November 15, 2023


China’s Industrial Output Grew 4.6% in October

China’s industrial output and retail sales growth beat expectations in October, but the underlying economic picture highlighted significant pockets of weakness with the crisis-hit property sector continuing to forestall a full-blown revival. The world’s second-biggest economy has struggled to mount a strong post-COVID recovery as distress in the housing market, local government debt risks, slow global growth and geopolitical tensions have dented momentum. A flurry of policy support measures have proven only modestly beneficial, raising pressure on authorities to roll out more stimulus. China’s industrial output grew 4.6% in October year-on-year, accelerating from the 4.5% pace seen in September, data from the National Bureau of Statistics (NBS) showed, beating expectations for a 4.4% increase in a Reuters poll. It also marked the strongest growth since April.

Retail sales rose 7.6% in October with improvement in both auto and restaurant sales growth, quickening from a 5.5% gain in September and hitting the fastest pace since May. Analysts had expected retail sales to grow 7.0% due to the low base effect in 2022 when COVID curbs disrupted consumers and businesses. Analysts struck a cautious note on the upside data surprise, noting that the property sector remains a weak link for the economy and pointed to the lack of major reforms as another impediment to sustainable longer term revival in growth.  The nationwide survey-based jobless rate stayed at 5.0% in October, unchanged from September, the NBS data showed. Youth unemployment, which hit a record high 21.3% in June, wasn’t available after the statistics bureau stopped publishing it since July. China has been ramping up efforts to revive its post-COVID economy with a slew of policy support measures in recent months, although the positive effects have been marginal so far. The upbeat data comes as a raft of other indicators for October released over recent weeks pointed to muted growth momentum. Imports grew unexpectedly, but exports shrank at a quicker pace, household borrowing remained weak, consumer prices swung lower while factory deflation persisted.

The economy grew faster-than-expected in the third quarter, with analysts generally expecting it to reach the government’s full-year growth target of around 5%, though a full-blown recovery is still some time away. The yuan held near a more than two-month high after surprisingly softer U.S. inflation reading overnight boosted bets that the Federal Reserve had reached the end of its tightening cycle. The country’s central bank, People’s Bank of China (PBOC), boosted liquidity injections but kept the interest rate unchanged when rolling over maturing medium-term policy loans. In a rare revision last month, the government also lifted its 2023 budget deficit to around 3.8% of gross domestic product from 3% to account for the planned issuance of 1 trillion yuan (US$137.10 billion) in sovereign bonds. The PBOC has cut banks’ reserve requirement ratio (RRR) twice this year to free up liquidity to aid the economic recovery. China’s crisis-hit property sector has yet to see a meaningful rebound despite strengthened support measures for homebuyers, including relaxing of home purchase restrictions, lowering in borrowing costs and other programmes. Property investment fell 9.3% in January-October year-on-year, after a similarly sharp 9.1% drop in January-September. Fixed asset investment disappointed with a 2.9% expansion year-on-year in the first 10 months, missing expectations for a 3.1% rise. It grew 3.1% in the January-September period. Confidence among private businesses also remained depressed, with investment in the sector shrinking 0.5% during January-October, narrowing slightly from the 0.6% decline in the first nine months.

Lego to Invest More Than US$200 Million to Expand Plant in Mexico

Toymaker Lego will invest more than US$200 million to expand its plant in the northern Mexican state of Nuevo Leon, the state’s government said in a statement. A government spokesperson later clarified that the final figure was US$205 million. The statement had initially cited two figures for the investment: US$205 million and US$250 million. The expanded operations are due to start up in May 2025, Nuevo Leon said in a statement.

Japan’s Economy Shrank 2.1% in July-September Quarter

Japan’s economy shrank 2.1% in July-September from the previous quarter on an annualised basis, government data showed, worse than market estimates and falling for the first time in three quarters. The gross domestic product (GDP) figure compared with the median forecast for a 0.6% decline and translated into a quarterly fall of 0.5%. Private consumption, which makes up more than half of the economy, was flat quarter-on-quarter, the data showed.

Biogen Third Quarter Profit Beat Estimates

Biogen cut its annual profit forecast to below Wall Street estimates due to higher expenses associated with its US$6.5 billion Reata Pharmaceuticals acquisition. The company received U.S. approval for its highly anticipated Alzheimer’s treatment Leqembi earlier this year. About 800 people were currently being treated with Leqembi, Biogen’s partner for the drug, Japanese drugmaker Eisai, said. That makes Biogen’s target of 10,000 patients on the drug by the end of March 2024 look increasingly difficult. Biogen said it now expects full-year adjusted profit of US$14.50 to US$15.00 per share, the new high end of the range matching the low end of its previous forecast of US$15 to US$16. Analysts were estimating US$15.26 per share.

