Creative Technology - Patent

CREATIVE AWARDED U.S. PATENT ON ITS INVENTION OF USER INTERFACE FOR PORTABLE MEDIA PLAYERS

“Zen Patent” Granted for Invention of its User Interface for Portable Media Players Including Many of Creative’s Zen and NOMAD Jukebox MP3 Players and Found in Some Competing Players Such as the Apple iPod and iPod mini

Singapore – August 30, 2005 – Creative Technology Ltd. (NASDAQ: CREAF), a worldwide leader in digital entertainment products, today announced that it has been awarded U.S. Patent 6,928,433, which Creative is referring to as the “Zen™ Patent.” The Zen Patent was awarded to Creative for its invention of the user interface for portable media players, including many of the Creative Zen and NOMAD® Jukebox MP3 players, and found in some competing players, such as the Apple iPod and iPod mini. The Zen Patent covers the user interface that enables users of portable media players to efficiently and intuitively navigate among and select tracks on the players. Creative applied for the Zen Patent on January 5, 2001 and it was awarded on August 9, 2005.

Creative’s invention for the user interface for portable media players enables selection of at least one track in a portable media player as a user sequentially navigates through a hierarchy using three or more successive screens on the display of the player. One example would be the sequence of screens that could display artists, then albums, and then tracks. When the user selects an artist, the player displays a list of albums for that artist. Selection of one of the listed albums then displays a list of tracks on the album.

“The user interface covered by the Zen Patent was invented by Creative research and development engineers in our Advanced Technology Center in Scotts Valley, California,” said Sim Wong Hoo, chairman and CEO of Creative. “The first portable media player based upon the user interface covered in our Zen Patent was our NOMAD Jukebox MP3 player. We shipped the NOMAD Jukebox to U.S. retail customers in September of 2000, and by November of 2000, it was already ranked as the top revenue-generating product in the U.S. in the digital audio player category, according to PC Data. By January of 2001, we announced that we had already sold 100,000 NOMAD Jukeboxes. The Apple iPod was only announced in October 2001, 13 months after we had been shipping the NOMAD Jukebox based upon the user interface covered by our Zen Patent.”

“I am very excited that we were awarded the Zen Patent, which helps to protect our invention and recognizes our innovation in portable media players,” said Sim. “After a major investment of time and effort by a group of our research and development engineers, we developed a way for a user to efficiently and intuitively navigate and select tracks from a significant number of tracks stored on a player. Before this invention, there was no intuitive and efficient way to deal with the large number of tracks that could be stored on a highcapacity player.”

“There has been press coverage recently regarding the rejection of Apple’s patent application, published as Pub. No. U.S. 2004/0055446 for a user interface in a multimedia player. This Apple patent application was filed on October 28, 2002. A related provisional application was filed by Apple on July 30, 2002, eighteen months after our filing date for the Zen Patent and over twenty months after our NOMAD Jukebox based upon our user interface was on the market,” added Sim.

“We continue to innovate in digital media players with the introduction of the Zen Vision, which adds high-quality video playback to its MP3 music and digital photo viewing features. The Zen Vision, as well as the upcoming Zen Micro Photo with a color OLED screen and many more new products, will be based upon the user interface covered by the Zen Patent,” noted Sim.

The full text and images of the Zen Patent, U.S. 6,928,433 are available at www.uspto.gov by doing a patent number search under issued patents.

Comments - Wow! Creative going to sue Apple for royalties soon ? :D

Previous Post

Asia Enterprises Holding Limited - IPO

Asia Enterprises Holding Limited

Issue statistics
Offer size: 68m new shares Public Tranche - 5m shares Placement Tranche - 63m shares
Price: S$0.27
NTA per share (post-IPO): 21.43 cents
Historical PE: 4.52x (FY04)
Market Cap (post-IPO): S$72.36m
Open: 23 August 2005
Close: 30 August 2005, 12.00noon
Trading: 1 September 2005 (on "when issued" basis)
Lead Manager: DBS

The company is a major Singapore-based steel distributor. Besides supplying a wide array of steel products, it also provides value-added steel processing services to industrial end-users in Singapore and the Asia Pacific. Most of its customers are from the shipbuilding & marine, engineering/fabrication, oil & gas, construction, precision metal stamping and manufacturing industries/businesses. The company expects its business to be driven by an increase in shipbuilding- & marine-related activities. Revenue jumped 44.3% from $56.5m in FY03 to $81.5m in FY04. The improvement in earnings, which rose more than threefold from $3.5m in FY03 to $11.9m in FY04, could be attributed to higher sales.

Estimated net IPO proceeds of S$16.2m will be used for the following:

1. S$10.0m to support business expansion, in particular, to grow its market share in shipbuilding- and marine-related activities and to expand its customer base in Southeast Asia.
2. S$5.0m for possible investments to expand its product range, capabilities and businesses through acquisitions, JVs or strategic alliances.
3. S$1.2m as working capital.

PROSPECTUS EXTRACTS

Page 63 - Ownership Structure
Comments - Wow! So many different families! They ought to provide us with the family tree!

Page 65 - Lock up period
Our Shareholders, namely the Koh family, the Lor family, the Ong family, the Yeo family and the Teo family, who will in aggregate hold 26,924,306 Shares, representing 10.05% of our Company’s enlarged issued and paid-up capital after the Invitation, have each undertaken not to sell, transfer or otherwise dispose of any part of their respective interests in our Company for a period of three months commencing from the date of our Company’s admission to the Official List of the SGX-ST.
Comments - How come all these families so special? The rest 6mths lock-up period. All waiting to take profit asap, huh?

Page 78 - Inventory turnover days 258(FY02), 210(FY03), 299(FY04)
Comments - Wow! almost 300days! Money sitting in the warehouse, not in the bank earning interest! Looks scary to me, poor inventory mgmt?

Inventory data for all 3 listed Steel Distribution cos. using latest results,

1. AEH : Inventory $46.502Mil (Dec-04) vs Revenue $81.395Mil (1 yr)
   
   • AEH has the highest inventory, slightly more than 50% of revenue (1yr)
     
2. HSH : Inventory $67.466Mil (30-Jun-05) vs Revenue $197.819Mil (11mths) ; Inventory $34.133 (31-Jul-04)
   
   • HSH is next highest , 31.3% (annualised using 11mth revenue data)
     
3. HG Metal : Inventory $80.002Mil (31-Mar-05) vs Revenue $154.4Mil (6mths) ; Inventory $62.004Mil (30-Sep-04)
   
   • HG Metal is lowest, aro' 26% (annualised using 6mth revenue data)

It does appear that AEH has the highest inventory figure and in an increasing steel price environment, they'll enjoy higher margins. The converse will be true in a declining steel price environment.

Note : Above figure is a simple estimation. It does not take into consideration the different make-up of the biz. A more accurate figure would be to use only data for the distribution biz (as that forms the bulk of AEH biz).

Page 82 - Customers with 5% or more of total revenue in any of last 3 years are,

1. Keppel Offshore & Marine group : 4.8% in FY04
2. Metal Component Engineering Limited : 2.0% in FY04
3. Piasau Slipways Sdn Bhd : 7.4% in FY04

Comments - So, the other "branded" name customers often mentioned for this IPO do not contribute 5% or more in revenue in any of the past 3 years.

