Commodities are ripe for a rebound - MarketWatch:
'via Blog this'
Thursday, August 27, 2015
Wednesday, August 26, 2015
Tuesday, January 27, 2015
How To Profit From Unloved Companies | The Motley Fool Singapore
How To Profit From Unloved Companies | The Motley Fool Singapore: "When expectations are low, any slight positive news can trigger a big improvement on investors’ perception of the company. And there were positive news about SMRT which appeared by mid-2014."
'via Blog this'
'via Blog this'
Monday, January 26, 2015
Klang mall reopens after facelift - Community | The Star Online
Klang mall reopens after facelift - Community | The Star Online: "The massive makeover, aimed at revitalising and transforming the mall to offer a high-quality shopping experience to customers, was a true challenge for the complex managers, ARA Asset Management Limited, who wanted to exploit the strategic locatio"
'via Blog this'
'via Blog this'
Many projects in pipeline for St James group, News, News, AsiaOne Business News
Many projects in pipeline for St James group, News, News, AsiaOne Business News: Shareholders of the former St James Holdings could reap a bonanza now that it is reinventing itself as a major property player.
Developer Perennial Real Estate Holdings (PREH) completed a $1.56 billion reverse takeover of the nightlife firm last month and is set on raising its net asset value by more than twofold from its current $1.26 billion to $2.62 billion, along with other deals in tow.
The enlarged group will also include a PREH-sponsored vehicle, the Perennial China Retail Trust (PCRT), once it is de-listed.
PREH's net asset value per share is expected to climb to $2.12, said chief executive Pua Seck Guan in a recent interview with The Straits Times. PREH units have yet to commence trading on the mainboard.
This increase assumes the group completes its acquisition of the Beijing Tongzhou Integrated Development and the remaining 51 per cent stake in Perennial Real Estate as well.
"The potential of the company is great because we've created a sizeable platform to deliver long-term growth," said Mr Pua, pointing to PREH's China portfolio, which comprises mixed-use developments worth $13.1 billion.
Its Singapore portfolio, which includes Capitol Singapore, Chijmes and TripleOne Somerset, has a gross development value of $3.8 billion.
Shareholders of the former St James Holdings who keep their shares could enjoy ample rewards, especially as PREH completes its ongoing projects in China and Singapore in the coming years.
Even PCRT shareholders who participate in the share swap can expect an upside, given that they are receiving PREH shares at a discount to the net asset value per share of $2.12, said Mr Pua.
"All our projects, which include the two largest high-speed rail commercial hubs in the whole of China, are strategically connected to major transportation nodes," he noted.
"And that's the exciting thing - because we have seen how successful such commercial hub projects can be in the likes of other cities, be it Tokyo, Osaka or Hong Kong."
The group's integrated development in Chengdu, for instance, is next to the Chengdu East High Speed Railway Station.
It has a gross floor area of 8.2 million sq ft and will boast offices, apartments and retail space when completed.
"When we bought the land about four to five years ago, other developers didn't quite see its potential," said Mr Pua.
"Today, as more train lines are added and as the area evolves to become Chengdu's new central business district, you can see it is bustling with activity."
Other projects in the pipeline include integrated developments in Xi'an, which is adjacent to the Xi'an North High Speed Railway Station, Beijing's Tongzhou district and Zhuhai's Hengqin area.
Mr Pua said the group plans to retain ownership of about 50 to 60 per cent of each China project, while putting the rest up for strata- title sales - as offices, shops, small office home office (Soho) or residential units that will "churn out trading profit and retain liquidity".
Such a strategy, said market watchers, may fetch high rates in a market packed with potential investors.
But they also cautioned that having more sub-proprietors could make it more difficult for the developer to get consensus on issues such as upgrading.
For Mr Pua, however, the sites bode well for the company's long-term prospects.
"We're not keen on selling everything because we believe that, in the coming years, these projects will help build the company's net asset value."
Mr Pua said PREH is also considering real estate opportunities outside of China, especially in countries such as Malaysia, Indonesia, Myanmar and even in Africa.
"But we won't go to a country where we don't know anyone," he said. "We will at least leverage on our business partners' network of relationships and experience before moving into another market."
tsjwoo@sph.com.sg
This article was first published on November 20, 2014.
'via Blog this'
Developer Perennial Real Estate Holdings (PREH) completed a $1.56 billion reverse takeover of the nightlife firm last month and is set on raising its net asset value by more than twofold from its current $1.26 billion to $2.62 billion, along with other deals in tow.
The enlarged group will also include a PREH-sponsored vehicle, the Perennial China Retail Trust (PCRT), once it is de-listed.
PREH's net asset value per share is expected to climb to $2.12, said chief executive Pua Seck Guan in a recent interview with The Straits Times. PREH units have yet to commence trading on the mainboard.
This increase assumes the group completes its acquisition of the Beijing Tongzhou Integrated Development and the remaining 51 per cent stake in Perennial Real Estate as well.
"The potential of the company is great because we've created a sizeable platform to deliver long-term growth," said Mr Pua, pointing to PREH's China portfolio, which comprises mixed-use developments worth $13.1 billion.
Its Singapore portfolio, which includes Capitol Singapore, Chijmes and TripleOne Somerset, has a gross development value of $3.8 billion.
Shareholders of the former St James Holdings who keep their shares could enjoy ample rewards, especially as PREH completes its ongoing projects in China and Singapore in the coming years.
Even PCRT shareholders who participate in the share swap can expect an upside, given that they are receiving PREH shares at a discount to the net asset value per share of $2.12, said Mr Pua.
"All our projects, which include the two largest high-speed rail commercial hubs in the whole of China, are strategically connected to major transportation nodes," he noted.
"And that's the exciting thing - because we have seen how successful such commercial hub projects can be in the likes of other cities, be it Tokyo, Osaka or Hong Kong."
The group's integrated development in Chengdu, for instance, is next to the Chengdu East High Speed Railway Station.
It has a gross floor area of 8.2 million sq ft and will boast offices, apartments and retail space when completed.
"When we bought the land about four to five years ago, other developers didn't quite see its potential," said Mr Pua.
"Today, as more train lines are added and as the area evolves to become Chengdu's new central business district, you can see it is bustling with activity."
Other projects in the pipeline include integrated developments in Xi'an, which is adjacent to the Xi'an North High Speed Railway Station, Beijing's Tongzhou district and Zhuhai's Hengqin area.
Mr Pua said the group plans to retain ownership of about 50 to 60 per cent of each China project, while putting the rest up for strata- title sales - as offices, shops, small office home office (Soho) or residential units that will "churn out trading profit and retain liquidity".
Such a strategy, said market watchers, may fetch high rates in a market packed with potential investors.