Its older multiple sclerosis drugs, long a growth driver for the company, face intense competition from cheaper versions and other rival treatments. Biogen urged investors to focus on its newer treatments including postpartum depression drug Zurzuvae, and Friedreich ataxia treatment Skyclarys, acquired with the purchase of rare disease drugmaker Reata.  Leqembi revenue recorded by Eisai was about US$2 million for the third quarter. Biogen said it expects annual sales to decline in low-single digits from last year, up from a previous forecast of a mid-single digit drop. Total expenses more than doubled to US$2.67 billion in the third quarter. Third-quarter profit of US$4.36 per share topped Wall Street estimates by 39 cents, buoyed by sales of Spinraza, its expensive treatment for spinal muscular atrophy, and higher contract manufacturing revenue.

EV Maker Canoo Forecasts Smaller Loss for Second Half

Canoo slashed spending plans for the second half of the year amid a market slowdown for electric-vehicle (EV) sales and forecast a smaller core loss in a tight funding environment. The EV maker expects capital expenditure of US$30 million to US$40 million in the second half of 2023, compared with its prior forecast range of US$70 million to US$100 million. Automakers such as Tesla, Ford and General Motors have been cautious about expanding EV production capacity amid economic uncertainties. Canoo projects core loss to be between US$85 million and US$105 million for the second half, versus its previous range of US$120 million to US$140 million. The company, which has contracts with the U.S. Defense Department for supply of advanced battery packs, and Walmart and NASA for supplying EVs, said its loss narrowed to US$112 million in the third quarter, compared with US$117.7 million a year earlier.

Canoo said its first revenue was generated in July when it delivered its first three NASA vehicles. Its revenue came in at US$519 million. Adjusted loss per share was 6 cents, compared with LSEG estimates of a 12-cent loss. Its cash and cash equivalents were US$8.3 million as of Sept. 30, compared with US$5 million in the preceding three months. Canoo last week unveiled the “American Bulldog” electric pickup truck, looking to further its push into the American market where pickups are among the top-selling vehicles.

US Postal Service Reports US$6.5 Billion Net Loss for 2023 Fiscal Year

The U.S. Postal Service reported a US$6.5 billion net loss for the 12 months ending Sept. 30 and said it will not breakeven next year as first-class mail fell to the lowest volume since 1968. The Postal Service said revenue fell 0.4% to US$78.2 billion results. U.S. Postmaster General Louis DeJoy said the loss includes US$2.6 billion in inflation costs “above what we projected and what we were able to recover… We are not happy with this result.” The agency has been aggressively hiking stamp prices and is in the middle of a 10-year restructuring plan announced in 2021 that aims to eliminate US$160 billion in predicted losses over the next decade and had forecast 2023 as a breakeven year.

First-class mail volume fell 6.1% in 2023 to 46 million pieces and is down 53% since 2006, but revenue increased by US$515 million because of higher stamp prices. The net loss was also impacted by accounting for its underfunded retirements caused by actuarial revaluation and discount rate changes. USPS, which has 640,000 employees reported a 2.6% increase in employee compensation and benefits costs to US$52.8 billion. USPS plans to cut US$1 billion in transportation costs next year. Total operating expenses were US$85.4 billion for the year, an increase of US$5.8 billion, or 7.3%. USPS said to preserve liquidity it did not make the full US$5.1 billion in retirement plan payments due.

Airbnb Acquired AI Startup GamePlanner.AI

Airbnb said it has acquired GamePlanner.AI, a 12-person startup, for an undisclosed sum, amid rapid adoption of artificial intelligence that has taken the tech world by storm and pushed many companies to explore its uses. GamePlanner.AI was co-founded by Adam Cheyer, who was also one of the founders of Apple’s voice assistant Siri. The startup will add to Airbnb’s existing set of AI technologies that include large language models, computer vision models and machine learning. CNBC, citing sources familiar with the matter, reported that the deal is valued at just under US$200 million. Airbnb declined to share any additional details of the deal. Other travel companies, including and Expedia have also made efforts to integrate AI to their existing technologies in an attempt to enhance customer-booking experiences and create more suitable itineraries and suggestions.