• FY04 Revenue $81.495Mil : 5% = $4.1Mil
• FY03 Revenue $56.474Mil : 5% = $2.82Mil

Page 87 - Some of our competitors in the steel distribution business include, Chuan Leong Metalimpex Company (Private) Limited, HG Metal Manufacturing Limited, Hup Seng Huat Co. Ltd. and Regency Steel Asia Pte. Ltd.
Comments - Those who are free can compare with the 2 other listed competitors, HG Metal and Hup Seng Huat. Some comparison data,

1. Share Price $0.27 at 27% premium to NAV. Premium higher compared to HSH but lower than HG.
2. Debts : After IPO, can be debt free. Both HG & HSH have large debts of $100Mil & $46Mil respectively.
3. Market Capitalisation : HSH is biggest at $134Mil. AEH & HG about the same at $70Mil+

Page 99 - Had the Service Agreements been effective since 1 January 2004, the aggregate remuneration (including CPF contributions and other benefits) payable to our Executive Directors for FY2004 would have been approximately $2.3 million instead of $2.9 million and profit before tax for our Group would have been approximately $16.0 million instead of $15.4 million.
Comments - Yes, the salaries are huge but would be lower after the listing compared to what they'd been getting prior to the listing. Of course, the more profitable, the higher the salaries would be. I don't think I've seen many small cos. paying their MD so many $Mil in salaries!

Page 91
TRENDS

• (a) Our Order Book Our revenue in FY2004 increased by $25.0 million from $56.5 million in FY2003 to $81.5 million in FY2004. This was an increase of approximately 44% as compared to the previous corresponding period, which was due mainly to an increase in the selling price of the steel products we distribute. Barring unforeseen circumstances, we expect to register continued growth in our sales in FY2005 due to the growth in shipbuilding and marine related activities in Singapore and Southeast Asia. Typically in our industry, our customers do not commit to a definite and long-term purchase requisite of their requirement for the various steel products. Notwithstanding this, over the last 32 years, we have established a diverse pool of more than 600 customers in Singapore and the region. Our repeat customers who collectively account for approximately 80% of our revenue for each of the last three financial years ended 31 December 2004. We were therefore able to establish ourselves as a regional centre for steel products.
  
• (b) Steel Prices In FY2004, we achieved a gross profit margin of 30% due to a steep increase in the selling prices of the steel products and lower inventory holding cost. Our inventories were accumulated over the last few years when steel prices were lower. However, our Directors believe that the steel price increase in FY2004 was largely a result of strong global demand for steel. In Asia, the demand was primarily driven by the PRC due to their rapid growth of investments and industrial outputs. In 2004, the PRC government has taken steps to cool the economy, by using a combination of fiscal and monetary policies. Notwithstanding the recent increases in the price of iron ore and coking coal, we believe that the steep increase in steel prices in FY2004 is unlikely to be repeated in the near future. As a result, we believe that moving forward, our gross profit margin could be lower than in FY2004. The average selling prices for our steel products in June 2005 remained relatively stable as compared to the average selling prices in December 2004, supported mainly by the strong demand from our customers engaged in shipbuilding and marine related activities. Barring any unforeseen circumstances, we believe that demand for steel will continue to experience growth and our Group will continue to benefit from the increase in demand for the current financial year.

Comments - Fm the above highlighted points, Revenue may be higher than 2004 but Gross Margin will likely be lower. In a steel price increasing environment, the co. benefited fm having a high Inventory Turnover of aro' 300days (pg78, also above), resulting in a high Gross Margin in FY04. However, going forward, should the price of steel drop, the reverse will be true, ie. Gross Margin will drop (as they will then have expensive 300 days old stocks but selling price is lower). So, for those who plan to be vested, watch out for steel price trend.

Page 58 - We intend to recommend dividends of not less than 40% of our net profits attributable to Shareholders in FY2005.
Comments - From pg91 above, revenue may be slightly better and gross margin may be lower than FY04. I simply use net profits for FY03 and FY04 and average them to get an indication,

1. Net Profit : FY03 = $3.475Mil ; FY04 = $11.932Mil ==> Average = $7.7Mil
2. EPS : FY03 = 1.74cts ; FY04 = 5.94cts ==> Average = 3.84cts
3. Shares : Pre-IPO = 200Mil ; Post-IPO = 268Mil

Using the average EPS and the enlarged nos. of shares,

• EPS = 3.84cts * 200/268 = 2.87cts
• Thus Dividend = 40% * 2.87cts = 1.15cts
• Net Dividend Yield = 1.15/27 = 4.245%

Note : The above is just an estimate. No figures were given in the prospectus.

OTHER COMMENTS

1. Only new shares are being issued, ie. no vendor shares. So, meaning, they are not cashing out some of their current hldgs immediately.
   
2. The usual practice of all IPOs would be to distribute out most of the existing cash prior to IPO as dividends. The same is done here, but the controlling Lee family (and some others) chose to get preference shares (which were converted to shares for IPO) instead of cash.

The above 2 points does indicate that the controlling Lee family is planning to remain for the long term, which is good. But then again, they are very well paid, in terms of salary, so no reason for them to quit if co. is profitable.

Very likely, the other families were 'forced' to follow this direction of no vendor share being issued, but in return, their lock-up period is shorter, 3mths (pg65, also above). I think quite of few of them will likely cash out after the 3mth lock-up period.

Disclaimer : The above is only my opinion. Do not use the above as a basis for your decision.

STI : BT

BT, Published August 24, 2005

Range-bound trading ahead for STI

SHORT-TERM stability has returned to the market in the past week as the Straits Times Index steadied itself near the 60-day moving average. Considering that the corporate earnings season is drawing to a close, we believe the index is likely to remain range-bound in the weeks ahead

Interest will likely gravitate towards companies that have delivered on the earnings front with strong growth prospects. Another factor to watch is oil prices, whose rising trend in recent weeks has been a debilitating factor to the equities market. While market watchers expect companies to perform better in 2H05, this scenario could be derailed if oil prices continue to trend up.

Observation of past trends suggests the market will slip into consolidation soon after oil prices break out into new highs. Thus, a good indicator to watch for the resumption of market momentum is a pullback in Brent crude prices.

Meanwhile, a range-bound environment is to be expected.

Support levels are:

1. 2245 - start point of the long white candle formation on July 19.
2. 2269 - the recent low touched on Aug 15.
   

Resistance levels are:

1. 2319 - 38.2 per cent retracement level of the correction from 2400 to 2269.
2. 2334 - 50 per cent retracement level of the correction from 2400 to 2269.

Prime REIT

Extracted from UOB Kay Hian Research Talking Point

Prime REIT: REIT of prime assets

The REIT fever will jump up another notch when IPO of Prime REIT takes place. The REIT will comprise of two prime Orchard Road properties in its portfolio. It's 74% stake in Wisma Atria and 27% stake in Ngee Ann City are worth S$1.3b.

The majority of its valuation from retail (85%) is positive, with the government's initiative to re-juvenate Orchard Road as well as the development of Integrated Resorts. Also, the possibilities of enhancing distribution per unit (DPU) is greater for retail space, given that the manager can re-mix tenants, re-size stores etc.

Prime REIT is offering a yield of about 5.1-5.4%. This is higher than CMT's forecast yield of about 4.1% and Suntec REIT's 5.3%. While CMT has had a growth track record, growth for Suntec REIT has been insignificant to-date. Given the excellent asset location, growth prospects and good DPU yields, Prime REIT is an attractive alternative to both Suntec REIT as well as CMT.

