SAPPHIRE CORP’S FY2011 bottomline is awash with red ink but that’s chiefly because of significant non-operating items.
Sapphire’s net loss attributable to shareholders was $35.6 million as compared to a profit of $75.6 million in FY2010.
Contributing to this result were significant non-operating items including an impairment loss of $80.3 million on available-for-sale financial assets -- namely a 9.2% stake in China VTM, an iron ore producer which is listed on the Hong Kong Stock Exchange.
In contrast, in 2010, Sapphire had a $113.7 million fair value gain on initial recognition of its available-for-sale financial assets (ie China VTM).
Adjusting for this and other non-operating items, Sapphire achieved a profit for FY 2011 amounting to $4.6 million as compared to $7.0 million in FY2010.
Sapphire is principally engaged in the production of steel and vanadium products, trading of minerals and investments in mining and resource-related businesses.
Revenue for FY2011 increased by $15.6 million from $119.9 million in FY2010 to $135.5 million.
Overall gross profit margin dropped to 17.8% in FY2011 from 21.3% in FY 2010 mainly due to:
- Lower unit selling price of V2O5 flakes as a result of lower steel demand in China,
- Low gross margin for the trading business,
- Higher maintenance costs incurred, and
- Write-down of inventory to net realizable value.
Cash in the bank and in hand increased by $21.4 million, from $13.0 million as at end-2010, to $34.4 million as at end-2011, mainly due to repayment of cash advances and loans by third parties.
SIAS Research analyst Liu Jinshu, the only analyst currently covering the stock, values Sapphire’s operations at S$208.6m (or S$0.257 per share) and its investments’ book value at S$0.167 per share.
These two segments add up to give the stock an intrinsic value of S$0.425 (1.3x P/B), according to SIAS Research's report last week.
Sapphire stock closed yesterday at 15.3 cents - or less than half its Net Asset Value of 33.18 cents - for a market cap of $124 million.
SIAS Research's report can be accessed at the Sapphire corporate website.
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SINWA's profit soars 64% to S$5.2 million in FY2011
SINWA LIMITED is a marine supply and logistics company servicing the marine and offshore industry in Singapore, China and Australia.
Its FY2011 was a commendable year, with revenue rising 14% to S$133.2 million in FY2011.
Net profit was $5.2 million, up 64% year on year.
The profitability would have been about twice as much if not for an impairment of $5.0 million on an investment in a joint venture company, Nordic International Limited which owns a seismic vessel.
Notably, the operating cashflow was $9.5 million, up from merely $82,000 previously.
Sinwa said it enjoyed higher revenue contribution from its mainstay business of supplying to vessels.
Revenue from that segment grew 10% in FY2011 to S$117.0 million due to the improvement in sales volume in Australia resulting from the recovery of the Australian offshore sector.
In this segment, Sinwa supplies a wide range of ships’ stores and equipment to ships, oil rigs and their crew. These include deck, engine and electrical stores, safety equipment, general consumables and tools, provisions and duty-free stores (namely liquor and tobacco products).
Other contributors to Sinwa's revenue were:
a. Agency & logistics segment also registered growth in revenue by 37% to S$3.4 million.
b. Marine engineering segment contributed a maiden S$4.2 million. This segment consists of the Group’s acquisition of the Sinwa Engineering (Fu Onn) Group and the newly established AMS Marine & Engineering Group.
Together both companies offer a comprehensive range of general engineering services to the marine and offshore industries.
Sinwa (market cap: S$45 million) has proposed a first and final cash dividend of 0.5 cents per ordinary share. This represents a yield of 3.7% based on its recent stock price of 13.5 cents, and a payout of about 30% of the Group’s earnings in FY2011.
Sinwa's FY2011 results press release can be accessed at the SGX website.
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