Home Depot Reported Better-than-Expected Third Quarter Sales

Home Depot sales were better than expected in the third quarter, bolstered by customers spending on plumbing and hardware for repair work and smaller projects, sending its shares up about 7% in a “sigh of relief” rally. Americans have put big renovations and discretionary home-improvement projects on the back burner after months of elevated inflation and interest rates. That hurt sales of items like flooring, countertops and cabinets at the top U.S. home improvement retailer, driving big-ticket purchases, or transactions over US$1,000, down 5.2% in the quarter. However, strong performance in categories like building materials, plumbing and hardware, as well as demand for new products like portable power stations, helped prop up spending at stores. Comparable sales declined 3.1% for the three months ended Oct. 29, smaller than the 3.31% drop analysts expected, according to LSEG data. Home Depot tightened its annual sales forecast range to a decline between 3% and 4%, compared with its prior forecast for a 2% to 5% decrease. Customers’ average ticket, excluding the impact from lower lumber and copper prices, grew in the quarter. Transactions were down 2.4%. Some big-ticket items like roofing and insulation typically sought after by “Pro-customers” like professional builders and contractors were also strong. Home Depot now expects annual per-share profit to fall 9% to 11%, compared with a 7% to 13% slump estimated previously.

Boeing Delivered 34 Jets in October

Boeing must deliver 70 narrowbody 737s and 14 widebody 787 Dreamliners in November and December to meet its target for 2023, setting the U.S. planemaker up for a sprint over the holiday season. The U.S. planemaker reported delivering 34 jets in October, about half as many as its European rival Airbus, which delivered 71 aircraft. Boeing has said it would deliver at least 375 narrowbody aircraft this year – a reduction from its original goal of between 400 and 450 737s – as well as at least 70 Dreamliners. Delivery numbers are typically largest in the final months of the year as planemakers race to meet annual goals. Boeing will meet its targets if it can match its delivery pace for last year, when it handed 87 737s and 16 Dreamliners to customers in the last two months of 2022.

Meanwhile, Airbus needs to deliver 161 aircraft in November and December to meet its annual goal of 720 deliveries. Boeing’s deliveries for October included 18 737 MAXs and one older-model 737 NG aircraft that will be converted into a P-8 maritime surveillance aircraft for the U.S. Navy. Widebody deliveries included three 777 freighters, six 767s and six Dreamliners. Boeing slowed 737 deliveries in August after the discovery of a supplier defect involving misdrilled holes on some aircrafts’ aft pressure bulkhead. Boeing booked 123 gross orders last month, bolstered by a deal with Southwest Airlines for 111 MAXs. It reported six cancellations, which included one MAX for Aerolineas Argentinas and five MAX for customers that Boeing declined to identify. Boeing’s gross orders since the start of January rose to 971, or 841 net orders after factoring in cancellations and conversions and 1,066 net orders after accounting adjustments. Airbus has booked orders for 1,399 aircraft through October, or a net total of 1,334 planes after cancellation.


SIIC Environment Net Profit Attributable to Shareholders Up 2.2% to RMB 583 Million for 9 Months

SIIC Environment revenue in 9MFY2023 amounted to RMB6.349 billion, an increase of 9.7% year-on-year (YOY). Gross profit and net profit in 9MFY2023 increased by 14.6% and 9.6% YOY to RMB2.214 billion and RMB925 million respectively. Construction revenue in 9MFY2023 amounted to RMB2.149 billion, an increase of 5.36% YOY, mainly due to the Group’s Xicen Water Purification Plant Project (“Xicen Project”) in Qingpu, Shanghai, together with other new projects. The aggregate of operating and maintenance income and financial income from service concession arrangements in 9MFY2023 increased by 11.84% YOY to RMB3.822 billion, mainly due to higher volume and average price in water treatment and water supply. Net profit attributable to shareholders in 9MFY2023 amounted to RMB583 million, representing a growth of 2.2% YOY.

Old Chang Kee First Half Profit After Tax Up 66.9% to $4.4 Million

For the period from 1 April 2023 to 30 September 2023 (“1H2024”), the Group’s revenue increased by approximately S$6.6 million or 15.1%. This increase in revenue arose mainly due to higher retail, catering, and non-retail sales, partially offset by lower delivery revenue. As at 30 September 2023, the Group operated a total of 82 outlets in Singapore. The Group’s gross profit margin increased by 1.2% to 66.5% in 1H2024, mainly due to improved cost management, product pricing management and lower production depreciation expenses as a percentage of revenue due to higher revenue generated for the current period. Other income increased slightly by approximately S$57,000 due to new employment grant income of approximately S$114,000, which was partially offset by lower other government grant income of approximately S$46,000 for the current period.

