We are now in the busiest part of the earnings season. Given that many companies are reporting their results at the same time, it might be useful to categorise them into three buckets of positive, negative and mixed. In this article, I will look at two companies that have recently reported mixed results.
M1 Ltd (SGX: B2F) is the first company that we will look at in this article. As a quick introduction, M1 is the smallest player within Singapore’s telecommunications industry. Its business can be broken down into four segments, namely, Mobile services, Fixed services, International Call services, and Handset sales.
In its third quarter ended 30 September 2018, M1 reported that sales was up 10.1% year-on-year to S$274.6 million. Service revenue was up 1.9% year-on-year to S$190.2 million. The growth in sales revenue was mainly driven by stronger performance in the Fixed Services, offset by weaker performance of International Call Services. Yet, EBITDA (earnings before interest tax depreciation and amortisation) declined 3.6% year-on-year to S$77.2 million. Similarly, net profit was down 5.3% year-on-year to S$34.4 million.
Last month, Keppel Corporation Limited (SGX: BN4), together with Singapore Press Holdings Limited (SGX: T39) offered S$2.06 per share for the remaining M1 shares they do not already own. The deal is subject to approval necessary from the Info-communications Media Development Authority (IMDA).
Riverstone Holdings Limited (SGX: AP4) is the other company that we will look at in this article. As a quick introduction, Riverstone is a Malaysia-based company operating in two key areas of the rubber gloves industry: cleanroom gloves and medical gloves.
In its latest earnings update, Riverstone reported that sales revenue improved 27.5% year-on-year to RM 239.5 million. Yet, gross profit for the quarter was down 9.2% year-on-year to RM 46.1 million. Gross profit margin for the latest quarter was 19.3%, down from 27.1% in the same period last year. Consequently, net profit for the reporting quarter declined by 6.5% year-on-year to RM 32.1 million.
As of 30 September 2018, Riverstone’s borrowings stood at RM 20.5 million while its cash and bank balances stood at RM 106.2 million, giving it a net cash position of RM 85.7 million.
Wong Teck Son, Riverstone’s executive chairman and CEO, commented on the company’s performance:
“Following the completion of construction of our new plant and the commissioning of new lines for phase 5 of our expansion plans, we are pleased to note that production has continued to run at close to full capacity. While we leverage upon our competitive advantage as an industry-renowned provider of customised solutions for the cleanroom glove segment, we remain mindful of the opportunities present in the burgeoning healthcare glove market as well.
Recently, the US Pharmacopeia (“USP”) Convention announced guidelines describing best practice standards to promote stringent hygiene in US hospitals and labs. Known as the USP 800, health workers working in pharmacies and hospitals are recommended to don two pairs of gloves when handling hazardous drugs. With these standards slated to come into effect in December 2019, we expect to see an uptick in US healthcare glove orders from the third to fourth quarter of 2019, should the guidelines be widely enforced.”
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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 Lawrence Nga doesn’t own shares in any companies mentioned. Motley Fool Singapore has a recommendation for Riverstone Holdings Limited.