See Hup Seng 3Q13 net profit gains 44% to S$2.5m

Notably its third-straight profit growth quarter.

Corrosion prevention services and petroleum-derived products provider See Hup Seng Limited (See Hup Seng) reported that its earnings for the third quarter ended 30 September 2013 (3Q13) grew 44% to S$2.5 million from S$1.7 million in 3Q12.

In 3Q13, the Group’s revenue gained 14% to S$73.3 million from S$64.5 million in 3Q12 on the back of increased sales from its core businesses – Refined Petroleum (RP) and Corrosion Prevention (CP).

Thanks to an expansion in Group gross profit margin to 15.1%, gross profit increased at a faster pace of 17% to S$11.1 million in 3Q13. Net profits of both RP and CP businesses also increased significantly by 64% and 100% respectively in 3Q13.

With this set of results in 3Q13, the Group has achieved year-on-year growth in net profit for three consecutive quarters. Accordingly, net profit for the nine months ended 30 September 2013 (9M13) soared 59% to S$7.3 million compared to S$4.6 million in the same period a year ago.

For 9M13, Group revenue rose 16% to S$217.6 million from S$187.7 million in 9M12. This was driven by both RP and CP businesses which also notched up stellar profit growth of 60% and 81% respectively in 9M13. RP accounted for 85% of Group revenue in 9M13 while CP made up 14%.

Executive Chairman of See Hup Seng, Mr Thomas Lim said, “In spite of the continuing challenges in the macro business environment, both our RP and CP divisions maintained their momentum and demonstrated a commendable recovery in 9M13. Barring any unforeseen circumstances, the Group expects to deliver a profitable performance in FY2013.

The macro-economy remains fragile; while increasing competition and rising business costs are also concerns that we will continue to monitor and manage closely. The Group has a sound financial position which we believe will better position us to cope with difficult market situations and capitalise on opportunities that can enhance the Group’s long term value.

To this end, See Hup Seng has proposed to acquire Hetat Holdings Pte. Ltd., a structural steel fabricator with over 10 years of track record in the construction industry. We believe this presents an opportunity for the Group to diversify and expand its earnings base while creating potential synergies with our CP business.”

At the end of September 2013, the Group maintained a sound financial position with cash and cash equivalents of S$33.4 million. Its net gearing stood at 0.42 times.