As a percentage of revenue, total S & D expenses decreased from 40.7% to 38.9%, mainly due to the increase in retail sales during the period. The increase in the Group’s administrative expenses was attributable to higher staff costs including higher bonus provision arising from the increase in profit for 1H2024. Finance costs increased slightly by approximately S$0.2 million mainly due to higher interest rates on bank loans. Other expenses decreased by S$0.2 million mainly due to lower depreciation expenses and impairment loss for amounts due from an associated company, and lower foreign exchange loss pursuant to foreign exchange revaluation of inter-company loans to the Group’s Australian and Malaysian subsidiaries for the current period, with the reduction in expenses being partially offset by higher impairment for amounts due from the Group’s joint venture in the United Kingdom. As a result of the above the Group’s profit after tax increased by 66.9% to S$4.4 million.

PSC Corporation Acquired 1.2 ha Freehold Land in Johore for S$965,000

PSC Corporation Ltd announced that its wholly-owned subsidiary, Fortune Food Manufacturing Sdn Bhd, has signed a sale and purchase agreement to acquire a piece of freehold vacant land, approximately 1.2 hectares, in Pontian, Johore, for a consideration of approximately RM3.3 million (about S$964,695). The Group intends to build a factory to expand its current Malaysia factory’s production capacity by 6 to 7 times, for the production of Fortune’s full range of soya bean-based products, noodles and desserts.  This new factory will also enable Fortune’s existing noodle production lines in Skudai, Johor Bahru and grass jelly lines in Benut, Pontian to be merged into a single facility. With a bigger floor area, new tofu and dessert lines can also be added to support the existing production at its Singapore factory, as well as facilitate the expansion of its Malaysia market.

ComfortDelGro Third Quarter PATMI 54.5% to $49.9 Million

Land transport giant ComfortDelGro posted a 54.5 % rise in net profit to $49.9 million for the third quarter ended Sept 30, from $32.3 million a year earlier. The company noted that its Patmi (profit after tax and minority interests) margin for the quarter also rose to 5 %, from 3.4 % a year earlier. Revenue over the same period rose 3.8 % to $996.6 million, from $960.3 million a year ago. In its business update, the company noted that its public transport business improved as renewals and indexation in the United Kingdom continued to improve margins. Revenue for its public transport business grew 3.4 % year on year to $758.5 million, while operating profit gained 23.8 % to $33.8 million.

As for its taxi and private-hire business, the company noted that demand remains high, although competition is increasing. It added that it has introduced a platform fee to its Zig app since July, and that its taxi fleet size holds firm, with a slight increase in market share.Revenue for its taxi and private-hire business grew 3.3 % to $147.6 million as operating profit rose 43.5 % to $28.7 million.

KOP Reported Second Quarter Profit After Tax of S$0.1 Million

Revenue increased by S$10.8 million or 123% from S$8.8 million in 3 months ended 30 September 2022 (“2QFY2023”) to S$19.5 million in 3 months ended 30 September 2023 (“2QFY2024”) and increased by S$44.8 million or 346% from S$12.9 million in 6 months ended 30 September 2022 (“6MFY2023”) to S$57.7 million in 6 months ended 30 September 2023 (“6MFY2024”). The increase was mainly due to increase in revenue from the real estate development and investment segment and hospitality segment. Cost of sales increased by S$8.5 million or 156% from S$5.4 million in 2QFY2023 to S$13.9 million in 2QFY2024 and increased by S$34.6 million or 430% from S$8.0 million in 6MFY2023 to S$42.6 million in 6MFY2024, which is in line with the increase in revenue during the period.

Gross profit increased by S$2.3 million or 68% from S$3.3 million in 2QFY2023 to S$5.6 million in 2QFY2024 and increased by S$10.1 million or 208% from S$4.9 million in 6MFY2023 to S$15.0 million in 6MFY2024, which is in line with the increase in revenue during the period. As a result of the above, the Group recorded a profit after tax of S$0.1 million in 2QFY2024 and a profit after tax of S$3.9 million in 6MFY2024 compared to a loss after tax of S$4.3 million in 2QFY2023 and a loss after tax of S$32.4 million in 6MFY2023.

The Hour Glass Profit Attributable to Owners Down 9% to $77.0 Million for First Half

Luxury watch retailer The Hour Glass has reported earnings of $77.0 million for the 1HFY2024 ended Sept 30, down 9% y-o-y. Earnings per share for 1HFY2024 also decreased to 11.71 cents from 12.58 cents in the same period last year. Revenue for the same period increased by 1% to $558.4 million, while the cost of goods sold increased by 3% to $385.7 million. The company’s gross margins decreased to 30.9% in 1HFY2024 compared to 32.4% in 1HFY2023, partly due to unfavourable exchange rate movements and contributing to a y-o-y decline in profit after tax of 9% to $77.9 million for the half-year period. As at Sept 30, cash and cash equivalents stood at $206.5 million. The Hour Glass has recommended an interim dividend of 2 cents per share for 1HFY2024.