But they also cautioned that having more sub-proprietors could make it more difficult for the developer to get consensus on issues such as upgrading.
For Mr Pua, however, the sites bode well for the company's long-term prospects.
"We're not keen on selling everything because we believe that, in the coming years, these projects will help build the company's net asset value."
Mr Pua said PREH is also considering real estate opportunities outside of China, especially in countries such as Malaysia, Indonesia, Myanmar and even in Africa.
"But we won't go to a country where we don't know anyone," he said. "We will at least leverage on our business partners' network of relationships and experience before moving into another market."
tsjwoo@sph.com.sg
This article was first published on November 20, 2014.
'via Blog this'
Sunday, January 25, 2015
Friday, January 23, 2015
1 Quality Share That Could Be Worth a Deeper Look | The Motley Fool Singapore
1 Quality Share That Could Be Worth a Deeper Look | The Motley Fool Singapore: "The nine points in Dorsey’s checklist are as follows:
The firm provides regular financial updates, has a long track record as a publicly-listed entity, and a market capitalisation that isn’t too small.
It has consistently earned an operating profit.
It has generated consistent operating cashflow.
The firm earns a good return on equity.
It has been able to grow its earnings consistently
.
It possess a clean balance sheet.
The firm can generates lots of free cash flow.
There are infrequent appearance of one-time charges.
There has not been major dilution of shareholders’ stakes in the firm."
'via Blog this'
The firm provides regular financial updates, has a long track record as a publicly-listed entity, and a market capitalisation that isn’t too small.
It has consistently earned an operating profit.
It has generated consistent operating cashflow.
The firm earns a good return on equity.
It has been able to grow its earnings consistently
.
It possess a clean balance sheet.
The firm can generates lots of free cash flow.
There are infrequent appearance of one-time charges.
There has not been major dilution of shareholders’ stakes in the firm."
'via Blog this'
Thursday, January 1, 2015
Winners and losers here amid weak ringgit, News, News, AsiaOne Business News
Winners and losers here amid weak ringgit, News, News, AsiaOne Business News:
"Chia Yan Min
My Paper
Friday,
Jan 02, 2015
The weaker ringgit has been a boon to Singapore shoppers and travellers, but the impact on businesses here is mixed.
While some companies with operations in Malaysia say costs are now slightly lower, others say the currency's fluctuations have affected cashflow and demand for Singapore exports.
The ringgit slumped to a historic low of RM2.67 (S$1.009) against the Singdollar last month, as plunging crude oil prices hit revenue from Malaysian petroleum exports.
The currency has since recovered slightly to about RM2.64 against the Singdollar - still down 3 per cent from RM2.57 in June.
Willy Koh, chief executive of precision engineering firm Racer Technology, said the company has benefited as its sales are denominated in United States dollars, while labour and rental costs are denominated in the relatively cheaper ringgit."
Racer Technology has a factory in the Iskandar region, employing 250 to 300 Malaysian workers.
However, the impact has been "very slight" as cost savings were offset by year-end bonus payouts to staff, said Mr Koh.
"If not for year-end bonuses, it might have been easier to see the impact of the weaker ringgit," he added.
While the depressed currency means lower operating costs for some, it has also made Singapore products relatively pricier in Malaysia.
Jonathan Phoon, executive director of wet-towel maker Freshening Industries, said its sales in Malaysia have dipped 5 to 8 per cent in recent months.
Its products are all made in Singapore.
"Retail and medical products are less price sensitive, so we have not been badly affected...We've also seen stronger sales from new product lines, which have helped offset the effect of the weaker currency," said Mr Phoon.
Chan Chong Beng, CEO of interior-furnishing firm Goodrich Global, said Malaysian customers have been "holding back payments to Singapore in the hope that the currency will recover".
"For SMEs, this means they might not get money as quickly, which would affect cashflow," said Mr Chan.
However, neither he nor Mr Koh expect the positive or negative effects to last for long.
"People will get used to the weaker currency after some time," said Mr Chan.
Firms - especially those with factories located close to Singapore - will also eventually have to raise Malaysian workers' wages if the ringgit's weakness is sustained, said Mr Koh.
The impact is negligible for companies like Hai's, which has a factory in Johor making sauces and pastes.
General manager Darren Lim said the company's business there is all conducted in ringgit, so it has been largely unaffected.
"The raw materials we use are bought in Malaysia and our Malaysian business sells the final products to our company in Singapore in ringgit...We're not feeling much of an impact," he said.
Analysts do not expect a strong pick-up in the ringgit, given that commodity prices are likely to remain subdued in the coming year.
Sim Moh Siong, senior currency strategist at the Bank of Singapore, said oil-exporter currencies like the ringgit and the Russian rouble "will likely face more risks this year".
'via Blog this'
"Chia Yan Min
My Paper
Friday,
Jan 02, 2015
The weaker ringgit has been a boon to Singapore shoppers and travellers, but the impact on businesses here is mixed.
While some companies with operations in Malaysia say costs are now slightly lower, others say the currency's fluctuations have affected cashflow and demand for Singapore exports.
The ringgit slumped to a historic low of RM2.67 (S$1.009) against the Singdollar last month, as plunging crude oil prices hit revenue from Malaysian petroleum exports.
The currency has since recovered slightly to about RM2.64 against the Singdollar - still down 3 per cent from RM2.57 in June.
Willy Koh, chief executive of precision engineering firm Racer Technology, said the company has benefited as its sales are denominated in United States dollars, while labour and rental costs are denominated in the relatively cheaper ringgit."
Racer Technology has a factory in the Iskandar region, employing 250 to 300 Malaysian workers.
However, the impact has been "very slight" as cost savings were offset by year-end bonus payouts to staff, said Mr Koh.
"If not for year-end bonuses, it might have been easier to see the impact of the weaker ringgit," he added.
While the depressed currency means lower operating costs for some, it has also made Singapore products relatively pricier in Malaysia.
Jonathan Phoon, executive director of wet-towel maker Freshening Industries, said its sales in Malaysia have dipped 5 to 8 per cent in recent months.
Its products are all made in Singapore.
"Retail and medical products are less price sensitive, so we have not been badly affected...We've also seen stronger sales from new product lines, which have helped offset the effect of the weaker currency," said Mr Phoon.
Chan Chong Beng, CEO of interior-furnishing firm Goodrich Global, said Malaysian customers have been "holding back payments to Singapore in the hope that the currency will recover".
"For SMEs, this means they might not get money as quickly, which would affect cashflow," said Mr Chan.
However, neither he nor Mr Koh expect the positive or negative effects to last for long.
"People will get used to the weaker currency after some time," said Mr Chan.
