derived from core business operations was S$36.0 million in 1H 2023 which was S$3.6 million or 11% higher than the S$32.4 million reported in 1H 2022. Profit after tax attributable to equity holders was S$38.3 million, up 16%.

UOL 1H2023 Net Attributable Profit Down 64% to S$135 Million 

UOL Group Limited reported a 64% decline in net attributable profit for its half-year ended 30 June 2023 (1H23) to $135 million due mainly to significantly lower attributable fair value gains on its investment properties of $3.5 million against $190 million for the same period last year. Group pre-tax profit before fair value and other gains/losses totalled $228.8 million, down 27% from $315.5 million in 1H22 due mainly to lower profit from property development and higher net finance expenses. Reflecting the decline in revenue recognition from property development, Group revenue fell 11% to $1.37 billion compared with the same corresponding period last year.

CSE Global 1H2023 Net Profit Up 142.8% to S$11.0 Million

The Group’s 1H2023 revenue rose 33.2% or S$87.1 million year-on-year to S$349.3 million, mainly attributable to broad-based growth in flow revenues across all geographical regions as well as contribution from new acquisitions of S$38.1 million. In line with higher revenues, the Group’s gross profit increased by S$23.0 million or 31.6% year-on-year to S$95.8 million. Net profit for 1H2023 surged by 142.8% to S$11.0 million from S$4.5 million in 1H2022, despite higher interest costs of S$2.9 million, additional depreciation and amortisation expenses of S$1.8 million, and increased tax expenses of S$1.7 million.

Ho Bee Land Reported Net Loss After Tax of S$155.7 Million for First Half

The Group recorded a 19% increase in profit from operations, before fair value changes, of S$159.9 million in 1H2023 (1H2022: S$133.9 million). Despite the strong operating performance, the Group recognised a net loss after tax of S$155.7 million for 1H2023, compared to a net profit after tax of S$149.9 million in 1H2022. This is primarily due to the unrealised fair value loss of S$208.3 million for the London portfolio and the higher interest costs of S$76.3 million in 1H2023 (1H2022: S$33.2 million). Notwithstanding this, the Group generated a net positive operating cash flow of S$77.4 million during the period. The Group’s loss per share for 1H2023 was 23.45 cents, compared to earnings of 22.57 cents per share in 1H2022. The total shareholders’ fund as of 30 June 2023 was S$3.75 billion, representing a net asset value of S$5.64 per share. Net gearing stands at 0.81 times as at 30 June 2023 (31 Dec 2022: 0.79 times).

Geo Energy Recorded Net Profit of US$28 Million for First Half

Geo Energy reported a 1H2023 net profit of US$28 million and declared a second interim dividend of 0.5 SG cent per share even as the Group is completing a major acquisition. The Group achieved revenue of US$239.8 million and net profit of US$28.0 million in 1H2023 despite lower coal price, higher government royalty and higher strip ratio. Declares a second interim dividend of 0.5 SG cent per share, representing a dividend pay-out of 42.84%. Secured a US$200 million transformational acquisition of a controlling stake in a listed Indonesian mining group with over 300 million tonnes reserves, giving long term sustainability of over 20 years mining life. Secured US$220 million loan facility from Bank Mandiri, supplementing the Group’s existing cash and bank balances of US$150 million as of 30 June 2023, to fund its acquisition plans, working capital and any capital expenditure required to ramp up production.

HRnet Group 1H2023 Net Profit After Tax Down 21.4% to S$29.6 Million

HRnetGroup delivered Revenue of S$294.8m (2022: S$314.2m) and recorded PATMI of S$28.3m (2022: S$34.6m), with profit margin at industry-leading 10.1% (2022: 12.0%) and conversion rate at 51.0% (2022: 54.0%). The net profit after tax (NPAT) decreased 21.4% to S$29.6 million. An interim dividend of 1.87 cents per share, representing a 62% payout from the 1H2023 NPAT is scheduled for payout to shareholders in September 2023. Cash (including T- Bills and DBS Credit Linked Notes) remained strong, despite the uncertainty in the recruitment market, at S$ 302.8m (31 December 2022: S$ 310.5m).

Fu Yu Reported Net Loss of S$3.9 Million for 1H2023

The SGX Mainboard-listed vertically integrated manufacturer of precision plastic components said 1H23 revenue declined 41.5% to S$71.2 million from S$121.8 million in 1H22, as its manufacturing and supply chain management segments faced sluggish business activities amid weak economic growth, prolonged geopolitical tensions and elevated interest rates environment which impacted customer demand. Revenue for Fu Yu’s manufacturing business amounted to S$52.6 million during the period in review, 26.9% lower than S$72.0 million a year ago. China’s economic recovery has been slower than expected even as the Group secured new domestic customers, while sales in Singapore and Malaysia also eased.

