Singapore's STIC '96 profit seen up

Singapore's STIC '96 profit seen up

SINGAPORE (Reuter): Diversified conglomerate Singapore Technologies Industrial Corp (STIC) is seen posting a healthy 20 percent rise in 1996 earnings as construction continues to fuel growth, analysts said yesterday.

They said the group's industrial parks would remain key contributors to the bottom line, with its oldest park on the Indonesian island of Batam expected to be a star performer.

According to the consensus forecasts in Edinburgh Financial Publishing's Estimate Directory, STIC is expected to report a 19.6 percent increase in net profit for the year ended December 31 to Singapore $65.2 million (US$45.6 million).

The estimates range from S$63.3 million to S$69.0 million. Net profit rose 36.2 percent to S$54.5 million in 1995.

STIC and its listed subsidiaries -- ST Electronic & Engineering, ST Computer and ST Capital -- are due to report their 1996 earnings this month.

Timothy Wong, research manager at Vickers Ballas, said construction and development were likely to generate nearly 30 percent of an expected pre-tax profit of S$133 million.

He said the Batam industrial park would be the strongest contributor. A park on another Indonesian island, Bintan, was likely to register losses due to a slow take-up rate, but these were expected to be lower than in the previous year.

Ng Eng Hou, analyst at Keppel Securities, said weak contributions from Bintan would be countered by the improved performance of its leisure resort as visitors picked up.

The group's industrial park in Wuxi, China, still in its start-up phase, would continue to lag behind the others due to changes in China's investment policy, Ng said.

Ng was referring to changes in China's policies on tax reform, export levies, and the lifting of tariffs on certain imports, which had made prospective tenants of the industrial park reluctant to invest there until a clearer picture emerged.

Analysts were divided about the earnings outlook for the group's finance arm, ST Capital, with the more bullish forecasts calling for a 20 percent rise in net profit.

They agreed increased competition in the finance industry would pressure the unit, preventing a return to the near 60 percent growth seen in 1995.

ST Electronic & Engineering was expected to benefit from a restructuring in December under which it acquired four companies from ST Computer, STIC and other parties for S$58.56 million.

"The restructuring will add to earnings. But it will obviously have a greater impact on ST Electronic than STIC because of the size of the earnings base," said Vickers' Wong.