BullRun: 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