In line with revenue, Fu Yu recorded 1H23 gross profit of S$6.4 million, 69.6% lower than S$21.0 million in 1H22. Accordingly, gross profit margin stood at 9.0% in 1H23, compared to 17.3% in 1H22. The Group recorded a net loss of S$3.9 million for 1H23, compared to a net profit of S$10.9 million a year ago, mainly due to the lower revenue, higher operating costs related to labour and energy as well as expenses related to developing its Smart Factory and strengthening its engineering resources.

Despite the challenging operating environment, Group’s balance sheet remains healthy with net cash of S$60.8 million as at 30 June 2023. Cash and bank balances amounted to S$66.1 million while total unsecured bank loans stood at S$5.3 million. Shareholders’ equity stood at S$140.6 million, equivalent to net asset value of 18.58 cents per share (based on the total number of issued shares of approximately 757.0 million shares) which included net cash of around 8.0 cents per share. On the outlook, the Group remains cautiously optimistic its order flow will remain healthy, even as countries struggle with economic slowdown and persistent inflationary pressures post-pandemic. In response to these challenges, Fu Yu has initiated several strategies for business transformation and long-term growth.

Hafary Holdings 1H2023 Profit Attributable to Owners Up 51.8% to S$15.8 Million

For HY2023 the group registered a revenue of S$104.8 million compared to S$71.3 million during HY2022. For HY2023, the other income and gains decreased by S$0.5 million or 12.9% from S$3.4 million during HY2022 to S$2.9 million during HY2023. For 6 months ended, cost of sales increased by S$16.7 million or 43.0% from S$39.1 million during HY2022 to S$55.8 million during HY2023. The increase in revenue led to a corresponding increase in the cost of sales. The gross profit margin (based on revenue from sale of goods (excluding rental and other income) and cost of sales, without taking into account labour costs and overheads) of 46.7% for HY2023 has slightly increased as compared to 45.2% for HY2022.

For 6 months ended, the group has generated a profit before tax of S$20.3 million as compared to a profit before tax of S$13.2 million in HY2022. For 6 months ended, excluding share of profit from associate and share of profits from joint ventures amounting to S$1.6 million for HY2023 (HY2022: S$1.7 million), profit before income tax incurred from recurring activities was S$18.7 million for HY2023 (HY2022: S$11.5 million). The profit attributable to owners also increased 51.8% to S$15.8 million in HY2023.

JB Foods 1H2023 Up 15.5% to US$8.4 Million

JB Foods Limited announced that the Group has registered a revenue of US$271.2 million for the first half of financial year ended on 30 June 2023 (“1H2023”), fuelled by growth in demand for cocoa ingredients, which saw a marked increase in the higher shipment volume. The gross profits increased by USD12.2million or 66.3% from USD18.3million in 1H2022 to USD20.5million mainly due to normalisation of the processing margin post Pandemic and improvement in global supply chain situation. However, the high inflation, high interest rate business environment has escalated the higher operating, overhead and financing expenses in 1H2023. Accordingly, the Group recorded a profit after tax growth of 15.5% or USD1.1 million from USD7.3 million in 1H2022 to USD8.4 million in 1H2023. The Group sees an improvement in the overall cocoa consumptions in first half of 2023 after the easing and reopening of borders around the world in year 2023.

Genting Singapore 1H2023 Net Profit After Tax Up More Than 100% to S$276.7 Million

Thanks to a recovery in the hospitality industry, Genting Singapore has reported earnings of $276.7 million for 1HFY2023, up 227.6% y-o-y, on the back of 63% jump in revenue to $1.08 billion. Gaming revenue accounted for three-quarters of the total, or $747 million, versus $475.2 million in the year-earlier 1HFY2022. Non-gaming revenue came in at $327 million, up from $176.8 million. Genting Singapore plans to pay an interim dividend of 1.5 cents per share, an improvement over the one cent payout for 1HFY2022.

