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CFO Ng Hoi-Gee is among the Singaporeans in the top mangement team of Sapphire. Photo by Leong Chan Teik

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:

  1. Lower unit selling price of V2O5 flakes as a result of lower steel demand in China,
  2. Low gross margin for the trading business,
  3. Higher maintenance costs incurred, and
  4. Write-down of inventory to net realizable value.

sapphire_chart_mar12

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

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About 88% of Sinwa's revenue in 2011 came from supplying heavy deck and engine equipment, spares, general hardware and provisions to the offshore and general maritime industry.

 

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Mike Sim, executive chairman & CEO of Sinwa. Photo by Sim Kih

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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