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.