Firms - especially those with factories located close to Singapore - will also eventually have to raise Malaysian workers' wages if the ringgit's weakness is sustained, said Mr Koh.
The impact is negligible for companies like Hai's, which has a factory in Johor making sauces and pastes.
General manager Darren Lim said the company's business there is all conducted in ringgit, so it has been largely unaffected.
"The raw materials we use are bought in Malaysia and our Malaysian business sells the final products to our company in Singapore in ringgit...We're not feeling much of an impact," he said.
Analysts do not expect a strong pick-up in the ringgit, given that commodity prices are likely to remain subdued in the coming year.
Sim Moh Siong, senior currency strategist at the Bank of Singapore, said oil-exporter currencies like the ringgit and the Russian rouble "will likely face more risks this year".
'via Blog this'
5 kinds of moats
There are 5 kinds of moats in investing:
Brand Moat: This type of moat exists when people think in terms of the brand rather than the category. Coke, not cola. Harley, not motorcycle. Porsche, not sports car, xerox, not copier. iPhone, not cell phone. Mac, not computer. This is a tough moat to build and to be durable requires enormous focus and consistency in the product and the ability to keep that going in the face of competition."
Secrets Moat: Companies with a secrets moat are those whose products use different technology, ingredients, or parts that are patented. 3M is a perfect example of a company with a big secrets moat because they create product around adhesives that are patented (adhesive recipe is a secret) such as Scotch tape and Post Its.
Toll Bridge Moat: Companies with a Toll Bridge Moat are companies who have somewhat of a monopoly over their industry, which positions them as the “go-to” choice. For example, Pacific Gas & Electric (PCG&E) is an example of a company with a “Toll Bridge Moat” because if you want to get power in California, you pretty much have to go through PCG&E.
Switching Moat: This kind of moat is centered on the cost of shifting from one product or supplier to another. For example, a company with a switching moat is Intel. Why? Because Apply built their computers on an Intel chip, so it would be very hard for them to switch to another competitor.
Price Moat: This moat is not so much about the lowest price as it is about the lowest cost. Price moats exist when a company's cost of production is durably lower than the competition, a moat that lets the company remain profitable when all other competitors are losing money.
Brand Moat: This type of moat exists when people think in terms of the brand rather than the category. Coke, not cola. Harley, not motorcycle. Porsche, not sports car, xerox, not copier. iPhone, not cell phone. Mac, not computer. This is a tough moat to build and to be durable requires enormous focus and consistency in the product and the ability to keep that going in the face of competition."
Secrets Moat: Companies with a secrets moat are those whose products use different technology, ingredients, or parts that are patented. 3M is a perfect example of a company with a big secrets moat because they create product around adhesives that are patented (adhesive recipe is a secret) such as Scotch tape and Post Its.
Toll Bridge Moat: Companies with a Toll Bridge Moat are companies who have somewhat of a monopoly over their industry, which positions them as the “go-to” choice. For example, Pacific Gas & Electric (PCG&E) is an example of a company with a “Toll Bridge Moat” because if you want to get power in California, you pretty much have to go through PCG&E.
Switching Moat: This kind of moat is centered on the cost of shifting from one product or supplier to another. For example, a company with a switching moat is Intel. Why? Because Apply built their computers on an Intel chip, so it would be very hard for them to switch to another competitor.
Price Moat: This moat is not so much about the lowest price as it is about the lowest cost. Price moats exist when a company's cost of production is durably lower than the competition, a moat that lets the company remain profitable when all other competitors are losing money.
Wednesday, December 31, 2014
Tuesday, December 30, 2014
Local Reits register solid returns for 2014, News, News, AsiaOne Business News
Local Reits register solid returns for 2014, News, News, AsiaOne Business News:
Grace Leong
The Straits Times
Monday, Dec 29, 2014
2014 has been a relatively solid year for the local real estate investment trust (Reit) sector, although prospects of higher interest rates next year could result in more volatility in Reit unit prices.
The 28 Reits listed here have a total market value of $59.7 billion and averaged year-to-date total returns of 12.9 per cent.
Indicative dividend yields averaged 6.1 per cent, according to a report by SGX My Gateway on Wednesday. The Reits also have posted an average price gain of 6.3 per cent so far this year, the report said.
A year ago, the 25 Reits listed had a total market value of $50.5 billion, while indicative dividend yields averaged 6.1 per cent.
The FTSE ST Reits Index, which tracks 33 local trusts, has had total returns of nearly 16 per cent so far this year, outperforming the Straits Times Index's 7 per cent gain. This compares with a drop of 4.5 per cent a year ago.
Despite the US Federal Reserve's dovish stance on monetary policy at its meeting last week, a hike in the Fed Funds target rate is expected by the second quarter of next year. "This would likely influence the Singapore Government 10-year bond yield and Sibor to increase, and could result in volatility in the share prices of S-Reits," OCBC Investment Research noted in a report last week.
But most Reits have buffered up their balance sheets to keep gearing ratios at relatively comfortable levels, and have also put in place hedging strategies, OCBC said.
Trusts here have been tightening their belts on expectations that interest rates could rise over the next few years, which would have major repercussions as borrowing costs are a major component of their expenses.
While the brokerage has maintained a neutral call on the sector, it is overweight on office and retail Reits. It has buy calls on CapitaMall Trust, Frasers Centrepoint Trust and Starhill Global Reit.
Reits are popular among investors as they can offer higher yields than regular property stocks through tax-exempt dividends and a requirement to distribute at least 90 per cent of taxable net income to unitholders.
MayBank Kim Eng, which has a buy call on CapitaCommercial Trust (CCT), cited "23 per cent of pre-commitment leases signed to date for CapitaGreen, and GIC renewing leases at Capital Tower next year with significant rental reversion".
"GIC (CCT's top 10 tenant contributing 5 per cent of monthly gross rental income) will be renewing its leases at Capital Tower next year, with significant reversion, given its low base, according to management. CCT stands to benefit from higher office spot rents given its favourable lease expiry profile," the brokerage said.
It also said CCT's balance sheet remained strong, "with a low gearing of 28 per cent, and 80 per cent of borrowings are on fixed rates".
Its portfolio occupancy also remains strong at 99.4 per cent.
Meanwhile, OCBC downgraded its call on Suntec Reit to a "hold", saying it is expected to be "a beneficiary of the robust momentum in Singapore's prime office sector, although rental growth is likely to moderate from 2015".
"The momentum for prime office space in Singapore remains robust, as illustrated by the 3.3 per cent quarter-on-quarter and 14.7 per cent year-on-year increase in grade A rentals in third quarter 2014, based on data from CBRE.
