As investors, quarterly earnings updates are the best way to gauge if a company is falling short or meeting investor expectations. Over the last few weeks, I have been keeping a close watch as numerous companies released their earnings update for the first half of 2018.
Here are three companies that have performed well in the most recent quarter.
Oversea-Chinese Banking Corp Limited (SGX: O39)
Like the other two major banks in Singapore, OCBC had a great first half of 2018.
OCBC’s net interest margin rose 2 basis points year-on-year. Together with larger loan volume, net interest income increased 8%. Non-interest income also increased by 2% year-on-year and 12% quarter-on-quarter. Its wealth management segment, a low-capital, high return business continues to do well, rising 3% year-on-year. This segment has compounded at an annual rate of 23% between December 2014 and December 2017.
Overall, net profit rose 16% year-on-year for the quarter. For the first half of 2018, the group’s net profit was 22% higher than a year ago.
With interest rates continuing to rise, we can expect higher net interest margins in the future. The company also declared an interim dividend of 20 Singapore cents, 11.1% higher than previous year but still at a comfortable payout ratio of 36%. OCBC’s shares currently trade at S$11.94 apiece, giving an annualised dividend yield of 3.3%, a price-to-earnings ratio of 10.9 and price-to-book of 1.2.
Mindchamps Preschool Ltd (SGX: CNE)
Listed late last year, Mindchamps Preschool Ltd operates one of Singapore’s most well-known preschool franchises. Its classes revolve around neuroscientist Professor Emeritus Allan Snyder’s research on the three minds model of education: the champion mind, the creative mind, and the learning mind.
The company had perhaps its best quarter since its listing with revenue spiking 60% to S$7.6 million from S$4.8 million in the corresponding period last year. Operating profit outpaced revenue growth, increasing 92% year-on-year. Net profit was 65% higher at S$1.24 million.
Mindchamps has been actively pursuing inorganic growth through its greater financial muscle since its listing. During the quarter, the number of company owned and operated preschools increased to 13 from six, while the number of franchisee owned and operated centres increased to 51 from 40.
In addition, it has recently acquired four preschools in Australia and opened its first school in Vietnam, expanding its global footprint. The company has also tied up with Keppel Capital Ventures Pte Ltd to establish a new private fund to acquire education real estate.
Mindchamps shares are currently going at S$0.695 per piece, translating to a price-to-book ratio of 2.92 and an annualised price-to-earnings of 52.6.
VICOM Limited (SGX:V01)
VICOM operates seven vehicle inspection centres in Singapore and has inspected more than 10 million vehicles since it began business.
The company has faced challenges in recent years with limited growth in car numbers, and its non-vehicular inspection and testing services facing headwinds. But in the second quarter of 2018, VICOM returned to growth with revenue growing 2.4% to S$24.7 million as business volume increased during the quarter.
Profit margin also improved, probably due to price hikes that the company has imposed on vehicle testing. Consequently, operating profit rose 5.1% to S$7.4 million. Earnings per share for the quarter was 7.05 cents. Management declared an interim dividend of 13.46 cents per share, a 2.6% increase from last year.
At the time of writing, shares of VICOM traded at S$6.32 per piece. This gives an annualised price-to-earnings of 21.1 and a trailing dividend yield of 5.7%.
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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 VICOM Limited. Motley Fool Singapore contributor Jeremy Chia owns shares in VICOM Limited.