Singamas profit soars by 899.8% to US$101.9mn

Positive demand for new containers, effective cost controls and further improved production efficiency spurred profit growth.

World-leading container manufacturer and logistics services provider Singamas Container Holdings Limited (“Singamas”) on Tuesday announced its interim results for the six months ended 30 June 2011.

The Group’s consolidated revenue amounted to US$1,023,991,000, a rise of 109.7% over the revenue of US$488,406,000 obtained in the comparable period last year. Consolidated net profit attributable to owners of the Company increased significantly by 899.8% to US$101,900,000 (1H2010: US$10,192,000) with basic earnings per share rising to US4.22 cents (1H2010: US0.42 cent). In the light of its positive results, the Group declares an interim dividend of HK9 cents (1H2010: nil), representing a payout ratio of 27.4%, according to a Singamas report.

Mr. Chang Yun Chung, Chairman of Singamas, said, “The improved performance was primarily the result of a continuing positive demand for new containers, higher average selling prices, effective cost controls and further improved production efficiency. With virtually no new container order and about 1.5 million twenty-foot equivalent units (“TEUs”) of old containers were disposed during the financial crisis, together with the recovery of the global export trading activities have resulted in shortage of containers in the shipping industry. To meet the upturn in container demand, we have increased production capacity at our manufacturing facilities. The construction of new manufacturing facilities at Qidong is well on track, with Phase one scheduled for completion by July 2012, and Phase two by the end of 2012.”

The operating environment has improved in the period under review. The Group expects this to continue in the foreseeable future. One of the major changes over the past 12 months or so has been a significant reduction in seasonality, and this change is something that the Group expects to continue, and to bring positive benefits. Far more orders were placed in what has traditionally been the low season for the Group. This has occurred because the Group’s customers have recognized that container supply is limited and new containers cannot be obtained during the traditional peak season as easily as in the past, so customers are spreading out their orders more evenly over the year to be sure of amassing the container numbers they expect to need.

As a result, the Group expects its revenues for 2011 to be distributed more evenly across the two halves of the year than in the last few years. For the Group, this will bring benefits of better operating conditions, more efficient deployment of labour, and more cost-effective ordering of raw materials.

The Company has considered the impact that may have on the Group’s businesses from the concern over the U.S. and Europe economic circumstances happening in the last two weeks. Based on the Group’s current business and operating situation, the Group is of the view that this recent market development would not have a significant effect on the Group’s performance. The Company will closely monitor the situation for the remaining year.

The Group’s financial position was further strengthened after the issuance of its RMB1.38 billion Notes on 14 April 2011. These Notes bear interest at a rate of 4.75% per annum, and will mature on 14 April 2014. The Group has been applying the net proceeds of this issue for working capital and general corporate purposes in the PRC.

Mr. Chang concluded, “Notwithstanding the recent market development, the promising outlook, the influx of working capital and the reduction in demand seasonality lead us to expect that the good achievements of the first half of 2011 can continue into the second half. With our facilities, expertise, marketing network and global reputation, prospects look cautiously optimistc for Singamas for the coming six months.”