Golden Agri Resources Third Quarter Net Profit Down 25% to US$68 Million

Golden Agri Resources has reported earnings of US$68 million ($92.5 million) for its 3QFY2023 ended Sept 30, down 25% y-o-y. Revenue in the same period, however, was up 5% to US$2.45 billion, as gross profit improved 25% to US$494 million in 3QFY2024. According to the company, increasing downstream sales volume helped compensate for the decline in crude palm oil (CPO) prices that impacted its plantation business.  The company says it remains positive about the palm oil industry’s long-term outlook.

In terms of short-term development, drought conditions across producing regions in Southeast Asia and South America point to the possibility of a slowdown in palm oil and soybean oil production. The upcoming festive season and strong biodiesel demand are expected to support the consumption of vegetable oils.  However, lingering geopolitical tensions and unstable global economic conditions will continue to add to market uncertainty. “We remain cautious and closely monitor the supply-demand dynamics of the industry,” the company says.

Cortina Holdings First Half Profit After Tax Down 18% to $34.0 Million

Watch retailer Cortina Holdings has reported earnings of $30.9 million for its 1HFY2024 ended Sept 30, 18% lower than its earnings for the same period last year.  Cortina’s revenue for 1HFY2024 was also down 3.8% y-o-y to $391.3 million, while its cost of purchasing goods and consumables stayed flat at $287.9 million for the period. The drop in earnings and revenue was attributed to economic uncertainties resulting from rising interest rates, the weakening of some Southeast Asian currencies against the Singdollar, as well as operational disruptions from the expansion and renovation of outlets in Malaysia and Thailand. The company recorded a lower gross profit of $34.0 million for the first half year of FY2024 compared with $41.3 million in the corresponding period last year, a decrease of $7.3 million or 18%.  However, the company’s sales margin improved to 33.3% in 1HFY2024, compared to 32.7% in the previous corresponding period. Its cash and cash equivalents stood at $103.1 million as at Sept 30.

The company has proceeded with its expansion plans in the region with both Cortina Watch and Sincere, to be completed in the next 12 months. Cortina Watch has grown from one to four boutiques in HK, and renovated and expanded its stores in Singapore and Thailand. Meanwhile, Sincere Watch has expanded its Sincere Haute Horlogerie concept in Thailand and Malaysia and continues to renovate its multi-label stores.

mm2 Asia Reported Profit Attributable to Owners of $3.0 Million for 1HFY2024

Group revenue for 1H FY2024 soared by 146.1% to S$128.7 million, largely driven by the gradual recovery from the COVID-19 pandemic. Content business grew by 36.0% to S$58.5 million due to the demand for content in the region in which the Group operates and the Concert and Event business revenues grew by more than 9 times to reach S$66.4 million, reflecting the strong recovery and robust demand of LIVE events industry. Gross profit rose by S$26.5 million to S$39.3 million, with the gross profit margin improving from 24.5% to 30.5%, due to the resilient performance of its Content business and procuring and executing the right projects in Concert and Event business.

As a result of the surge in revenue especially, in the Content and Concert and Event businesses, the Group profitability has turned to a net profit after tax of S$10.8 million from a net loss after tax of S$6.2 million. The profit attributable to owners was S$3.0 million for the first half, mm2 Asia successfully turned back to profit after minority interest, recording a notable gain. EBITDA increased by 220.4% to reach S$33.0 million in 1H FY2024 due to increased revenues from the Content and Concert and Event businesses.

Delfi Reported PATMI of US$32.8 Million for 9M 2023 

For 3Q 2023, the Group achieved higher consolidated net sales of US$126.4 million, a Yo-Y increase of 12.9%, which when combined with the strong momentum from the first half of the year helped bring revenue for 9M 2023 to US$412.6 million, an increase of 15.2% compared to the same period in 2022. The strong revenue helped the Group achieve PATMI of US$32.8 million for 9M 2023 (higher Y-o-Y by 22.1%). The Group achieved a Gross Profit Margin of 29.5% and 29.9% for 3Q 2023 and 9M 2023 respectively supported by our overall sales mix combined with proactive pricing actions implemented to mitigate higher input costs.

The Group generated EBITDA for 9M 2023 of US$52.8 million (higher Y-o-Y by 9.4%) on the back of US$12.9 million in 3Q 2023 (lower Y-o-Y by 6.3%). The lower 3Q EBITDA reflected higher selling and distribution costs in line with our business growth and strategic decisions to increase investments in our brand building initiatives. Tight control of operating costs helped limit the decrease in 3Q 2023. For 9M 2023, the Group generated net cash from operations (after working capital) of US$37.7 million, a Y-o-Y increase of US$21.7 million. The operating cash was employed primarily to fund capital expenditures of US$19.8 million, mainly on production equipment needed to meet operational needs in line with our business growth.