"Notwithstanding this positive environment, we believe the pace of rental increase would moderate next year. Growth is expected to ease further in 2016, given the large pipeline of supply coming on stream," the brokerage said.
"The situation appears less sanguine for Suntec Reit's retail segment which, in our view, is underpinned by headwinds facing Singapore's retail sector. This has resulted in the relatively lacklustre committed occupancy rate of 60 per cent (as at Sept 30) for Suntec City Mall's Phase 3 development. We see downside risks to our full year 2015 gross revenue and distribution per unit forecasts if the situation remains sluggish," it said.
'via Blog this'
Grace Leong
The Straits Times
Monday, Dec 29, 2014
2014 has been a relatively solid year for the local real estate investment trust (Reit) sector, although prospects of higher interest rates next year could result in more volatility in Reit unit prices.
The 28 Reits listed here have a total market value of $59.7 billion and averaged year-to-date total returns of 12.9 per cent.
Indicative dividend yields averaged 6.1 per cent, according to a report by SGX My Gateway on Wednesday. The Reits also have posted an average price gain of 6.3 per cent so far this year, the report said.
A year ago, the 25 Reits listed had a total market value of $50.5 billion, while indicative dividend yields averaged 6.1 per cent.
The FTSE ST Reits Index, which tracks 33 local trusts, has had total returns of nearly 16 per cent so far this year, outperforming the Straits Times Index's 7 per cent gain. This compares with a drop of 4.5 per cent a year ago.
Despite the US Federal Reserve's dovish stance on monetary policy at its meeting last week, a hike in the Fed Funds target rate is expected by the second quarter of next year. "This would likely influence the Singapore Government 10-year bond yield and Sibor to increase, and could result in volatility in the share prices of S-Reits," OCBC Investment Research noted in a report last week.
But most Reits have buffered up their balance sheets to keep gearing ratios at relatively comfortable levels, and have also put in place hedging strategies, OCBC said.
Trusts here have been tightening their belts on expectations that interest rates could rise over the next few years, which would have major repercussions as borrowing costs are a major component of their expenses.
While the brokerage has maintained a neutral call on the sector, it is overweight on office and retail Reits. It has buy calls on CapitaMall Trust, Frasers Centrepoint Trust and Starhill Global Reit.
Reits are popular among investors as they can offer higher yields than regular property stocks through tax-exempt dividends and a requirement to distribute at least 90 per cent of taxable net income to unitholders.
MayBank Kim Eng, which has a buy call on CapitaCommercial Trust (CCT), cited "23 per cent of pre-commitment leases signed to date for CapitaGreen, and GIC renewing leases at Capital Tower next year with significant rental reversion".
"GIC (CCT's top 10 tenant contributing 5 per cent of monthly gross rental income) will be renewing its leases at Capital Tower next year, with significant reversion, given its low base, according to management. CCT stands to benefit from higher office spot rents given its favourable lease expiry profile," the brokerage said.
It also said CCT's balance sheet remained strong, "with a low gearing of 28 per cent, and 80 per cent of borrowings are on fixed rates".
Its portfolio occupancy also remains strong at 99.4 per cent.
Meanwhile, OCBC downgraded its call on Suntec Reit to a "hold", saying it is expected to be "a beneficiary of the robust momentum in Singapore's prime office sector, although rental growth is likely to moderate from 2015".
"The momentum for prime office space in Singapore remains robust, as illustrated by the 3.3 per cent quarter-on-quarter and 14.7 per cent year-on-year increase in grade A rentals in third quarter 2014, based on data from CBRE.
"Notwithstanding this positive environment, we believe the pace of rental increase would moderate next year. Growth is expected to ease further in 2016, given the large pipeline of supply coming on stream," the brokerage said.
"The situation appears less sanguine for Suntec Reit's retail segment which, in our view, is underpinned by headwinds facing Singapore's retail sector. This has resulted in the relatively lacklustre committed occupancy rate of 60 per cent (as at Sept 30) for Suntec City Mall's Phase 3 development. We see downside risks to our full year 2015 gross revenue and distribution per unit forecasts if the situation remains sluggish," it said.
'via Blog this'
Friday, November 28, 2014
Tuesday, November 18, 2014
Friday, November 14, 2014
Duracell deal is a typical Warren Buffett play — a bargain - MarketWatch
Duracell deal is a typical Warren Buffett play — a bargain - MarketWatch: "“This is part of Berkshire’s long-standing acquisition strategy,” said Cathy Seifert, an analyst at S&P Capital IQ. “It’s a business model that is understandable, it has recurring and predictable cash flow and earnings, [and] there’s an intact management team and a willing seller.”"
“Buffett is a value investor, and it is not the first time he has gone into an industry where the macro trends have been softening,” said Seifert. “He will go in, cut costs, tweak margins and amp up distribution.
'via Blog this'
“Buffett is a value investor, and it is not the first time he has gone into an industry where the macro trends have been softening,” said Seifert. “He will go in, cut costs, tweak margins and amp up distribution.
'via Blog this'
Thursday, November 13, 2014
Tuesday, November 11, 2014
Warren Buffett's 9 rules for running a business
Warren Buffett's 9 rules for running a business:
1. Keep calm in the face of volatility. Buffett writes that earnings gyrations "don't bother us in the least." After all, "Charlie and I would much rather earn a lumpy 15 percent over time than a smooth 12 percent."
2. Keep good company. Berkshire has never split its Class A shares. As a result, one share currently costs almost $214,000. That discouraged people from rapidly moving into and out of the stock, and that's exactly the way Buffett likes it. He wants shareholders who share his long-term view. All the way back in 1979, he wrote, "In large part, companies obtain the shareholder constituency that they seek and deserve. If they focus their thinking and communications on short-term results or short-term stock market consequences, they will, in large part, attract shareholders who focus on the same factors."
Read More Advice from Buffett's 30-year-old right-hand woman
3. Keep your focus. In that same letter, Buffett warns that even a great company can see its "value stagnate in the presence of hubris or of boredom that caused the attention of managers to wander." The result: a "sidetracked" leadership that "neglects its wonderful base business while purchasing other businesses that are so-so or worse." In this area, Buffett argues that "inactivity strikes us as intelligent behavior." In 1982, a year that saw a number of corporate deals, Buffett thought that in many of them, "managerial intellect wilted in competition with managerial adrenaline. The thrill of the chase blinded the pursuers to the consequences of the catch."
4. Keep costs low. In his 1996 letter, Buffett wrote that being a "low-cost operator" is directly responsible for the success of Berkshire's GEICO auto insurance subsidiary. "Low costs permit low prices, and low prices attract and retain good policyholders." And when those customers recommend GEICO to their friends, the company gets an "enormous savings in acquisition expenses, and that makes our costs still lower."
