Published February 28, 2009

Q4 earnings down 87.3 per cent at $1.51b

Three-quarters of the 88 loss-making companies in the fourth quarter had swung from profit to loss

By JAMIE LEE

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THE numbers are not pretty. Total earnings posted by 229 companies for the fourth quarter of 2008 crashed 87.3 per cent year-on-year to $1.51 billion.

The data, compiled by BT, excludes companies with no comparative figures from a year earlier. Three-fifths of the companies registered a net profit. Of these, about 65 per cent reported smaller gains.

Red could be the new black. Of the 88 companies that reported a net loss, 67 or three-quarters swung from profit to loss.

UOB joined its two local competitors in posting lower-than-expected Q4 results yesterday. Singapore's second-largest lender said net income fell 34.4 per cent to $332 million, missing the mean estimate of $443 million according to seven analysts polled by Bloomberg.

Also falling below expectations were DBS Group, which posted a 40 per cent lower Q4 net profit of $295 million, and OCBC, which saw its Q4 profit slide about 30 per cent to $301 million year-on-year.

More bad debts and falls in loan growth have yet to come into the picture, analysts said.

DBS's non-performing loan (NPL) ratio could rise to 4.4 per cent at the end of this year from the end-2008 ratio of 1.5 per cent, DMG & Partners analyst Leng Seng Choon estimated in a research note. This could lead to provisions of $1.56 billion this fiscal year, up 76 per cent from a year earlier.

Mr Leng also expected OCBC's NPL ratio to hit 3.7 per cent this year, up from 1.5 per cent last year, which could result in provisions of $930 million. This is slightly more than double the 2008 level.

He rates both banks 'neutral'.

Turning to bricks and mortar, South-east Asia's largest property developer CapitaLand said that Q4 profit slumped 88.4 per cent to $78 million due to revaluation losses on its investment property portfolio, a lack of write-backs for provisions and dismal sales.

CapitaLand, which announced a $1.84 billion rights issue on the same day as its results, could be preparing to 'leverage up' for a write-down of land-bank values for Farrer Court and Char Yong Gardens, as selling prices are still heading south, CIMB-GK analyst Donald Chua said in a note.

Mr Chua has an 'under-perform' rating on the stock.

City Developments' Q4 net profit was slashed more than half to $100 million, from $235 million a year earlier. Its results were dragged down by lower earnings from its London-listed arm Millennium & Copthorne Hotels, amid impairment charges and revaluation deficits.

Oil and gas honcho SembCorp Marine posted an increase in Q4 profit to $69.4 million, up from $792,000 in 2007. Last year, it booked a $308.2 million charge arising from forex transactions, related expenses and non-operating expenses, as well as a settlement with BNP Paribas.

'Financing issues are a key challenge for the industry, thus order book strength in 2008 is unlikely to be repeated,' Citi Investment Research analysts Horng Han Low and Rigan Wong said in a note. They kept a 'sell' rating on the stock, noting that while SembCorp has capitalised on the up-cycle and improved margins, 'the extent of current down-cycle and concerns over customer financing will continue to weigh on the stock'.

Massage chair retailer OSIM International was one of the companies that swung into the red in Q4, after it wrote off $77.3 million for its investment in US retailer Brookstone. OSIM reported a net loss of $73.24 million, against a net profit of $30.17 million a year earlier.

About 329 companies - including some that do not report their Q4 results - have posted their profits for 2008. Combined corporate earnings for 2008 from 321 of them with comparative 2007 figures stand at $230 billion, down 29.3 per cent, with various companies' results cushioned by better performances in the first half of the year.