A Tough Quarter At Keppel T&T

ktt_logoKeppel Telecommunications & Transportation Limited (SGX: K11), a subsidiary of Keppel Corporation Limited (SGX: BN4), posted an 18% rise in third-quarter revenues to S$40m.

However, net profit only increased 3.3% to S$15.5m. The drag in profits was due to higher operating and interest expenses and taxation.

A breakdown is shown below to explain the 27.7% rise in operating expenses:

  • Higher purchase of Goods & Services in line with the increase in revenue
  • Staff costs increased due mainly to higher headcount
  • Higher depreciation due mainly to additional capital expenditure for data centres’ equipment.
  • Rental of equipment and facilities expenses rose due to higher upkeep of warehouses, equipment rental and maintenance costs.
  • ·

For the first nine months of the year, Group revenue increased 14% to S$117m thanks to higher revenue from Data Centre and Logistics Divisions.

But profits disappointed due to higher operating and interest expenses although other income did soar 219%. The increase in other income was due to dilution gain in an associated company. The Group’s profits for the first nine months increased 5.4% to S$49.86m.

The company’s cash and cash equivalents decreased by S$24.72m mainly due to the purchase of fixed assets and advance payment for acquisition of a subsidiary.

Total liabilities stood at S$568m compared to last year’s S$166m due mainly to increases in creditors and borrowings. The increase in creditors was due largely to costs incurred to set up the data centres.

Earnings per share improved 8% to S$0.082 while its net asset value per ordinary share increased 7% to S$0.82 per share. Shares in KepT&T, which cost $1.53, values the company at 14 times historic earnings. The dividend yield is 2.29%.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice.   Motley Fool Singapore contributor James Yeo doesn’t own shares in any companies mentioned.