5. Keep employee incentives simple. Buffett doesn't like what he calls "lottery ticket" arrangements, such as stock options, in which the ultimate value could range from "zero to huge" and is "totally out of the control of the person whose behavior we would like to affect." Instead, goals should be "tailored to the economics" of the business, simple and measurable, and "directly related to the daily activities of plan participants."
Read More Warren Buffett shares his secret: How you can 'tap dance to work'
6. Keep out of trouble. Buffett tries to "reverse engineer" the future at Berkshire. "If we can't tolerate a possible consequence, remote though it may be, we steer clear of planting its seeds." (Buffett notes that his partner Charlie Munger often says, "All I want to know is where I'm going to die so I'll never go there.")
7. Keep your undervalued stock to yourself. Buffett is especially critical of a company using its stock to make a purchase when that stock isn't being fully valued by the market. "Under such circumstances, a marvelous business purchased at a fair sales price becomes a terrible buy. For gold valued as gold cannot be purchased intelligently through the utilitization of gold—or even silver—valued as lead."
8. Keep it small. In 2006, Buffett wrote that he's skeptical "about the ability of big entities of any type to function well." In his opinion, "size seems to make many organizations slow-thinking, resistant to change and smug." That's one reason Berkshire's corporate headquarters still has only a handful of employees, with almost all the managing work left to its unit's managers. "It is a real pleasure to work with managers who enjoy coming to work each morning and, once there, instinctively and unerringly think like owners."
9. Keep your reputation. In Buffett's mind, perhaps the most important piece of advice for businesses, and for everyone else, is to maintain a sterling reputation for honesty by never doing something you wouldn't want to see reported on the front page of your local newspaper. After taking control of Salomon in the wake of a major 1991 scandal at the financial firm, he famously told a Congressional panel that he had a simple message for employees: "Lose money for the firm and I will be understanding; lose a shred of reputation for the firm and I will be ruthless."
As he put it in one of his most-often quoted sayings: "It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you'll do things differently."
—By CNBC's Alex Crippen. Follow him on Twitter: @alexcrippen
'via Blog this'
1. Keep calm in the face of volatility. Buffett writes that earnings gyrations "don't bother us in the least." After all, "Charlie and I would much rather earn a lumpy 15 percent over time than a smooth 12 percent."
2. Keep good company. Berkshire has never split its Class A shares. As a result, one share currently costs almost $214,000. That discouraged people from rapidly moving into and out of the stock, and that's exactly the way Buffett likes it. He wants shareholders who share his long-term view. All the way back in 1979, he wrote, "In large part, companies obtain the shareholder constituency that they seek and deserve. If they focus their thinking and communications on short-term results or short-term stock market consequences, they will, in large part, attract shareholders who focus on the same factors."
Read More Advice from Buffett's 30-year-old right-hand woman
3. Keep your focus. In that same letter, Buffett warns that even a great company can see its "value stagnate in the presence of hubris or of boredom that caused the attention of managers to wander." The result: a "sidetracked" leadership that "neglects its wonderful base business while purchasing other businesses that are so-so or worse." In this area, Buffett argues that "inactivity strikes us as intelligent behavior." In 1982, a year that saw a number of corporate deals, Buffett thought that in many of them, "managerial intellect wilted in competition with managerial adrenaline. The thrill of the chase blinded the pursuers to the consequences of the catch."
4. Keep costs low. In his 1996 letter, Buffett wrote that being a "low-cost operator" is directly responsible for the success of Berkshire's GEICO auto insurance subsidiary. "Low costs permit low prices, and low prices attract and retain good policyholders." And when those customers recommend GEICO to their friends, the company gets an "enormous savings in acquisition expenses, and that makes our costs still lower."
5. Keep employee incentives simple. Buffett doesn't like what he calls "lottery ticket" arrangements, such as stock options, in which the ultimate value could range from "zero to huge" and is "totally out of the control of the person whose behavior we would like to affect." Instead, goals should be "tailored to the economics" of the business, simple and measurable, and "directly related to the daily activities of plan participants."
Read More Warren Buffett shares his secret: How you can 'tap dance to work'
6. Keep out of trouble. Buffett tries to "reverse engineer" the future at Berkshire. "If we can't tolerate a possible consequence, remote though it may be, we steer clear of planting its seeds." (Buffett notes that his partner Charlie Munger often says, "All I want to know is where I'm going to die so I'll never go there.")
7. Keep your undervalued stock to yourself. Buffett is especially critical of a company using its stock to make a purchase when that stock isn't being fully valued by the market. "Under such circumstances, a marvelous business purchased at a fair sales price becomes a terrible buy. For gold valued as gold cannot be purchased intelligently through the utilitization of gold—or even silver—valued as lead."
8. Keep it small. In 2006, Buffett wrote that he's skeptical "about the ability of big entities of any type to function well." In his opinion, "size seems to make many organizations slow-thinking, resistant to change and smug." That's one reason Berkshire's corporate headquarters still has only a handful of employees, with almost all the managing work left to its unit's managers. "It is a real pleasure to work with managers who enjoy coming to work each morning and, once there, instinctively and unerringly think like owners."
9. Keep your reputation. In Buffett's mind, perhaps the most important piece of advice for businesses, and for everyone else, is to maintain a sterling reputation for honesty by never doing something you wouldn't want to see reported on the front page of your local newspaper. After taking control of Salomon in the wake of a major 1991 scandal at the financial firm, he famously told a Congressional panel that he had a simple message for employees: "Lose money for the firm and I will be understanding; lose a shred of reputation for the firm and I will be ruthless."
As he put it in one of his most-often quoted sayings: "It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you'll do things differently."
—By CNBC's Alex Crippen. Follow him on Twitter: @alexcrippen
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Saturday, November 8, 2014
Perennial Real Estate decides not to reduce offer price for PCRT, Companies & Markets - THE BUSINESS TIMES
5 Nov8:11 AM
PERENNIAL Real Estate Holdings Limited (PREHL) plans to stick to its offer price to acquire the remaining units in Perennial China Retail Trust (PCRT) in respect of the latter's distribution for the third quarter of fiscal year 2014.
PREHL had earlier reserved its right to reduce the offer price for PCRT payable to any accepting unitholder of any PCRT units by the amount of dividend, right, other distribution or return of capital. On Wednesday, its joint financial advisers said the firm has elected not to exercise its right to reduce the offer price in respect of the third-quarter FY2014 distribution.
