Singamas shares slide 14.7pc despite firm's return to profitability

PUBLISHED : Thursday, 19 August, 2010, 12:00am
UPDATED : Thursday, 19 August, 2010, 12:00am

Singamas Container Holdings' share price plunge more than 14.7 per cent yesterday, even though the company returned to the black.

The world's second-largest maker of shipping containers posted an interim net profit of almost US$10.2 million, compared with a US$27.4 million net loss in last year's first half.

The shares closed at HK$1.68, down from HK$1.99 at the opening.

Chief executive Teo Siong Seng attributed the drop to an analyst's report that forecast the company would generate a full-year net profit of US$29 million. He thought investors had divided this full-year estimate by two and assumed the company would generate a half-year net profit of US$14.5 million.

Teo said that having seen the actual profit figure, investors had assumed the company had underperformed, even though the firm traditionally sees a stronger second half.

Teo said that while the company would not declare a first-half dividend, Singamas was committed to an annual payout ratio of between 25 per cent and 30 per cent and expected to declare an appropriate dividend for the full year.

He said production of new containers virtually ceased until after the Lunar New Year in February, following a slump in demand last year.

'Production only returned to normal in April and May,' he said.

The company produced 230,666 20-foot equivalent units (teu) and sold 236,190 teu in the first half, generating revenue of US$471.4 million, while logistics operations contributed US$17 million. This compared with an output of 18,243 teu and a total revenue of US$99.5 million in the first half of last year.

Teo said output in the first half usually accounted for 40 per cent of the yearly total. As a result, he said, the company expected full-year production to top 550,000 teu.

The company, which has a 25 per cent global manufacturing market share, has a full order book until September and was now 'filling October capacity'.

Teo said the average selling price of a 20-foot container had climbed from US$2,155 in the first half to US$2,700 for September production.

Asked about the impact on the company of a potential slowdown in global container shipments that has been forecast by some container shipping lines, Teo said there had been 'some caution about placing orders in November and December'.

He said the company was scouting for potential merger and acquisition targets, especially among specialist container manufacturers.

'We are talking to a couple of candidates,' he said, expecting deals to be confirmed in the next few months.

Improved result

Singamas reported a turnaround from last year's six-month net loss to an interim net profit of, in US dollars: $10.2m