Watch out for REIT's IPO in mid-September.

Properties:	74% of Wisma Atria and 27% of Ngee Ann City
Lease Remaining:	56 yrs for Wisma Atria and 67 yrs for Ngee Ann City
Total Asset Value:	S$1.3b
Equity Raising:	S$915m
Commercial MBS:	S$420m
Debt to Asset:	31%
Initial yield:	5.12 - 5.40%
Indicative range:	S$0.93 - 0.98
Number of units:	581.9 - 629.1m
Financial sponsor:	Macquarie Group (Will hold a stake of 20-25%)
Cornerstone other than Macquarie:	AIA, DBS & Great Eastern (Together upto 13.3% stake)
Growth plans:	Rent increases, acquisitions (Singapore & overseas)
IPO Date:	Slated for mid-September

Previous Post

Introduction of REIT Investing

If you happen to come across this blogsite and decide to read through some of our blog topics, you will found out that there is a huge posting or interest on REIT counters. One of the reason is that the contributors for this blog site has vested interest (including me) in the REIT counters currently trading in SGX market. So I decided to post some basic introduction of REIT.

Actually, REITs are considered quite new in the Singapore equity market, with the first two REIT floated in Singapore Exchange (SGX) in July 2002. Currently, there are about six REIT counters trading in SGX at this point of posting. You may want to visit StockPick created by KK (one of the BullRun contributor) for more detailed analysis of REIT counters.

A REIT is an investment vehicle that holds a portfolio of real estate assets primarily with the aim of generating income from the properties. It is set up as a closed-end investment trust, which means that no new shares or units are issued after the IPO. REIT will only issue new shares or units when the REIT manager decide to acquire additional properties. The sale of new shares or units will fund the acquisition. Once, the REIT start the debut trading, supply and demand will determine the market price.

Singapore REITs are required by law to hold at least 70% of their total assets in real estate assets and they are not allowed to engage in property development activities, whether on their own, through joint venture with other property developers or investing in unlisted property development companies. This mean that REITs are not exposed to the risks of property development.

Benefit of Investing in REITs

• Exposure to the Property Market - By buying REIT, you can own a stakes in the properties held by REIT.
  
• Portfolio Diversification - You reduce your risk as REIT normally hold multiple properties under it portfolio.
  
• Regular Income - You can expect to receive rental income generate by the properties held by the REIT.
  
• Potential Capital Gains - You can expect to reap capital gains if you sell your REIT shares at a higher price than you purchase.
  

Risks of Investing in REITs

• Deterioration in business conditions
  
• Increased supply of similar properties
• Early termination of lease by tenants
• Increase in Interest Rate
• Fall in Property prices

Factor to Consider when Buying REIT

• Type of Property Held by REIT - Industrial, Retail, Office
• Quality of Property
  
• Quality of Management
• Occupancy Rate
  
• Expenses
• Share Price Vs NAV of REIT
• Deferred Payment Scheme - For new acquisition or New IPO launch
  

Credit: Some of the information for this post is extracted from Benedict Koh and Fong Wai Mum book, Personnel Financial Planning

REITs

Published August 19, 2005 in BT,

Competition may hit returns of Singapore

Reits RETURNS from shares of Singapore's real estate investment trusts may decline, after a three-year rally, as investors switch to higher-paying Reits from Hong Kong, Malaysia and Thailand. The size of Singapore's property-trust market has expanded 14-fold to S$10 billion since the first one was set up in 2002, according to data compiled by Bloomberg. CapitaMall Trust and Ascendas Reit, the city's biggest, have given investors annual returns of as much as 50 per cent in the period. 'The easy money has been made,' said Teng Ngiek Lian, who manages US$650 million as chief investment officer at Target Asset Management in Singapore and bought CapitaMall and Ascendas Reit shares during their initial sales in 2002. 'Scarcity made Reits more attractive in the early days. I'm no longer as bullish.'

Singapore's six property trusts will soon face competition from as many as four Malaysian Reits and three in Hong Kong, including one that attracted US$76 billion of demand from investors before its initial public sale was delayed by a legal challenge last year. Singapore's Reits offered dividend yields as high as 8 per cent three years ago, according to Bloomberg data. Yields have since fallen to as low as 3.8 per cent, compared with a yield of 2.7 per cent for the government's benchmark 10-year bond. Trusts in Hong Kong, Thailand and Malaysia are offering higher yields to lure investors away from the more established markets in Japan and Singapore.

Hong Kong's Housing Authority plans to revive its US$2.7 billion property trust after the city's highest court last month dismissed a challenge against the sale. The trust, called Link Reit, offered a 6.65 per cent dividend yield to fund managers at its IPO last year. Kuala Lumpur-based Axis Real Estate Investment Trust Bhd, which sold shares this month, expects to offer yields of about 8 per cent this year and 8.63 per cent in 2006, according to its prospectus. Thailand's Central Pattana PCL, which plans to sell shares this year, will offer yields as high as 7.8 per cent, said DBS Group Holdings Ltd, which is managing the sale.

In Singapore, 'some of the Reit valuations have gone way ahead of the property valuation, so that should serve as a warning flag', said David Lum, an analyst at Daiwa Institute of Research Singapore Pte. Four of Singapore's six property trusts are trading above their book value, and two are trading at almost twice book value, according to Bloomberg data.

Some investors say Singapore's Reits still offer good value. 'We're generally looking at 10-12 per cent returns at very low risk. You can still buy Reits on that story,' said Chris Reilly, who helps manage more than US$200 million of Asian real-estate stocks at Henderson Global Investors in Singapore. - Bloomberg

My Comments

On Friday, we see the share prices of 3 REITs dropped the most amongst all the locally listed REITs and I think it's the impact of this article, which also appeared in the free paper, TODAY. FYI,

1. CMT and A-REIT are the ones trading at almost twice book value
2. CMT offers the lowest yield at 3.8% before Friday's drop
3. CCT was aro' 4.3% yield before Friday's drop

Let's hope it's not the beginning of a broad based decline in REIT share prices!

Previous Post

Prime REIT

From CNA,

SINGAPORE : Prime REIT is planning to raise about S$570 million from its initial public offering scheduled for mid-September. It has lodged its preliminary prospectus with the Monetary Authority of Singapore for a listing on the Singapore Exchange mainboard.

Prime REIT - managed by a unit of the German insurer Ergo - is offering about 592 million units at between 93 and 98 Singapore cents each. The REIT will initially invest in and own the Wisma Atria shopping mall. Prime REIT currently owns 74 percent of Wisma Atria and 27 percent of another mall, Ngee Ann City, with a total value of S$1.3 billion.

