Earnings Brief: Best World International Limited, Singapore Telecommunications Limited and Valuetronics Holdings Limited

Yesterday evening, Best World International Limited (SGX: CGN) released its third-quarter earnings while this morning, Singapore Telecommunications Limited (SGX: Z74) and Valuetronics Holdings Limited (SGX: BN2) announced their second-quarter results.

Here are some quick highlights from the earnings announcements:

1. Best World International Limited

a) Revenue for the third quarter ended 30 September 2017 fell 10.3% year-on-year to S$46.8 million. The firm has three business segments – Direct Selling, Export and Manufacturing/Wholesale.

b) Direct Selling revenue slumped 37%, mainly due to a decline in revenue from the firm’s key market, Taiwan. Export revenue increased 35.5% as the “China consumer market continued to display a growing appetite and demand” for Best World’s skincare brand, DR’s Secret. Last but not the least, Manufacturing/Wholesale revenue declined 0.9%.

c) Net profit improved 12.2% to S$12.2 million, primarily due to lower distribution costs and administrative expenses.

d) Diluted earnings per share (EPS) was at 2.21 Singapore cents for the quarter, up from 1.62 cents last year.

e) Looking ahead, the firm said: “With sustained growth expected for the Group’s Export Segment, barring unforeseen circumstances, Management is cautiously optimistic of the Group’s profitability for the next reporting period and for FY2017 and that the decline in Taiwan will be sufficiently buffered by growth of the Group’s Export Segment.”

2. Singapore Telecommunications Limited

a) Revenue for the second quarter ended 30 September 2017 went north by 6.9% year-on-year to S$4.37 billion as all business segments performed well. The revenue included contributions from digital marketing company, Turn, which was acquired in April this year.

b) EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortisation) rose 4.8% to S$1.29 billion. The increase is due to strong performances from the firm’s consumer and enterprise businesses, bolstered by higher post-paid mobile and fixed broadband customer numbers in Australia.

c) The share of results of associates and joint ventures declined 4.9% to S$487 million, due to lower profit at Airtel and lower contribution from NetLink NBN Trust (SGX: CJLU) after the divestment of Singtel’s 75.2% stake in July this year. These were partially offset by higher profit at Globe and contribution from Intouch, which was acquired in November 2016.

d) Underlying net profit slid 4.1% to S$929 million, impacted by lower associates’ contributions. Airtel is facing keen price competition in India.

e) Including the one-off gains from the divestment of Singtel’s stake in NetLink NBN Trust, net profit for the quarter almost trebled to a record of S$2.89 billion.

f) Diluted EPS for the quarter was 17.67 Singapore cents, up from 6.09 cents last year.

g) Shareholders will be receiving an interim dividend of 6.8 Singapore cents per share (same as last year) and a special dividend of 3.0 cents per share from the divestment of NetLink NBN Trust.

h) Out of S$2.3 billion in proceeds from the divestment of the trust, the special dividend would amount to a total of around S$500 million. The balance of the proceeds will be used for future spectrum acquisitions and growth investments.

i) For the current financial year ending 31 March 2018, Singtel said that its consolidated revenue is expected to grow by mid-single digit level and EBITDA to rise by low-single digit level.

3. Valuetronics Holdings Limited

a) For the second quarter ended 30 September 2017, revenue for the electronics manufacturing services provider went up 26.5% year-on-year to HK$725.7 million. The strong performance was mainly due to higher demand for smart LED lighting products with Internet of Things features, which caused a 45.7% jump in revenue in its Consumer Electronics business segment.

b) Valuetronics’ other business segment, Industrial and Commercial Electronics, saw its revenue rise by 10.5% largely due to an increase in demand from some its customers.

c) Net profit soared 33.5% to HK$50.8 million.

d) Diluted EPS grew from HK 16.1 cents last year to HK 23.4 cents in the latest quarter.

e) Shareholders would be receiving an interim dividend of 7 HK cents per share for the latest quarter. There was no dividend declared during the same quarter last year.

f) Looking ahead, the firm said: “Various indicators show the economic activities in the United States, the Group’s largest market, growing moderately. As such, the Group expects its customers and itself to benefit from the continuous growth momentum in the second half. Meanwhile, the Group still continues to see supply chain challenges, such as raw material price fluctuations and extended procurement lead times. Nevertheless, barring unforeseen circumstances, the directors expect the Group to achieve profit growth for the financial year ending 31 March 2018.”

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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 Sudhan P doesn’t own shares in any companies mentioned.