Geo Energy Resources Reported Net Profit of US$39.5 Million for 9M 2023

The Group achieved revenue of US$111.0 million and US$350.8 million for 3Q2023 and 9M2023 respectively. The Group delivered coal sales of 2.2 million tonnes in 3Q2023, mainly comprising 1.8 million tonnes and 0.4 million tonnes of 4,200 GAR coal from the TBR and SDJ coal mines respectively.  EBITDA for 3Q2023 was US$22.6 million (3Q2022: US$59.8 million) with a margin of 20% and net profit was US$11.5 million and US$39.5 million for 3Q2023 and 9M2023 respectively. An interim dividend of 0.4 SG cent for 3Q2023 was declared, and together with dividend declared and paid for 2Q2023, 1Q2023 and 4Q2022, these translate to a dividend yield of 19%.

Asian Pay Television Trust Third Quarter Revenue Down 7.7% to $65.7 Million

Total revenue decreased 7.7% from $71.2 million in 3Q2022 to $65.7 million in 3Q2023. Basic cable TV revenue of $45.9 million for the quarter comprised subscription revenue of $37.9 million and non-subscription revenue of $8.0 million.  Premium digital cable TV revenue of $2.8 million for the quarter comprised subscription revenue of $2.5 million and nonsubscription revenue of $0.3 million. Broadband revenue of $17.0 million for the quarter, which includes revenue from data backhaul, comprised subscription revenue of $16.5 million and non-subscription revenue of $0.4 million. Staff costs for the quarter were lower compared to the pcp mainly due to lower staff costs in constant dollar terms as a result of tighter cost management.

Other operating expenses were $6.3 million for the quarter ended 30 September 2023, down 8.7% compared to the pcp and $19.6 million for the nine months, down 7.1% compared to the pcp mainly due to lower marketing and selling expenses. Total capital expenditure of $8.7 million for the quarter ended 30 September 2023 was 5.8% higher than the pcp. For the nine months ended 30 September 2023, total capital expenditure of $22.5 million was 11.7% lower than the pcp. Total capital expenditure as a percentage of revenue is within industry norms at 13.2% for the quarter and 11.2% for the nine months. Cash and cash equivalents at the Group level were $94.1 million as at 30 September 2023. The Trustee-Manager will reserve approximately $11 million for scheduled principal repayments on its onshore and offshore borrowing facilities for the rest of 2023.

GP Industries Profit Attributable to Equity Holders Down 55.1% to S$8.9 Million

For the first half year (“1H”) ended 30 September 2023 (“1HFY2024”), the Group’s revenue decreased by S$31.3 million or 5.3% to S$564.2 million, compared to the revenue reported for the first half last year (“1HFY2023”). The decline was mainly due to a 5.5% and 4.3% decrease in revenue of the Batteries Business and the Electronics and Acoustics Business, respectively. In terms of geographical markets, sales to Europe and Asia decreased while sales to the Americas increased. During 1HFY2024, the Group has enhanced its product mix, implemented stricter cost control measures and monitored the optimal level and timing of commodities purchases. Finance costs for 1HFY2024 was S$16.7 million, an increase of S$4.3 million or 34.3% from S$12.4 million reported for 1HFY2023, due mainly to rapidly increasing global interest rates.

As a result, the Group’s gross profit margin increased from 25.5% in 1HFY2023 to 27.4% in 1HFY2024. The improved profit margin outweighed the decrease in revenue and achieved an increase in gross profit for 1HFY2024 by 1.8% to S$154.3 million. Total profit attributable to equity holders of the Company decreased by 55.1% to S$8.9 million for 1HFY2024, as compared to S$19.8 million for 1HFY2023. Based on the weighted average of 483,843,482 (1HFY2023: 483,843,482) shares in issue, basic earnings per share for 1HFY2024 was 1.84 Singapore cents, as compared to 4.09 Singapore cents reported in 1HFY2023.

CDL to Acquire 1NQ, A Forward-Funding PRS Project in Manchester for ₤75.6 Million

City Developments Limited (CDL) has expanded its United Kingdom (UK) Private Rented Sector (PRS) portfolio with the acquisition of 1NQ, a 261-unit freehold project in Manchester for £75.6 million (approximately S$125.7 million). CDL will forward-fund the PRS project, which will commence construction this month. The site is located near Piccadilly Station, along Tariff Street and Port Street in the Northern Quarter, within the Piccadilly Basin neighbourhood of Manchester. Full planning permission was obtained in October 2023. CDL plans to develop the site into two new-build 10 and 12-storey apartment blocks housing a mix of 1-, 2- and 3-bedroom apartments and two commercial units on the ground floor.