According to the draft prospectus, Prime REIT expects to pay a distribution per unit of 2.51 Singapore cents for the six months to December 31 this year. The distribution will be 5.25 Singapore cents for 2006. And if the IPO is priced at the top end of 98 cents, the annualised distribution will be 5.12 percent for this year and 5.35 percent next year. The IPO will have shares set aside for both the public and institutions. The units that will be sold through the IPO represent about 57 percent of the trust. - CNA

My Comments - The one we'd been waiting for! But, yield is not better than Suntec :D

SGX Market Commentary

Published August 13, 2005 by BT

Bears ahead of bulls - but just barely

THERE was a tug-of-war between the bulls and the bears yesterday, which ultimately was won by the bears, but only just. The Straits Times Index opened stronger to recoup some of the losses it suffered in the previous two days. But the bears were relatively fresher. By the end of the day, the STI slid 2.77 points to 2,303.2. For the week, it lost 35.7 points or 1.5 per cent - its biggest decline since February this year. UOB Sesdaq Index, however, managed to eke out a gain of 0.47 point to 82.19. On a weekly basis, it was down 0.29 point or 0.35 per cent.

'Despite the sudden swing in market sentiment from one of optimism only last week to pessimism and fear currently, we see limited downside in the short term,' Kim Eng said in its market view report yesterday. DBS Vickers, meanwhile, thinks the selling momentum would continue for some stocks. In its 'From the Chartroom' report yesterday, it had called for trading sells on Cosco, Labroy Marine, SembCorp Industries and Keppel Land. Of the four, only Labroy managed to snap back from its recent losses.

The drag on the STI yesterday came from UOB, OCBC and SPH. Cushioning the fall, meanwhile, were Keppel Corp, which rose 30 cents after after crude oil prices rose above a record US$66 a barrel in New York, boosting optimism that demand for rigs will remain strong. DBS, Fraser & Neave and City Developments were among the other gainers. Hyflux, whose share price was in a free fall in the last few sessions, managed to stage a rebound. It ended 14 cents up to $3.20, with 8.2 million shares traded. Three Temasek-linked companies - Singapore Telecom, CapitaLand and Stats ChipPac - topped the actives list yesterday with 74 million shares traded among them. SingTel and Stats were unchanged, while CapitaLand ended one cent lower.

Under $1b traded

Among the second-liners, the action centred on Global Voice, Bio-Treat, Biosensors and Utac. But all moved by less than 2 per cent. Overall, trading was less hectic than the previous few sessions when over $1 billion worth of shares changed hands. Yesterday, 820 million Singapore-dollar shares worth $996.8 million were traded. Excluding warrants, losers pipped gainers by 163 to 154.

My Comments - End of consolidation? Or more to come? With oil price still trending up and winter not even here yet in US and Europe (when oil consumption goes up even higher), it's better to be safe than sorry! I'd focus on short term trades as there'll be volatility and do selective accumulations of blue chips (I'd previously sold off my entire stake of Singtel, OCBC, CCT, most of my SPH,...etc.) if the price goes below my previous selling price.

Creative Technology : Q4 FY05 Results

SGX Announcement dated 10-Aug-05,

CREATIVE ANNOUNCES Q4 FY05 RESULTS
Revenues up over 50 Percent Year-Over-Year on 260 Percent Increase of MP3 Unit Sales; Company Reports Loss Primarily Attributable to Lower-than-Expected Selling Prices and Inventory Write Downs

SINGAPORE – August 11, 2005 – Creative Technology Ltd. (NASDAQ: CREAF), a worldwide leader in digital entertainment products, today announced financial results for the fourth quarter and fiscal year 2005, ended June 30, 2005. All financial results are stated in U.S. dollars.

Sales for the fourth quarter were up 51 percent year-over-year, coming in at $305.4 million, up from $201.8 million in revenue for the same quarter last year.

Sales for the 2005 fiscal year were up 50 percent year-over-year, coming in at $1.224 billion, up from $814.9 million for the 2004 fiscal year.

For the fourth quarter, net income was a loss of $31.9 million with EPS of a $0.38 loss per share, including an investment gain of $9.3 million. Excluding the investment gain, net income for the fourth quarter was a loss of $41.2 million with EPS of a $0.49 loss per share. This compares to net income for the same period last year of $6.6 million with EPS of $0.08, including an investment loss of $0.2 million.

Net income for the 2005 fiscal year including investment gains of $74.4 million and a noncash impairment charge on 3Dlabs of $65.2 million, was $0.6 million with EPS of $0.01. Net income for the 2005 fiscal year excluding investment gains of $74.4 million and a non-cash impairment charge of $65.2 million, was a loss of $8.6 million, EPS of a loss of $0.10 per share. Net income for the same twelve months last year including the benefit of a $12.2 million tax write-back and investment gains of $72.6 million was $134.2 million with EPS of $1.61. Net income excluding the benefit of a $12.2 million tax write-back and investment gains of $72.6 million was $49.4 million with EPS of $0.59.

“Our Q4 unit shipments of MP3 players were up more than 260 percent year-over-year. However, this high growth was below our aggressive expectations for the period,” said Craig McHugh, president of Creative Labs, Inc. “We had set our targets higher for unit volume and average selling prices for our MP3 players than we achieved in the period. Missing our targets caused us to miss our revenue goals and we were not able to reduce our inventory levels as rapidly and as much as we had expected. During the quarter, there was a decline in the value of certain components in our inventory, including flash memory and hard drives, so we needed to take an inventory write down. Even though we increased overall revenues 50 percent year-over-year, the lower-than-expected selling prices for MP3 players and the inventory write-downs negatively impacted gross margins in the period. These factors combined with currency losses resulted in our loss in the period. While we are very disappointed that we reported a loss for the fourth quarter, we believe we can get closer to break-even in the current quarter and that we can return to profitability by the end of this calendar year. We plan to return to profitability by continuing to grow our MP3 business and growing our audio business following the launch of the new Sound Blaster® X-Fi™ and the new Xtreme Fidelity™ audio standard, which we introduced this week.”

“While we continue to work diligently through our inventory position and are very focused on returning to profitability, we are not hesitating in driving our company forward,” said Sim Wong Hoo, chairman and CEO of Creative. “Just this week, we introduced what I believe will be the future direction of audio – the new Xtreme Fidelity audio standard and its first incarnation in products, the Sound Blaster X-Fi sound cards. Over the last month we have toured the world demonstrating the new Xtreme Fidelity standard and the Sound Blaster X-Fi to the press, and the response has been phenomenal. The new Xtreme Fidelity literally wowed people as we clearly demonstrated how the Sound Blaster X-Fi family of ultra high performance sound cards can dramatically enhance MP3 and CD music, virtually any music or audio, accelerate gaming, and provide an amazing headphone experience.”

“Over the past seven years we have relentlessly and painstakingly built our EAX standard to become the unified audio standard for the PC platform,” continued Sim. “Xtreme Fidelity will be the fifth generation of this well-established PC audio standard, where virtually all existing games and media content under the Windows platform can be instantly enhanced without any modification.”

“We also showed the press the award-winning Zen™ Micro Photo MP3 player and the new Zen Vision, our music, photo and video player, due to be released soon,” continued Sim. “We received overwhelmingly positive responses to these exciting new products from some of the toughest and most astute reviewers. With the Zen Vision, you can now carry all of your music, all of your photos and all of your favorite videos in the palm of your hand. I believe we now have the sexiest, most appealing and most versatile digital music, photo and video player in the world. We believe that we will greatly strengthen our product offerings in our key product categories in time for this holiday season. By next year you can expect the Xtreme Fidelity standard to be included in some of our high-end digital media players. With our huge arsenal of audio products, technologies and intellectual property, you can expect Xtreme Fidelity to proliferate into all kinds of audio products going forward.”

