S'pore's C&C profit seen hit by Astra

S'pore's C&C profit seen hit by Astra

SINGAPORE (Reuters): Singapore motor distributor Cycle & Carriage's interim profit is likely to be dragged down by its 30 percent stake in Indonesia's loss-making Astra International, analysts said on Monday.

"We expect the numbers to be poor in the first half. Astra is going to be a drag on its earnings and that will probably offset a very strong Singapore motor performance," said Michael Ong, an analyst at SG Securities.

Four analysts Reuters spoke to gave an average net profit forecast of S$55 million for C&C. Last year, the group made an interim of S$56 million.

The lowest forecast came in at S$23 million from SG Securities and the highest at S$70 million from Kim Eng Securities.

C&C, controlled by Jardine Strategic, will announce its interim results on Tuesday.

The wide divergence resulted from disagreement on the impact of the rupiah on Astra and the knock-on impact on C&C.

The rupiah had lost more than 20 percent of its value against the U.S. dollar since C&C bought into the Indonesian motor group in late March. The Indonesian unit was quoted around 8,970/8,990 per dollar in late Asian trade on Monday.

Astra reported a net loss of 803 billion rupiah in the first five months of the year.

Many analysts were cautious about C&C, once a favourite for fund managers eyeing consumer stocks.

They said the group's fate would be closely tied to the rupiah and the political climate in Indonesia.

SG's Ong has a "sell" on C&C, saying it has been transformed into a trading stock due to the uncertainty linked to Indonesia.

Ong said this would also be the last year for C&C to enjoy the full benefit of wholesale and retail margins from distributing Mercedes Benz cars.

In January 2001, its wholesale rights return to Daimler Chrysler

"Profit-wise, Astra will be increasingly important. It will be even more important from next year onwards," Ong said.

Astra, with $1.2 billion in debt, was still cash flow negative and some motor analysts in Jakarta said there were also some concerns over its ability to service a doubling in principle repayment next year, which required some asset disposal.

On Monday, C&C shares dipped four cents to S$3.96 in thin trading.

Its shares had lost about 27 percent since reaching a year's high of S$5.45 in mid-May, while the Straits Times Index has fallen six percent during the same period.