Kingsmen reported 2Q14 earnings of SGD5.3m (-1.4% y-o-y) while 1H14 net profit declined 18.2% y-o-y to SGD6.2m despite a healthy 11.8% growth in revenue. However, we remain optimistic on 2H14 with a secured orderbook of SGD141m expected to be recognised. Its interim dividend of 1.50 cents is also maintained.
We lower our TP to SGD1.08 (from SGD1.10), which is based on 10x FY14F P/E. Maintain BUY.
■ Icon Offshore Bhd has won RM297 million contracts to supply a workboat and two anchor handling tug and supply vessels. Its unit Icon Bahtera (B) Sdn Bhd had inked a deal to provide one accommodation work boat to Zell Transportation Sdn Bhd, with Brunei Shell Petroleum as the end customer, Icon Offshore said in a filing to Bursa Malaysia yesterday. Another unit, Icon Offshore Group Sdn Bhd recently received a letter of intent to extend a contract from an international oil and gas service provider to provide two anchor handling tug and supply vessels. (Bloomberg, Aug 15)
The Global Telco sector is basically flat YTD (-2%) with some regional fluctuation (from AxJ +13% to Japan -11%). Buried within this scenic flatland, however, has been significant dispersion (Telkom SA +94%, Bharti Infratel +60%, True Corp +54%; Oi -66%, Portugal Tel -54%, Sprint -47%). We see trading opportunities buried in the flat lands...
■ 1H14 revenue recorded a marginal 1.7% increase to S$7.9m. Revenue growth is in line with expectations. In general, Singapore KitchenEquipment (SKE) experienced weaker 1H results as clients would fully utilize their kitchens to cater to increased demand during the Christmas to Lunar New Year period, resulting in less expenditure in maintenance and new equipment.
■ Gross profit was flat yoy at S$2.5m in 1H14 despite the increase in revenue. The marginal yoy dip in gross margin from 32.3% to 31.8% was due to due to higher overheads. Gross margin of 32% is within the company’s normalized margin range.
■ Distribution expenses increased by 95.9% yoy, which translated to value change of S$0.5m. The rise in expenses is primarily due to increased headcount in sales team (by approximately 3-4 people) and salary cost, participation in regional food hotel exhibition event, increase in transportation and carriage outward expenses (increase in 3-4 vehicles) as well as advertising and marketing activities. The expenses were incurred in an attempt to expand sales in 2H14.
■ As a result of increased cost, a net loss of S$0.1m was incurred in 1H14.
■ An interim dividend of 0.25 Scts/share has been declared for 1H14.