Unitholders who choose to accept the offer will still receive 0.52423 PREHL shares for each PCRT offer unit, the firm said in an announcement to the Singapore Exchange. PREHL is making a voluntary conditional offer to acquire the remaining units in PCRT in exchange for PREHL shares. Unitholders are offered 70 Singapore cents for each PCRT unit, to be paid for by the issuance of 0.52423 PREHL shares at some S$1.3353 each.
Unitholders who elect to accept the offer on or prior to Nov 12 will still be entitled to receive the latest quarterly distribution so long as they are on the register of PCRT as at the books closure date.
'via Blog this'
PERENNIAL Real Estate Holdings Limited (PREHL) plans to stick to its offer price to acquire the remaining units in Perennial China Retail Trust (PCRT) in respect of the latter's distribution for the third quarter of fiscal year 2014.
PREHL had earlier reserved its right to reduce the offer price for PCRT payable to any accepting unitholder of any PCRT units by the amount of dividend, right, other distribution or return of capital. On Wednesday, its joint financial advisers said the firm has elected not to exercise its right to reduce the offer price in respect of the third-quarter FY2014 distribution.
Unitholders who choose to accept the offer will still receive 0.52423 PREHL shares for each PCRT offer unit, the firm said in an announcement to the Singapore Exchange. PREHL is making a voluntary conditional offer to acquire the remaining units in PCRT in exchange for PREHL shares. Unitholders are offered 70 Singapore cents for each PCRT unit, to be paid for by the issuance of 0.52423 PREHL shares at some S$1.3353 each.
Unitholders who elect to accept the offer on or prior to Nov 12 will still be entitled to receive the latest quarterly distribution so long as they are on the register of PCRT as at the books closure date.
'via Blog this'
Reits band together to form new industry body, Real Estate - THE BUSINESS TIMES
Reits band together to form new industry body, Real Estate - THE BUSINESS TIMES:
6 Nov5:50 AM
Singapore
SEVERAL real estate investment trusts (Reits) have banded together to form an association - the Reit Association of Singapore (Reitas) - to promote the growth of Singapore's Reit sector. It will be headed by a nine-member executive committee, comprising representatives from some of the major Reits and sponsors such as Mapletree, CapitaLand, Frasers and Keppel.
Mapletree Investments group chief investment officer Chua Tiow Chye is president of the association, while Sonny Tan, a former general manager at Fraser & Neave, is CEO.
There are three vice-presidents, each of whom will head a separate sub-committee. ARA Asset Management (Fortune) CEO Anthony Ang will be responsible for engaging the authorities with the aim of improving the regulatory environment; CapitaLand group chief financial officer Arthur Lang will head education and research; while Keppel Reit CEO Ng Hsueh Ling will oversee promotion of Reitas initiatives.
The others in the committee include Ascendas Reit CEO Tan Ser Ping (treasurer) and Frasers Centrepoint Asset Management CEO Christopher Tang (member). Legal, trustee and banking representatives fill the other three spots.
Reitas has its first task cut out already - amassing feedback from Reits on the latest Monetary Authority of Singapore (MAS) consultation paper.
Mr Chua said that he understood the good intentions behind the proposal, but cautioned against the "slippery slope" of over-regulation. Blanket regulations should not be thrown onto the whole industry just because of "some black sheep", he said. "Some of the proposals requiring independent directors (IDs) to do beyond what is required of a listed company are quite excessive."
For instance, for interested party transactions, MAS proposes having the Reit manager's audit committee (comprising non-executive directors, mostly independent) certify that it is not aware of any other offer with better terms for any property divestments to a Reit.
"This is one part which I think is quite uncomfortable for IDs. While we agree with the principle that we should get the best price, we don't want to pass the onus to IDs," he said.
He is also against a prescriptive one-size-fits-all fee formula across all the Reits, as well as the doing away with acquisition fees for Reit managers, which would remove incentives for them to scout for deals, he said.
There has also been debate about whether Singapore Reits (S-Reits) should consider internal management - that is, absorbing the management team into the Reit, instead of having Reits externally managed by a sponsor-owned team.
The belief is that internal managers' interests are more aligned with investors', given that they are not motivated to earn huge fees from the Reit for the sponsor.
On this, Mr Chua, Mr Lang and Mr Ang say that they prefer to just let the market evolve naturally. Singapore's Reit market started from an externally managed model because its first Reits were all backed by strong developer-based sponsors. Interestingly, recently listed independent Reits such as IReit Global still choose an externally managed structure. Of course, this may change in future. What is important is that Reits should be allowed that flexibility to choose, Mr Chua said.
Singapore is at a crucial point now in its race to boost its standing as an international Reit market. It is currently the third-largest market in the Asia-Pacific, after Australia and Japan, but can be considered more international than both, which are more domestic-oriented.
At the same time, Malaysia, Hong Kong, Thailand and India are implementing aggressive policies to try to overtake Singapore's Reit market. And capital is now borderless. "If S-Reits do not keep at the forefront of things, we will disappear from the map," Mr Lang said.
Reitas has also been engaging MAS, and through it, the Inland Revenue Authority of Singapore and the finance ministry, on issues such as tax exemptions for foreign-sourced income as well as stamp duty remission for properties sold to S-Reits. Both benefits have so far been renewed every five years and will next end on March 31, 2015. The association hopes these will be made permanent or renewed, as it will give more certainty to Reits aspiring to list here.
Reitas also does not plan to be dominated just by the big boys, but welcomes the membership of small Reits, as well as trustees, trustee-managers, investment banks, lawyers, accountants, tax advisers, property consultants, private property fund managers and academia.
Already, the Singapore Exchange has agreed to be its corporate patron and will support it in its research and education work, which incidentally ties in with the exchange's own efforts on investor education.
Reitas is to be officially launched on Nov 17. Soon after, mom and pop investors can expect courses and seminars that help to "de-mystify" Reits. Separate courses will be made available to industry practitioners to help upgrade their skillsets in tandem with the advancement of the Reit industry.
'via Blog this'
6 Nov5:50 AM
Singapore
SEVERAL real estate investment trusts (Reits) have banded together to form an association - the Reit Association of Singapore (Reitas) - to promote the growth of Singapore's Reit sector. It will be headed by a nine-member executive committee, comprising representatives from some of the major Reits and sponsors such as Mapletree, CapitaLand, Frasers and Keppel.
Mapletree Investments group chief investment officer Chua Tiow Chye is president of the association, while Sonny Tan, a former general manager at Fraser & Neave, is CEO.
There are three vice-presidents, each of whom will head a separate sub-committee. ARA Asset Management (Fortune) CEO Anthony Ang will be responsible for engaging the authorities with the aim of improving the regulatory environment; CapitaLand group chief financial officer Arthur Lang will head education and research; while Keppel Reit CEO Ng Hsueh Ling will oversee promotion of Reitas initiatives.