The project is expected to be completed in 2026. 1NQ is the Group’s fourth PRS project in the UK since 2019. The first was CDL’s acquisition of the development site for a 665-unit project in Leeds called The Junction. This was followed by another two acquisitions in 2021 – one by CDL Hospitality Trusts (CDLHT), the Group’s REIT associate, a 352-unit forward-funded project in Manchester named The Castings, and the other project by CDL called The Octagon in Birmingham, with 370 units. The Junction has obtained Practical Completion for three out of five blocks (comprising 307 units) and has achieved above 90% committed occupancy as at October 2023. The remaining two blocks with 358 units are on track for completion by Q4 2023.

Metro Holdings First Half Profit After Tax Down 51.4% to $8.2 Million

Metro Holdings reported a net profit of S$8.2 million for the first half of the financial year ended Sep 30, 2023, down 51.4 % year on year from S$16.9 million. This was mainly due to a lower gross profit from its retail division, as well as a share of associate’s fair value loss adjustment on its UK investment properties, said the property player. Earnings per share stood at S$0.01, down from S$0.02 in the same period a year earlier. No dividend was declared for the period. Revenue for the half-year declined 6.9 % to S$50.2 million, from S$53.9 million previously, as the group reported lower revenue contributions across all its business segments.  Revenue from the retail division fell 3.6 % to S$45.6 million from S$47.3 million a year earlier. This was due to lower sales from the group’s two department stores in Singapore – Metro Paragon and Metro Causeway Point. Revenue contributions from the property division decreased as well. This came on the back of lower income from the sale of property rights of Metro’s residential developments in Bekasi and Bintaro, Jakarta. The group’s share of profit of associates for the half-year fell 62.4 % to S$3.2 million, from S$8.6 million a year prior. This was mainly due to a share of fair value loss on investment properties in the UK, versus a fair value gain in the previous year, along with lower share of an associate’s operating profit mainly from its Australia and UK properties, due to rising interest costs.

Overall finance costs for the half-year rose 39.1 % to S$15.4 million, from S$11 million in the year-ago period. This came on the back of rising interest rates from bank borrowings, and was mitigated in part by lower bank borrowings from the partial repayment of short-term borrowings and higher interest income.


Environmental Organisations Claim Plastic Clean-Up Tech Not All It Seems

A new report from the Environmental Investigation Agency (EIA) and OceanCare highlights the damaging impacts of ‘quick fix’ ocean clean-up technologies. The most well-known example is The Ocean Cleanup project (TOC), which has been found to have damaging environmental impacts on marine life. In Clean-Ups or Clean-Washing?,  EIA and OceanCare are calling for international government delegates at the third round of UN negotiations on a Global Plastics Treaty in Nairobi, Kenya between 13-17 November to prioritise reducing production of plastics rather than focusing on clean-up technologies, which can be costly, damaging to the environment and distract from real solutions.

As part of this Treaty, negotiators will be looking at remedial measures to support national action to end plastic pollution, particularly to address the disproportionate impact placed on the Least Developed Countries (LDCs) and Small Island Developing States (SIDS). Environmental organisations are calling for governments to focus on upstream solutions that reduce plastic production rather than relying on quick fixes that can have broader negative impacts. One of these is the growing popularity of marine plastic clean-up devices or technologies that aim to collect and remove plastic pollution from the ocean. Research has identified 38 technologies (at different stages of use) that seek to tackle the plastic crisis through measures including drone and robots, sand filters, surface skimmers and vacuums.

EIA Ocean Campaigner Jacob Kean-Hammerson said: “It’s time to get real about clean-up tech. Our concerns lie in the role clean-ups play in distracting from more decisive solutions, such as reductions in production and consumption.” While the purpose of these technologies sounds appealing on the surface, environmental organisations and academics are concerned that they pose a threat to the very same species and ecosystems they are seeking to help. They also warn such technologies distract from policy measures that actually address plastic pollution, such as tackling production and consumption.

“We recognise that clean-up measures are an inevitable and necessary part of a full lifecycle approach to ending the plastic pollution crisis,” said Kean-Hammerson.