Lum Chang Interior Awarded Contract Valued at S$44.89 Million

Lum Chang Holdings Limited (the “Company”) announced that its subsidiary, Lum Chang Interior Pte. Ltd. (“LC Interior”), has secured a contract for the proposed erection of a hotel at 2 Cavan Road (the “Contract”). The Contract, valued at SGD44.89 million, is awarded by Peak Land Pte Ltd. The scope of the Contract includes the construction of a block of eight-story hotel with swimming pool, ancillary facilities and carpark including the conversion of an existing three storey conserved warehouse to hotel ancillary facilities. The contract period is approximately 24 months and LC Interior is scheduled to commence work in August 2023. The Contract is not expected to have a material financial impact on the Group’s results for the current financial year ending 30 June 2024. The revenue from the Contract will be recognised progressively according to the stages of its completion. This latest award brings the total outstanding value of construction works yet to be reported as revenue for LC Interior to approximately SGD99.9 million.


Bayer, GenZero and Shell Team Up to Reduce Methane Emissions in Rice Cultivation

German multinational pharmaceutical and biotechnology company Bayer, in collaboration with Temasek-owned decarbonisation investment platform GenZero, and Shell Energy are pooling their resources to tackle methane emission reduction in rice cultivation. The proposed approach by the trio will include training, support, and guidance for smallholder farmers while utilising Measurement, Reporting & Verification (MRV) mechanisms incorporating remote sensing technology. The project aims to set a benchmark for similar efforts in the rice decarbonisation space. Frederick Teo, CEO of GenZero, said: “Rice is one of the leading sources of methane emissions, with India being the second largest producer of rice globally. With this programme, we aim to transform the future of rice cultivation by driving the adoption of alternative wetting and drying as well as direct seeding techniques across smallholder farmers in India.” “The aim is to reduce the amount of water required for farming across many water-stressed agricultural regions in India and reduce methane emissions arising from rice cultivation, supporting the transition of the agricultural industry towards a low-carbon future.” 

Paddy rice cultivation is responsible for approximately 10% of global methane emissions, a potent greenhouse gas with a global warming potential over 27 times that of carbon dioxide. Rice farms occupy 15% of the global farm area, equivalent to more than 150 million hectares worldwide. It also consumes around one-third of the global fresh water. To address the challenges of climate change and limit global temperature rise, a significant and scalable effort is required to promote methane emissions reductions in rice cultivation. Over the last two years Bayer said it has already done the necessary groundwork and initiated a pilot Sustainable Rice Project across India. It started with an aim to generate carbon reductions by encouraging rice farmers to switch from the current practice of transplanting with continuously flooding fields to Alternate Wetting and Drying (AWD) that involves controlled and intermittent flooding and Direct Seeded Rice (DSR) that involves no transplanting operations and very limited flooding. 

With this collaboration in place, the Programme in its first year aims to significantly scale up its coverage to 25,000 hectares of rice cultivation. Any success achieved during this first year will pave the way for the implementation of an even larger-scale sustainable rice project. Beyond greenhouse gas reduction, the programme is expected to generate other benefits such as water savings, soil health improvement, and enhanced community livelihoods for smallholder rice farmers. To ensure scientific accuracy and credibility, the International Rice Research Institute (IRRI), a globally renowned scientific institution, will provide valuable support in conducting scientific assessments of greenhouse gas reductions, water use reductions, and improvements in soil health.

China Airlines Sustainability Demonstration Flight Improves Carbon Reduction Performance by 1500%

Taiwan-based carrier China Airlines’ recent flight CI753/CI754 between Taipei and Singapore was designated as the carrier’s sustainability demonstration flight during which it successfully reduced its carbon emissions by 150 tons. The airline took part in the second “The Sustainable Flight Challenge” (TSFC) held by the major industry alliance SkyTeam, with flight CI753/CI754 between Taipei and Singapore showing a 1500% improvement on last year’s performance or the equivalent of planting a forest the size of 375 basketball courts. The SkyTeam TSFC is a friendly competition focusing on the use and exchange of knowledge. China Airlines competed against 72 flights from 22 airlines around the world and was nominated for five awards. The winners were announced on August 3 with China Airlines winning the award for “Best Inflight Supply Chain” and “Best Adopted Solution.”

For inflight supplies, China Airlines worked closely with supply chain partners by trialling plastic reduction and taking carbon emissions throughout the product life cycle into account. The recycling of daily PET bottles and coffee dregs into eco-friendly woven goods and utensils spotlights China Airlines’ sustainability practices from the ground to the sky, resulting in the award for “Best Inflight Supply Chain.” China Airlines also developed innovative new ideas such as “Dynasty Sky Reading” for travellers. Making more than a hundred publications available for free downloads reduced both payload and carbon emissions. This promising sustainability solution won praise from SkyTeam and will now be rolled out to other carriers, resulting in the award for “Best Adopted Solution.” China Airlines also worked through the “ECO Travel” program to make the flights “net zero” by making all passengers and cargo carbon neutral.