Comments - Much worse than expected. More losses expected this quarter before it return to profitability next quarter. I expect share price to continue to drop then. Will re-evaluate again after next quarter results, unless price drop below $10 :D

Reports (added on 12-Aug)

• DBSVickers dated 12-Aug,
  CREAF’s 4QFY05 earnings would be within expectation if we exclude the S$20m inventory write-down. If we also exclude investment gain, net loss would be US$12m. No specific guidance was offered but the Group targets to breakeven this quarter and return to profitability in the Christmas quarter. The fall in its investment value has resulted in a lower historical BVPS of S$11.40. New products were announced and we see a potential blockbuster in X-Fi, an audio chip processor that could have numerous applications. With the stock trading near book value and the Christmas quarter approaching, we believe downside risk is limited while earnings momentum should pick up from the trough. As such, we upgrade the stock to a HOLD but trim our DCF derived price target to $14.00.



• CIMB-GK dated 12-Aug,
  We believe Creative will continue to face ferocious competition in MP3 products. We understand that Apple’s new iPod mini and iPod are due for release this Christmas. Other players such as Samsung, Sony, and iRiver have also been launching new products. Another threat may come from MP3-enabled handphones. Creative is now pinning its hopes on its new audio product, the X-Fi, which provides a more realistic surround experience with headphones or multi-channel speakers for all types of digital entertainment. However, we are more cautious and have modelled moderate growth. We have slashed our FY06-07 net profit forecasts by 76-79% to reflect lower gross margin assumptions. Our unchanged target price of S$8.45 is based on 0.8x P/BV, which appears to be the trading support in the last five years.

Previous Post on Creative

Disclaimer : The above info is for reference only, not an inducement to buy or sell.

CapitaLand

Temasek has sold 200 million shares in CapitaLand at $2.90 per share. The share is mainly sold as a placement to investor. Temasek is selling around 7.5% stake in CapitaLand and after this sale, Temasek holding still has around 44.5% stake in CapitaLand after this sale. This amount is around 4% discount to the closing price of $3.02 at Friday.

Previous Post on Capitaland

Comments: This is the second sale done by Temasek holding. The first was SMRT. Before this sale, I was thinking that Temasek will be doing a placement share on Singtel but they decided to do a placement on SMRT and CapitaLand. Nevertheless, this should have a some minimum impact (limited movement in share price) on other Temasek Linked Companies (TLC) share price these few weeks as investors do not know whether Temasek will be doing another round of sale on other TLCs. This is due to the fact that Temasek has history placing the placement price lower then the current market price to generate interest for their placement exercise. Sometime, I am wondering why must they do it this way. So unfair to the investor that hold the share. If those private investor feel that the company is worthwhile investing then they should pay a slight premium instead of getting discount. So unfair to small time investor. If Raffles holding can sell their asset at a premium, why can't Temesak sell their share at a premium too? The only case that I can think that company are selling their company share at a discount is when they need fresh fund or they are facing problem, which is normally not the case for TLC. This comment is my personnel view on this share and I do not have any vest interest in this counter.


Disclaimer: The above information is for your pleasure reading only. USE THE INFORMATION AT YOUR OWN RISK. Make your own decision for any investment.

Super CoffeeMix : 1H05 Results

Fm SGX Announcements, 1H2005 Press Release,

Super’s net profit increases 57% in 1H2005 to S$12.7 million
- Declares inaugural interim dividend of 0.6 Singapore cents -

Singapore, 8 August 2005 – Super Coffeemix Manufacturing Ltd ("Super"), a leading diversified manufacturer of instant convenient food and beverages that are marketed and distributed globally, today announced that its net profit attributable to shareholders for the first half of financial year ending 31 December 2005 ("1H2005") rose 57% to S$12.7 million from S$8.0 million in 1H2004.

The increase in its half year net profit was driven by a combination of factors including substantially lower interest expenses and taxes during the six months, as well as a gain of S$1.3 million from negative goodwill arising on the acquisition of the remaining shares from minority shareholders in Super Food Investment International Pte Ltd and PT Super Aneka Foods & Beverages.

For 1H2005, Group revenue was higher at S$85.4 million from S$82.4 million a year ago chiefly on higher sales in markets such as Singapore, Indonesia, Myanmar, Philippines and Thailand. This was, however, partially offset by lower sales in Malaysia due to the restructuring of distributorship there to enhance Super’s presence.

In line with its Malaysian expansion strategy, the Group has entered into an agreement with Munchworld Marketing ("Munchworld") of Malaysia in June 2005 to distribute Super’s range of products through Munchworld’s network of more than 10,000 retail outlets nationwide including hypermarkets, supermarkets, mini-marts and convenience stores.

On a quarterly basis, revenue grew 8% in 2Q2005 to S$40.9 million (2Q2004: S$37.8 million) while net profit grew a corresponding 15% to S$5.0 million (2Q2004: S$4.3 million) during the comparative period.

Earnings per ordinary share rose to 2.57 cents for 1H2005 from 1.62 cents a year ago while net asset value per ordinary share increased to 33.38 cents as at 30 June 2005 from 31.07 cents as at 31 December 2004.

Teo Kee Bock, Chairman and Managing Director, said: "Our growth over the past few years has been compelling leveraging on our sound growth strategies. This includes our aggressive marketing strategy, vertical integration strategy, strategic alliances and partnerships. We will continue to seek new opportunities to enhance Super’s market reach in both existing and new markets."

To reward its shareholders for their support, the Board of Directors has declared a gross interim dividend of 0.6 Singapore cents for 1H2005. This is the first time Super is declaring an interim dividend since its listing in 1993.

Commenting on Super’s inaugural interim dividend declaration, Mr. Teo said the initiation is a reflection of the Group’s positive growth prospects and is in line with its overall strategy to reward its shareholders.

"On behalf of the Board of Directors, I would like to thank our shareholders for their continual support. Going forward, the Board believes that Super is poised to continue to make interim dividend payouts to reward its shareholders for their support."

The Group is optimistic that it will be able to match its final dividend, if not exceed, with its interim dividend for FY2005, barring any unforeseen circumstances.

Comments

It's not as good as it sounds, my comments as fllws,

Comparison of Quarterly Results 2004 vs 2005

• Revenue +8% but Cost of Sales +14%, thus Gross Profit No Change
• Net Profit +15% due to Minority Interest -85%

May be worrying sign as cost is going up more than the revenue resulting in no increase in Gross Profit. The Net Profit +15% is thus misleading as it's due to the big reduction in minority interest of -85% (ie. fm acquisition of the minority shareholders). General and Admin Expenses has also gone up a lot +16% but this was mitigated by lower Interest Expenses and Taxation.

Comparison of Half Year Results 2004 vs 2005

Results are flat with Revenue +4% and Cost of Selling +5% for Gross Profit +1%. Total Operating Expenses -1%. The bulk of the Net Profit +57% comes fm Other Revenue (mostly negative goodwill on consolidation plus some fm Interest and Foreign Currency Gains). Other contributor to the Net Profit are fm lower Taxation and reduction in Minority Interest.

So, why I said it's not as good as it sound is because the big increase in Net Profit has nothing to do with the Operations. I'd be very concerned if this continues as it means the co. have stopped growing.

NOTE : Am vested, so read my opinion with extra care :D

References

• SGX - 2Q05 Financial Statements
• Blog StockPick - Case Study

Disclaimer : The above is my own opinion. Pls do not rely on it for your investment decisions.

