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Earnings Brief: Challenger Technologies Limited, DBS Group Holdings Ltd and BreadTalk Group Limited

Last Friday, Challenger Technologies Limited (SGX: 573) released its third quarter earnings while this morning, DBS Group Holdings Ltd (SGX: D05) and BreadTalk Group Limited (SGX: 5DA) announced their third quarter results.

Here are some quick highlights from the earnings announcements:

1. Challenger Technologies

a) Revenue for the quarter ended 30 September 2017 rose 5% year-on-year to S$78 million. This was mainly due to improved performance from IT products, and stronger growth from the corporate sales division and retail operations.

b) Profit attributable to shareholders surged 90% to S$3.3 million, largely on the back of an absence of an impairment provision for investments in a last-mile delivery provider during the same period last year, higher gross profit, and lower operating expenses. The improvement in gross profit was due to an improved product mix and the contribution from the company’s new flagship store.

c) Diluted earnings per share (EPS) was at 0.96 Singapore cents for the quarter, up from 0.51 cents last year.

d) Looking ahead, Challenger said that it would further enhance its e-commerce capabilities and functions to increase its competitive advantage to strengthen its market position in the online business. Its ValueClub app, serving over 500,000 members, will be upgraded by the end of the year with additional features.

2. DBS Group

a) Quarterly total income crossed the S$3 billion mark for the first time, growing 4% year-on-year to S$3.06 billion, strengthened by loan growth and fee income. Fee income was at a new high as well, led by the wealth management and cash management businesses.

b) However, net profit fell 23% to S$822 million, mainly due to an 87% increase in allowances for credit and other losses. DBS said that “net allowances of S$815 million were taken as residual weak oil and gas support services exposures were classified as nonperforming assets.”

c) Net interest margin for the quarter fell from 1.77% to 1.73%.

d) The non-performing loans (NPL) ratio for the quarter increased from 1.3% a year ago to 1.7%.

e) Net book value climbed from S$16.66 in the third quarter of 2016 to S$17.43.

f) As for the outlook, the bank expects underlying loan growth to be 7% to 8% in 2017 and 2018, and income growth to be around 3% this year, and double-digit next year.

3. BreadTalk Group

a) For the third quarter, revenue fell 2% year-on-year to S$154.3 million due to a weak showing from all its business divisions except the Restaurant division.

b) However, profit attributable to shareholders swelled 22.2% to slightly less than S$4 million, primarily due to lower distribution and selling expenses for the quarter.

c) Diluted EPS grew from 1.16 Singapore cents last year to 1.41 cents in the latest quarter.

d) Shareholders would be receiving an interim dividend of 1.0 Singapore cents per share for the latest period. There was no dividend declared during the same quarter last year.

e) Looking ahead, BreadTalk said: “The Group’s dual pronged strategy of consolidating underperforming operations and focusing on high performing markets has proven to be effective. We continue to develop new growth engines as represented by Din Tai Fung in the United Kingdom (UK) and Song Fa Joint Venture. They will generate new revenue streams for the Group. Our first Song Fa Bak Kut Teh outlet in Shanghai and our first Din Tai Fung outlet in the UK are expected to open in 2018. The Group remains in a good position to improve overall profitability and quality of earnings for FY 2017”.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. The Motley Fool Singapore has recommended shares of DBS Group. Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.