The others in the committee include Ascendas Reit CEO Tan Ser Ping (treasurer) and Frasers Centrepoint Asset Management CEO Christopher Tang (member). Legal, trustee and banking representatives fill the other three spots.
Reitas has its first task cut out already - amassing feedback from Reits on the latest Monetary Authority of Singapore (MAS) consultation paper.
Mr Chua said that he understood the good intentions behind the proposal, but cautioned against the "slippery slope" of over-regulation. Blanket regulations should not be thrown onto the whole industry just because of "some black sheep", he said. "Some of the proposals requiring independent directors (IDs) to do beyond what is required of a listed company are quite excessive."
For instance, for interested party transactions, MAS proposes having the Reit manager's audit committee (comprising non-executive directors, mostly independent) certify that it is not aware of any other offer with better terms for any property divestments to a Reit.
"This is one part which I think is quite uncomfortable for IDs. While we agree with the principle that we should get the best price, we don't want to pass the onus to IDs," he said.
He is also against a prescriptive one-size-fits-all fee formula across all the Reits, as well as the doing away with acquisition fees for Reit managers, which would remove incentives for them to scout for deals, he said.
There has also been debate about whether Singapore Reits (S-Reits) should consider internal management - that is, absorbing the management team into the Reit, instead of having Reits externally managed by a sponsor-owned team.
The belief is that internal managers' interests are more aligned with investors', given that they are not motivated to earn huge fees from the Reit for the sponsor.
On this, Mr Chua, Mr Lang and Mr Ang say that they prefer to just let the market evolve naturally. Singapore's Reit market started from an externally managed model because its first Reits were all backed by strong developer-based sponsors. Interestingly, recently listed independent Reits such as IReit Global still choose an externally managed structure. Of course, this may change in future. What is important is that Reits should be allowed that flexibility to choose, Mr Chua said.
Singapore is at a crucial point now in its race to boost its standing as an international Reit market. It is currently the third-largest market in the Asia-Pacific, after Australia and Japan, but can be considered more international than both, which are more domestic-oriented.
At the same time, Malaysia, Hong Kong, Thailand and India are implementing aggressive policies to try to overtake Singapore's Reit market. And capital is now borderless. "If S-Reits do not keep at the forefront of things, we will disappear from the map," Mr Lang said.
Reitas has also been engaging MAS, and through it, the Inland Revenue Authority of Singapore and the finance ministry, on issues such as tax exemptions for foreign-sourced income as well as stamp duty remission for properties sold to S-Reits. Both benefits have so far been renewed every five years and will next end on March 31, 2015. The association hopes these will be made permanent or renewed, as it will give more certainty to Reits aspiring to list here.
Reitas also does not plan to be dominated just by the big boys, but welcomes the membership of small Reits, as well as trustees, trustee-managers, investment banks, lawyers, accountants, tax advisers, property consultants, private property fund managers and academia.
Already, the Singapore Exchange has agreed to be its corporate patron and will support it in its research and education work, which incidentally ties in with the exchange's own efforts on investor education.
Reitas is to be officially launched on Nov 17. Soon after, mom and pop investors can expect courses and seminars that help to "de-mystify" Reits. Separate courses will be made available to industry practitioners to help upgrade their skillsets in tandem with the advancement of the Reit industry.
'via Blog this'
Saturday, November 1, 2014
SMRT reports 75.5% spike in Q2 profits - Channel NewsAsia
SMRT reports 75.5% spike in Q2 profits - Channel NewsAsia:
SINGAPORE: Transport operator SMRT on Friday (Oct 31) said its profit after tax and minority interests for the second quarter of the current financial year rose 75.5 per cent year-on-year to S$25.3 million.
Operating profit for the quarter increased 66.5 per cent compared to a year ago to S$33.3 million, on the back of higher operating profit in fare business of $5.5 million and in non-fare business of S$27.2 million, SMRT said.
Its operating profit from train operations increased by S$6.6 million on the back of higher revenue and lower electricity costs, partially offset by higher depreciation. LRT losses, however, widened from S$400,000 to S$700,000, it said.
Bus operations improved from an operating loss of S$7.4 million to a lower operating loss of S$1.4 million, which it said was due mainly to higher revenue and productivity gains.
SMRT's operating expenses rose 2.5 per cent to S$292.9 million, due mainly to higher staff and depreciation costs, partially offset by lower energy expenditure, the transport operator said.
"The fare business environment will continue to be challenging owing to heightened operational demands on service, reliability and capacity," SMRT said. "The group will continue to grow its non-fare business by building on its rail engineering capabilities, and exploring local out-of-network and international opportunities."
The SMRT board has declared an interim dividend of 1.5 cents per ordinary share.
- CNA/ly
'via Blog this'
SINGAPORE: Transport operator SMRT on Friday (Oct 31) said its profit after tax and minority interests for the second quarter of the current financial year rose 75.5 per cent year-on-year to S$25.3 million.
Operating profit for the quarter increased 66.5 per cent compared to a year ago to S$33.3 million, on the back of higher operating profit in fare business of $5.5 million and in non-fare business of S$27.2 million, SMRT said.
Its operating profit from train operations increased by S$6.6 million on the back of higher revenue and lower electricity costs, partially offset by higher depreciation. LRT losses, however, widened from S$400,000 to S$700,000, it said.
Bus operations improved from an operating loss of S$7.4 million to a lower operating loss of S$1.4 million, which it said was due mainly to higher revenue and productivity gains.
SMRT's operating expenses rose 2.5 per cent to S$292.9 million, due mainly to higher staff and depreciation costs, partially offset by lower energy expenditure, the transport operator said.
"The fare business environment will continue to be challenging owing to heightened operational demands on service, reliability and capacity," SMRT said. "The group will continue to grow its non-fare business by building on its rail engineering capabilities, and exploring local out-of-network and international opportunities."
The SMRT board has declared an interim dividend of 1.5 cents per ordinary share.
- CNA/ly
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FormFactor (FORM) Beats Q3 Earnings, Revenue Estimates - Analyst Blog - NASDAQ.com
FormFactor (FORM) Beats Q3 Earnings, Revenue Estimates - Analyst Blog - NASDAQ.com:
FormFactor reached a milestone by accomplishing profitability in two consecutive quarters since the fourth quarter of fiscal 2007. The sequential increase in the bottom line was primarily driven by increased revenues aided by higher demand and improving execution.
Formfactor, Inc - Earnings Surprise | FindTheBest
Revenue
Revenues of $73.9 million were up 9.8% sequentially and 9.3% from the year-ago quarter. Revenues also beat the Zacks Consensus Estimate of $73.0 million. The sequential increase was limited to the System on Chip (SoC) and DRAM segments. However, the NAND Flash segment declined. Region-wise, Japan was the strongest sequentially, but the increase in the Asia/Pacific and North America was also significant.