Property Bubble - A pessimistic view

House-price bubble set to hit semis, warns analyst

Peter Clarke, EE Times


LONDON - Malcolm Penn, chief executive of market analysis firm Future Horizons, warned that a house-price boom that has taken hold across the developed world is set to be biggest bubble in global economic history. When it bursts it will almost certainly trigger a collapse of the semiconductor market, just as the stock market bubble of 2000 did, Penn said.

Penn, writing in a monthly newsletter, acknowledged that such bubble trigger points are almost impossible to forecast, and, in the absence of such as burst, stuck to his previous prediction for semiconductor market growth in 2006 of 6.0 percent.

Penn said that at the present time semiconductor equipment purchase was moderate and that indicated the chip industry would avoid serious overcapacity in 2006. "Our big worry is the economy," Penn wrote saying that he is starting to lose confidence in the economic forecasts of the International Monetary Fund (IMF). "Right now the IMF is remarkably bullish, with a growth forecast of 4.4 percent, up 0.1 percent on 2005."

Penn argued that after three years of growth above the long-term average, it was time for some below average growth. The alternative would be a more catastrophic change later. "The economy is currently full of uncertainties, not the least being the current slow down in overall consumer spending, and the inevitable bursting of the (global) house price bubble," Penn wrote.

Penn cited an article in The Economist and reported that the total value of residential property in developed countries had risen by more than $30 trillion over the past five years, to $70 trillion, an increase equivalent to 100 percent of those countries' combined GDPs.

Soft landing possible

Penn went on to say that such rapid growth dwarfed the global stock market bubble of the late 1990s which demonstrated an increase over five years at 80 percent of GDP, and the Wall Street crash (55 percent of GDP). Penn also observed that the stock market crash of 2000 triggered a 32 percent decline in the semiconductor market in 2001.

Penn said that if the global economy grows at 4.4 percent in 2006, the semiconductor market would go through the roof with already tight capacity triggering shortages and price rises.

"If the economy slows, however, it WILL take the semiconductor market with it," Penn wrote. "It will cause demand for boxes to drop, and with it chips, which means automatic overcapacity, a collapse in ASPs, and a global market slowdown, the extent of which will be governed by how much the economy slows."

Penn added that current restraint in fab building by the chip makers should allow the industry to accommodate a moderate slowing in demand without a major crash, provided this triggers further conservatism in capital expenditure.

"Under such a scenario, a soft rein-back scenario is entirely plausible, hence our 6.0 percent 2006 market forecast number, the same as we were postulating in January 2005," Penn concluded.

Union Steel Holdings : IPO

Issue statistics

• Offer size: 75m new shares + 14m vendor shares Public Tranche - 4.2m shares Placement Tranche - 84.8m shares
• Price: S$0.20
• NTA per share (post-IPO): 10.00 cents
• Historical PE: 5.73x (FY04)
• Market Cap (post-IPO): S$69.4m
• Open: 2 August 2005
• Close: 11 August 2005, 12.00noon
• Trading: 15 August 2005 (on "when issued" basis)
• Lead Manager: OCBC

The company is principally engaged in the recycling of ferrous and non-ferrous scrap metals, the trading of steel products and the provision of other services, such as waste collection and management, demolition works, rental of steel plates and car scrapping. The Group has more than 500 customers spread across Japan, China, India, Indonesia, Malaysia and Singapore. The company believes global demand for metals is likely to rise as China and other Asian nations continue their economic and infrastructural expansions. Its directors believe China will continue to be a major consumer of steel and other metals in line with its economic expansion and infrastructural expansion plans, such as projects relating to the Three Gorges, the Olympics and the Shanghai Exposition. Its directors also believe India and Indonesia may undergo further infrastructural development. Revenue jumped 30% from S$86.3m in FY03 to S$112.1m in FY04. Earnings more than doubled from S$4.6m in FY03 to S$9.5m in FY04.

Estimated net IPO proceeds of S$13.2m will be used for the following:

1. S$5.0m for its expansion plans in China and Indonesia, failing which the net proceeds will be used for other possible acquisitions, strategic partnerships and/or JVs in China, Indonesia or elsewhere.
2. S$5.0m to pay down certain bank borrowings from United Overseas Bank Limited and Sing Investments & Finance Limited.
3. The balance as working capital.

Comments
From the prospectus,

• Page 79
  For FY2005, our Directors observed the following trends:
  (i) Our Directors expect our revenue in FY2005 to be relatively similar compared to FY2004. This is primarily a result of our Company maintaining our sales margins in light of higher direct costs.
  (ii) As a result of the increase in the international prices of fuel in 2005, our Directors expect expenses on fuel, gas and diesel for our Group to be higher in FY2005 as compared to FY2004. As a result of the increase in oil prices, our Directors expect distribution costs (primarily carriage and freight charges) and our direct costs (primarily fuel costs) to be higher in FY2005 as compared to FY2004. Given the above and barring any unforeseen circumstances, our Directors believe that, for FY2005, our Group will remain profitable but the level of profitability in FY2005 will likely be lower as compared to FY2004.
  
  
• Page 62 under Note (2) in small prints,
  Had the proposed Service Agreements been in force at the beginning of FY2004, the estimated total remuneration for Messrs Ang Yu Seng, Ang Yew Lai and Ang Yew Chye and the profit after taxation for FY2004 would have been S$1.9 million and S$8.7 million, respectively. Please refer to the section entitled “Service Agreements” for a description of the Service Agreements.

From the info provided in these 2 pages, what is clear is that EPS will for sure be lower in 2005 compared to 2004 as Revenue will be flat and Expenses, Costs and Salary (Net Profit $9.5Mil in 2004, so $1.9Mil salary in 2005 for the 3 directors will result in a very significant reduction in 2005 profit) will go up. Thus,

• 2004 EPS = 3.49cts (272Mil Shares)
• With the new shares issued fm IPO, 2004 EPS = 2.74cts (347Mil Shares)
• Best Case 2005 EPS = 2.74cts (if same as 2004)
• Therefore, Best Case Dividend = 30% of 2.74cts = 0.822cts (stated in prospectus that they MAY pay 30% of net profit as dividend)
• Thus, Best Case Net Dividend Yield at $0.20 = 4.11%

However, due to the above statements, Dividends will be significantly less than 0.822cts and Net Yield significantly less than 4.11%.

• Page 83
  Mr Lim Chen Wei, Jonathan is our Group Financial Controller in charge of the finance functions of our Group. From 1998 to 2000, Mr Lim was a senior associate with PricewaterhouseCoopers. From 2001 to 2002, he became the internal audit supervisor of Kuok Oils and Grains Pte Ltd. From 2002 to 2004, Mr Lim was the finance manager of Digiland International Limited where he managed, amongst other matters, the daily financial operations, the monthly consolidated financial statements and operating performance and the credit risk exposure of Digiland International Limited and its subsidiaries. Mr Lim is a certified public accountant with the Institute of Certified Public Accountants of Singapore and a certified internal auditor of the Institute of Internal Auditors. He graduated with a Bachelor’s Degree in Accountancy (Merit) from the Nanyang Technological University in 1998.

For the important post of Group Financial Controller, the staff (age 31) was hired only in 2004 or 2005, likely for the purpose of this IPO.