“However, governments and negotiators must seize the opportunity of the upcoming Global Plastics Treaty to put the necessary measures in place to ensure we are not endlessly cleaning-up plastics and, when we are, we’re putting people and the planet first”. One major concern is that plastic and marine life often accumulate in the same areas. In the Great Pacific Garbage Patch, for instance, currents concentrate plastics and marine life in the same small areas. In Hawaii, 100 per cent of larval fish and 95 per cent of floating plastics are concentrated into only eight per cent of the ocean surface. Furthermore, clean-up technologies have been recognised as a climate-intensive process because of the fuel they burn. Studies have found that 200 vessel-based clean-up devices would not clean the world’s oceans in more than 100 years of continuous operation, but there would be significant climate implications.

“These clean-up projects appear attractive to the wider public and also to decision-makers,” said OceanCare Plastics Policy Expert Ewoud Lauwerier. “Wouldn’t it be great to have such an easy solution, where ‘ocean vacuum cleaners’ enable business as usual? “As attractive as it sounds, it is misleading. They are ineffective, capital intensive, falsely seen to be a solution and can even harm marine wildlife.” The most well-known clean-up initiative is The Ocean Cleanup (TOC), established when its founder conceived of a machine to clean the Great Pacific Garbage Patch. It anticipated collecting between 9,900-14,900kg of waste per week, but researchers have estimated the reality is between 3.7-5.5 times lower than expected.

Environmental organisations and scientists have also raised concern about TOC’s impact on marine life. Reported bycatch from TOC’s 2020 high-seas clean-ups include: sea turtles (including endangered species), sharks, diverse fish species and cephalopods. There has also been speculation about its links to the plastics industry due to its funders, who have previously included Saudi petrochemical and polymer producer SABIC, Dutch industrial conglomerate and plastics manufacturer DSM and Coca-Cola, which was named as the UK’s worst plastic polluter for the fourth year running earlier this year. “Clean-up projects are a wonderful tool for the industry to distracting from the real problem. No surprise there, when you look at who the core funders are,” added Lauwerier.

Australian Bank Sued Over Climate Risk Management

A shareholder of Melbourne-based ANZ Bank has filed a claim in the Australian Federal Court arguing that the bank has failed to properly manage the material risks of climate change and biodiversity loss, and is seeking an order that the bank provide more information about its risk management framework. Lawyers for shareholder Catherine Rossiter, Equity Generation Lawyers, issued a statement saying Rossiter’s concerns originate from disclosures in the bank’s 2022 annual report that acknowledged climate change and biodiversity loss were “emerging risks”, without making clear whether those risks were adequately dealt within its risk management framework. Equity Generation Lawyers said Ms. Rossiter seeks copies of ANZ’s internal risk management framework because she is concerned the bank may not be properly managing the twin risks of climate change and biodiversity loss.

The statement on Equity Generation’s website says; “since 2016, ANZ has reportedly loaned A$18.6bn to fossil fuels. It recently increased lending to fossil fuel projects whilst its peers significantly reduced theirs.”  “ANZ loaned A$2.6bn in 2022 to fossil fuel projects, up from A$2bn in 2021. In contrast, CBA significantly reduced its lending to A$267m in 2022 from A$1.3bn in 2021. “ “Furthermore, ANZ and its shareholders are significantly exposed to risks stemming from biodiversity loss. ANZ reported its aggregate exposure to the agriculture, forestry, fishing and mining sectors – being those generally highly dependent on biodiversity – as A$52.1bn in 2022.” “Australia’s economy is heavily reliant on nature. Approximately half of Australia’s GDP (49.3% or A$892.8 billion) has a moderate to very high direct dependence on nature.”

Equity Generation’s statement adds; “Our client is concerned, based on disclosures in its 2022 Annual Report, that ANZ is not satisfying governance standards for the risks of climate change and biodiversity loss.” “APRA’s Prudential Standard CPS-220 Risk Management requires, amongst other things, ANZ to maintain a risk management strategy that addresses material risks. ANZ’s 2022 Annual Report suggests that neither climate change nor biodiversity loss is addressed as material risks in ANZ’s risk management strategy; a board-approved document that gives effect to the organisation’s approach to managing risk.” “The practical effect of such an omission is that ANZ may be failing to measure, evaluate, monitor, control, and mitigate those risks. This, in turn, could affect shareholder value through exposure to the physical and transition risks associated with climate change and biodiversity loss.”

“Our client seeks information from ANZ, by way of preliminary discovery, about its risk management systems to enable her to determine whether the bank’s governance systems adequately deal with climate change and biodiversity risks.” The Sydney and Melbourne-based law firm said it now seeks access to the information to determine whether their client has a right to obtain relief from the Court in relation to the question of whether ANZ has breached its obligations under APRA Prudential Standards or misleading conduct laws.