Revenues by Geography
Asia-Pacific contributed 33% of third quarter 2014 revenues (up 14.5% from the prior quarter but down 10.6% from the year-ago quarter). North America's share was 26% (up 14.6% from the prior quarter and 14% from the year-ago quarter) while South Korea brought in 20% of the revenues (down 1.4% from the prior quarter but up 15.1% from the year-ago quarter). Europe/Middle East accounted for 11% of the revenues (down 9.9% sequentially but up 90.7% on a year-over-year basis). Japan contributed the remaining 10% (up 39.2% sequentially and 16.4% from the year-ago quarter).
Revenues by End User
SoC revenues in the third quarter amounted to $39.4 million, up 7.9% from the prior quarter and 24.3% from the year-ago quarter. Overall strength in the market was driven by strong demand across mobile computing, personal computers and servers and continued momentum in copper pillar applications.The company also witnessed broad-based demand for SoC probe cards in markets like industrial and automotive in the quarter.
Reported revenues for DRAM products were $31.4 million, up 18.9% sequentially and 9.0% on a year-over-year basis. The increase can be attributed to the fact that DRAM customers invested in new technology nodes and new memory communication interface standards like DDR4 and LPDDR4. Each new standard leads to new designs, which in turn drive new probe cards.
Flash revenues were $3.1 million in the third quarter, a decline of 31.1% from the prior quarter and 56.3% from the year-ago quarter. NOR Flash revenues decreased $2.0 million in the third quarter to $1.1 million, while NAND Flash revenues increased $0.6 million to $2.0 million in the quarter.
The new NAND Flash probe card, Vector, contributed meaningfully to the $2 million of NAND Flash revenues in the quarter.
Margins
Non-GAAP gross profit was $28.4 million, or 38.5% of revenues, compared with non-GAAP gross profit of $24.4 million, or 36.2% of revenues in the prior quarter. The increase in this quarter's non-GAAP gross margin was attributed to increased absorption of fixed cost as a result of higher factory utilization manufacturing efficiencies.
Non-GAAP operating profit was $4.9 million, compared with $1.4 million in the previous quarter.
Operating expenses adjusted for restructuring, acquisition, amortization, integration and asset impairment charges came in at $23.5 million, up 2.3% sequentially and 5.2% from the year-ago quarter. Operating margin of 6.6% jumped 457 basis points sequentially and was more or less consistent with the prior year.
Pro forma net income was $5.1 million (9 cents a share) compared with $1.4 million (2 cents a share) in the previous quarter and a loss of $6.5 million (12 cents a share) in the year-ago quarter.
On a GAAP basis, net loss for the third quarter of fiscal 2014 was $ 0.3 million, or $0.00 per fully-diluted share, compared to a net loss of $ 4.3 million, or $0.08 per fully-diluted share in the previous quarter, and a net loss for the third quarter of fiscal 2013 of $10.7 million, or $0.20 per fully-diluted share.
'via Blog this'
FormFactor reached a milestone by accomplishing profitability in two consecutive quarters since the fourth quarter of fiscal 2007. The sequential increase in the bottom line was primarily driven by increased revenues aided by higher demand and improving execution.
Formfactor, Inc - Earnings Surprise | FindTheBest
Revenue
Revenues of $73.9 million were up 9.8% sequentially and 9.3% from the year-ago quarter. Revenues also beat the Zacks Consensus Estimate of $73.0 million. The sequential increase was limited to the System on Chip (SoC) and DRAM segments. However, the NAND Flash segment declined. Region-wise, Japan was the strongest sequentially, but the increase in the Asia/Pacific and North America was also significant.
Revenues by Geography
Asia-Pacific contributed 33% of third quarter 2014 revenues (up 14.5% from the prior quarter but down 10.6% from the year-ago quarter). North America's share was 26% (up 14.6% from the prior quarter and 14% from the year-ago quarter) while South Korea brought in 20% of the revenues (down 1.4% from the prior quarter but up 15.1% from the year-ago quarter). Europe/Middle East accounted for 11% of the revenues (down 9.9% sequentially but up 90.7% on a year-over-year basis). Japan contributed the remaining 10% (up 39.2% sequentially and 16.4% from the year-ago quarter).
Revenues by End User
SoC revenues in the third quarter amounted to $39.4 million, up 7.9% from the prior quarter and 24.3% from the year-ago quarter. Overall strength in the market was driven by strong demand across mobile computing, personal computers and servers and continued momentum in copper pillar applications.The company also witnessed broad-based demand for SoC probe cards in markets like industrial and automotive in the quarter.
Reported revenues for DRAM products were $31.4 million, up 18.9% sequentially and 9.0% on a year-over-year basis. The increase can be attributed to the fact that DRAM customers invested in new technology nodes and new memory communication interface standards like DDR4 and LPDDR4. Each new standard leads to new designs, which in turn drive new probe cards.
Flash revenues were $3.1 million in the third quarter, a decline of 31.1% from the prior quarter and 56.3% from the year-ago quarter. NOR Flash revenues decreased $2.0 million in the third quarter to $1.1 million, while NAND Flash revenues increased $0.6 million to $2.0 million in the quarter.
The new NAND Flash probe card, Vector, contributed meaningfully to the $2 million of NAND Flash revenues in the quarter.
Margins
Non-GAAP gross profit was $28.4 million, or 38.5% of revenues, compared with non-GAAP gross profit of $24.4 million, or 36.2% of revenues in the prior quarter. The increase in this quarter's non-GAAP gross margin was attributed to increased absorption of fixed cost as a result of higher factory utilization manufacturing efficiencies.
Non-GAAP operating profit was $4.9 million, compared with $1.4 million in the previous quarter.
Operating expenses adjusted for restructuring, acquisition, amortization, integration and asset impairment charges came in at $23.5 million, up 2.3% sequentially and 5.2% from the year-ago quarter. Operating margin of 6.6% jumped 457 basis points sequentially and was more or less consistent with the prior year.
Pro forma net income was $5.1 million (9 cents a share) compared with $1.4 million (2 cents a share) in the previous quarter and a loss of $6.5 million (12 cents a share) in the year-ago quarter.
On a GAAP basis, net loss for the third quarter of fiscal 2014 was $ 0.3 million, or $0.00 per fully-diluted share, compared to a net loss of $ 4.3 million, or $0.08 per fully-diluted share in the previous quarter, and a net loss for the third quarter of fiscal 2013 of $10.7 million, or $0.20 per fully-diluted share.
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