• Pg VI (Appendix)

The audited financial statements can be found here for the 3 companies under the Union Steel Holdings group,

1. Union Steel Pte Ltd
2. YLS Steel Pte Ltd
3. Yew Lee Seng Metal Pte Ltd

The Net Profit Margin is dropping for (1). The Group Margin is however going up, due to YLS Steel Pte Ltd increasing margin. But, as the revenue contributions of (1) and (2) are almost equal, in the longer term, the declining margin of (1) may be bad for the group as a whole.

My Action

May be good for a stag as issue size is small and easily 'cornered' but I'll most likely give it a miss. Mid term, not very attractive due to flat revenue and reducing profits and low yield. Long term, big question mark, so better to re-look after the 2005 results.

References

• IPO Prospectus

Disclaimer : The above is my opinion only. Pls do not rely on it for your investment decisions

SGX Market Commentary

Published August 6, 2005 in BT,

In broker jargon, a 'mild correction'

IF this week were looked at in isolation, the Straits Times Index's movements would read: two days of gains followed by three days of losses culminating in yesterday's alarming 23.52-point drop to 2,338.97. Extend the frame of reference a bit further back, and the picture isn't so dramatic - in the two weeks leading up to the start of this week, the index had risen almost exactly 100 points or 4.3 per cent. This, by any standard, is a sizeable advance - fuelled in no small part by the government's property measures - so it stands to reason that a sizeable correction can reasonably be expected. As it turns out, the loss for this week was only 14 points or less than one per cent which in broking parlance would be considered a 'mild correction'. Wall Street's Thursday drop in response to oil crossing US$61 per barrel was probably the main reason for the selling yesterday, since all regional markets were similarly depressed.

Oil and gas, rig builders and shipping continued to play central roles throughout the week, with the likes of SPC, KS Energy, Ezra, SembCorp Maritime, STX PanOcean, NOL and Cosco all seeing active trading while posting big price rises.

What was noticeable was the loss of momentum in the previous week's big plays, namely, banks and property. CapitaLand and DBS, for instance, started off the week with a bang, shooting up 19 cents and 50 cents to $3.02 and $16.60 respectively, but by mid-week showed signs of strain. CapitaLand finished at $2.99 yesterday, down five cents while DBS was unchanged at $16.50.

Also noticeable was the significant impact that broker reports had on the stocks concerned - STX's Thursday rejuvenation, for example, came courtesy of a CSFB 'outperform'; Fu Yu's collapse came after 'hold' calls from Kim Eng and Phillip Securities.

Meanwhile, compact disc firm Anwell Technologies' shares plunged mid-week after the company issued a profit warning, while the seemingly unstoppable Hyflux Ltd encountered selling yesterday after it released its first-half results. Phillip Securities was among the houses to call a 'sell' on Hyflux's shares, saying it has adjusted its earnings forecasts downwards for FY05 from $54.1 million to $50.2 million to take into account lower margins and lower core earnings. 'By using 19x P/E and FY06 core EPS of 12 cents, we arrive at the fair value of $2.28. We think the stock is overvalued now. Downgrade from HOLD to SELL on valuations,' it said. Similarly, CIMB-GK Goh downgraded Hyflux from 'outperform' to 'neutral' stating that 'Hyflux's share price has soared nearly four-fold within a year, but its FY05-06 PE multiples have only moved from the 20-25x range to 30-35x due to earnings upgrades . . . current valuations appear rich, given the risk of unproven execution. Should there be any delay in the award of contracts, disappointment in 3Q core earnings could lead to share price weakness.' Hyflux yesterday lost 12 cents to $3.56.

A-REIT : BT

Published August 5, 2005 in BT

A-Reit manager refutes talk it overpaid for assets
It says disclosures adequate for investors to form own judgement

(SINGAPORE) The manager of Ascendas Real Estate Investment Trust (A-Reit) yesterday refuted market comments that the trust has been overpaying for its asset acquisitions and then leasing back buildings to sellers at higher-than-market rents.

In the market, these are called sale-and-leaseback deals. And A-Reit suggested one reason why its purchase price and rentals for such deals are seen to be higher than market values. Its deals, said A-Reit, often comprise not only the real estate but also equipment like automated storage and retrieval systems (ASRS) in the case of logistics facilities.

ASRS allow the tenant to make full use of their space, by stacking goods right up to the ceiling. 'Given these features, we can achieve a 10 per cent higher per square foot monthly rental for such space compared with conventional warehouse space rental of $1 to $1.20 psf,' said Ascendas-MGM Funds Management CEO Tan Ser Ping. On account of this, A-Reit would pay the vendor a higher price and in return, the Reit is able to command a higher rental from leasing back both the property and ASRS to the seller.

Mr Tan also emphasised yesterday in an e-mail response to BT's queries that to minimise the business risks from such sale and lease-back (SLB) deals, Ascendas-MGM has stringent evaluation criteria.

'We look at the location and quality of the property, as well as building specifications. It's important that the building isn't highly specialised so that it will allow for alternative uses by other tenants if the existing one vacates,' he said. A-Reit also evaluates the credit-worthiness of the SLB tenant and typically requires either security deposits or bankers' guarantees for up to 24 months from the tenant, Mr Tan noted. 'In fact, there have been instances where we rejected investment opportunities on grounds that we were not comfortable with the credit-worthiness and long-term sustainability of the proposed tenant's business, but were subsequently picked up by another investor,' he added.

A-Reit has come under scrutiny following Temasek chief executive Ho Ching's speech last week, in which she warned investors of the potential hazards in the Singapore Reit market. Without naming any Reit, she pointed, among other things, to the potential dangers when a Reit manager agrees to buy assets at highly inflated prices and the seller or vendor agrees to lease back the asset, also at inflated rents which are well above market rates. Such an arrangement enables both buyer and seller to meet their respective financial targets, but may prove dangerous to Reit unit holders. Said Ms Ho: 'Imagine what happens if the economy takes a nose dive, and the troubled vendor goes belly up. The trust manager would have to scramble to find replacement tenants. Rentals would realistically be much lower than the previously inflated level. 'The unit holders would be hit with a drop in distribution yield. The value of the asset in the trust will similarly take a serious beating.'

Not everyone is convinced with A-Reit's answers yesterday. 'The point about getting a higher price and rent because of the ASRS is, I think, a red herring. How many properties in A-Reit's total portfolio have ASRS?' said a seasoned industry observer. He may have a point. An Ascendas-MGM Funds spokeswoman told BT that it had only two logistics assets with ASRS. The trust's portfolio also includes light industrial, high-tech and business park space.

Industry sources told BT that A-Reit bought IDS Logistics Corporate HQ, TT International Tradepark, C&P Logistics Hub, Fedex Building and 7 Changi South at prices ranging from $140 to $217 psf of net lettable area. This represents premiums of 75 to 97 per cent above the current replacement costs of the buildings.

A veteran property valuer told BT an ASRS system in a logistics facility would account for about 5 per cent of the facility's real estate value. So that would not account for the big spread between A-Reit's purchase price of the assets and the buildings' replacement costs. 'Perhaps they are counting on property rental and capital values appreciating in the future. So it depends on the view you take of the market,' he suggested.

In a similar vein, Ascendas-MGM's Mr Tan said: 'Price and value are essentially based on business judgement on a willing buyer, willing seller basis. 'Price at a point in time is one's perception of not only the current intrinsic value of an asset, but more importantly, also of its future potential. 'Every asset has a price. The questions are: Where is the benchmark, and what is the right price? 'We've acquired some income-producing investment properties at prices which we think represent fair value based on our investment criteria and assessment of the market.' At the end of the day, it's up to investors to decide whether they want to invest in A-Reit. 'We are very transparent and our disclosures are certainly adequate for discerning investors to evaluate and form their own judgement on our performance,' said Mr Tan.

A-Reit has delivered total returns to unitholders of 192 per cent since its listing in November 2002. This comprises 166 per cent from capital gains from appreciation of A-Reit's unit price, and another 26 per cent from distributions paid out to unitholders. Its property portfolio has increased from eight properties worth about $607 million at listing to 44 worth $2.3 billion.

Comments - BT shifts focus fm Suntec to A-REIT. Time to monitor A-REIT price and pick up bargains when the yield hits above 5%. Based on the latest quarter DPU, that would be $2.37. I started to buy today at $2.38.

A-REIT is in the midst of new acquisitions which should bring their yield up even further. Based on recent SGX announcements, they'd done a new revaluation (higher) of their existing properties which shld be a precursor to increasing their debts for the new acquisitions. So, either they are planning the new acquisitions without issuing new shares or likely, issuing fewer new units.

Disclaimer : The above is just my opinion, do not rely on it to make your investment decisions

SingTel - Q1 Results

SingTel profit up 9.5 pct on Asian mobile growth

SINGAPORE, Aug 4 (Reuters) - Singapore Telecommunications Ltd. , Asia's fifth-largest phone firm, posted a 9.5 percent gain in quarterly profit on Thursday as strong regional mobile phone growth offset a margin squeeze at its Australian unit.

SingTel, the city-state's biggest listed firm, has spent $17 billion in the last four years buying firms in Australia and high-growth Asian nations as it battles fierce competition at home, where nine out of 10 people already own a mobile phone. It derives about 75 percent of revenues and two-thirds of pretax earnings from operations outside Singapore. Its Optus unit in Australia is now SingTel's top revenue earner, but subscriber growth is expected to slow as its market matures.

"We are pleased with the profitable regional mobile business," Chief Executive Lee Hsien Yang said in a statement. "Bharti and Telkomsel continue to contribute strongly to the group's earnings growth."

SingTel, majority owned by the government, made an underlying profit before goodwill and exceptionals of S$762 million ($460 million) in its fiscal first quarter to June, compared with S$696 million in the year-earlier quarter.

This was below an average underlying profit forecast of S$778 million, according to a Reuters poll of eight analysts whose estimates ranged from S$743 million to S$797 million.

Attributable net profit was S$796 million, up 14 percent, thanks to a one-off gain of S$34 million through a stock transaction related to its stake in Indian mobile firm Bharti. Operating revenue grew 6.4 percent to S$3.21 billion.

SingTel's Optus division has a one-third share of Australia's mobile phone market, where more than eight in 10 people own a handset and competition is heating up. Optus reported net profit of A$150 million ($115 million) for the quarter, on a 4.8 percent rise in revenue to A$1.74 billion. Optus Mobile, which boosted sales by 5 percent in the first quarter, contributed 56 percent of overall revenue growth, with the fixed-line divisions contributing 44 percent. Rivals Telstra Corp. Ltd. , Hutchison Telecommunications (Australia) Ltd. and Vodafone Group Plc. have been wooing new users with price deals. New regulations might also squeeze margins, analysts said. Last year, the Australian Competition and Consumer Commission cut fees telecom companies charge each other when their customers make calls to people on rival networks. "This quarter, revenue and EBITDA (earnings before interest, tax, depreciation and amortisation) were impacted by increasing levels of competition, especially in the mobile and fixed business markets across the industry," Optus Chief Executive Paul O'Sullivan said in a statement.

But SingTel's profits were boosted by robust contributions from fast-growing Asian markets, where cellphone users are fewer. The company owns major stakes in five operators: 21.5 percent of Thailand's Advanced Info Service Plc. , 30.8 percent of India's Bharti Group, 44.6 percent of Globe Telecom Inc. in the Philippines, 35 percent of Indonesia's PT Telkomsel and 45 percent of Pacific Bangladesh Telecom Ltd., purchased in June.

SingTel shares have gained about 10.6 percent in the last three months, in line with the rise in the MSCI AsiaPacific telecoms sector average. The stock has outperformed a 3.9 percent increase in Telstra shares and a 7.3 percent gain in Taiwan's Chunghwa Telecom Co. Ltd. .

Previous Post on Singtel

Singapore Visitor Arrivals

After the SARS outbreak, the tourist industry in Singapore is badly affected in the past few years but with the recent annoucement on Integrated Resort and the recent Olympics Selection meeting, the visitor arrivals is on tracks to hit 2005 target of 8.9 million vistors set by Singapore Tourism Board. During the first half year, there are about 4.2 million tourists visited Singapore, which is almost half way mark of the target. The bulk of the tourists were from Indonesia, China and then Australia. Together with India and Malaysia, the vistors from these five countries contribute almost 50% of the visitor in the first half year. I think the second half of the year will be better as normally tourist vist peak at the second half of the year.

Comments:
I think companies related to tourism industry would see their revenue increased this year. Industries like Hotel, airlines, airport service, Food & Beverage as well as retail segments should show good result this finanical year. Keep a look out at these stocks. :)

Any good suggestion, please feel free to let us know.

Suntec - SGX Announcement

Just out, hot fm SGX announcements,

ARA pledges support of Madam Ho Ching’s views on REITs and waives acquisition fees

3 Aug 2005, Singapore – The ARA Group and its subsidiary companies, ARA Asset Management (Singapore) Limited (“ARASL”) – the manager of Fortune REIT – and ARA Trust Management (Suntec) Limited (“ARATMSL”) – the manager of Suntec REIT pledge their support of the views on the REIT industry given by Madam Ho Ching, Chief Executive Officer of Temasek Holdings Pte Ltd, on 28th July 2005.

The ARA Group is fully committed to the long-term growth of Singapore’s REIT industry and firmly supports carrying out best practices to ensure that the interests of REIT unitholders are upheld. As manager of Fortune REIT and Suntec REIT, the ARA Group pledges to act in the best interests of unitholders. The ARA Group would be pleased to consider any improvements and new practices to enhance the REIT industry in Singapore.

“To show our commitment to the long-term interests of unitholders, the ARA Group will waive our front-end acquisition fees in respect of future deals which Fortune REIT and Suntec REIT may enter into. By doing so, we would like to demonstrate that our motivation is aligned to that of unitholders in the long-term. We believe in the sustainability of the assets’ cash flow and are managing the portfolio with the unitholders’ long-term interests in mind. The ARA Group believes that this waiver should set a new industry standard for REIT managers in Singapore,” commented Mr Justin Chiu, Chairman of the ARA Group.

“The ARA Group concurs with Madam Ho’s concerns regarding the use of financial engineering in REITs. In light of this recent development, we will review the recent proposed acquisitions by Suntec REIT and may initiate discussions with the relevant parties,” expressed Mr. Chiu.

Previous Post on Suntec in this blog

Comments - Finally, a response fm Suntec mgmt. Looks good enough to me. Suntec shares will likely move up tomorrow from the low of $1.16 today.