Civmec, on Jan 10, announced that it made positive progress with the due diligence for the transfer of ownership of Luerssen Australia, a shipyard in Western Australia.

 

The update comes after the company signed a non-binding heads of agreement with NVL B.V. & Co. KG of Bremen Germany outlining the framework for the transfer of ownership in October 2024. Luerssen Australia is responsible for building six Arafura Class Offshore Patrol vessels for the Royal Australian Navy under the SEA 1180 contract.

 

The heads of agreement includes the transfer of all NVL' s shareholding in Luerssen Australia to Civmec , encompassing all assets, employees, and licences.

 

The successful transfer of ownership will ensure the continued design and construction of the Arafura Class Offshore Patrol vessels at the Osborne South shipyard in South Australia and Civmec' s facility in Henderson, Western Australia.

 

In its Jan 10 update, Civmec says both parties have been actively exploring ways to enhance efficiency and synergies for the SEA 1180 project while collaborating closely with the Commonwealth to obtain consent.

 

The parties are now working towards a revised effective date the transfer of ownership is expected to be on or before July 1.

 

Amid the due diligence and consent process, Civmec Construction & Engineering and Luerssen Australia have entered into a service level agreement to enable the former to provide the latter with shipbuilding services and operational support. Civmec' s shipbuilding and operational support under the agreement will continue until the successful transfer of ownership or the end of the agreement&rsquo s term.

 

Dual-listed construction and engineering services provider Civmec P9D Limited has reported a net profit of A$15.2 million ($13.2 million) in 1QFY2025 ended September, in line with the same period last year. 

 

Meanwhile, earnings per share stood at 2.99 Australian cents in 1QFY2025, down from 3.01 Australian cents in 1QFY2024. 

 

For the same period, the group&rsquo s revenue stood at A$262.7 million, up 7.2% y-o-y from 1QFY2024. 

 

In 1QFY2025, the group reported an ebitda of A$29.2 million, up by 1% y-o-y. 

 

Net asset value (NAV) per share stood at 95.8 Australian cents, up from 86.0 Australian cents in 1QFY2024. 

 

As at end-September, the group had an order book of A$800 million, down from A$853 million in the previous quarter. 

James Fitzgerald, chairman of Civmec, says: &ldquo We continue to secure projects with long term clients, demonstrating our robust market position.&rdquo  

 

He adds: &ldquo Additionally, we are excited to announce the successful completion of the re-domicile of the Civmec&rsquo s parent company to Australia, effective from Sept 4. This strategic move is anticipated to enhance our ability to secure Australian contracts, particularly from entities with local content policies or initiatives.&rdquo

All assets, employees and licences will be transferred to ensure the uninterrupted design and build of six offshore patrol vessels under an existing contract 

 

CONSTRUCTION and engineering services provider Civmec : P9D -2.8% has signed a non-binding heads of agreement with German shipbuilder Naval Vessels Lurssen (NVL) for the transfer of ownership of its subsidiary Luerssen Australia. 

 

Once the potential transaction is completed, NVL will transfer all its shareholding in Luerssen Australia to Civmec, including all assets, employees and licences. 

 

This will ensure the &ldquo uninterrupted design and build&rdquo of six offshore patrol vessels for the Royal Australian Navy under an existing contract with the Australian Department of Defence &ndash   Luerssen Australia&rsquo s sole business, done at a shipyard in South Australia and the Civmec-owned facility in Western Australia, said Civmec in a Tuesday (Oct 15) bourse filing. 

 

The proposed change of ownership and control of Luerssen Australia will be subject to the government&rsquo s approval. 

 

To obtain the necessary consent as soon as possible, Civmec said the group and Luerssen Australia will immediately begin engagements with the authorities on the required administrative approval process and work towards a target date of Dec 31. 

 

At the same time, the group will conduct necessary due diligence and detailed planning, since the non-binding agreement is subject to satisfactory due diligence and the fulfilment of certain conditions. 

 

&ldquo The immediate priority is to agree on a framework for the interim period in which Luerssen Australia and Civmec will closely cooperate in managing (the existing contract), ensuring that (the Department of) Defence, the Royal Australian Navy and industry all benefit from the efficiencies and advantages of the agreement,&rdquo said Civmec. 

 

Civmec executive chairman Jim Fitzgerald said the acquisition of Luerssen Australia is a &ldquo natural step&rdquo for the company, as a sovereign Australian shipbuilder with world-class shipbuilding facilities and an experienced shipbuilding workforce. 

 

&ldquo Having worked on the project since 2018, we&rsquo re confident in our ability to execute the remaining work scope and ensure a smooth transition for all stakeholders,&rdquo he added. 

 

Tim Wagner, Luerssen Australia&rsquo s chairman and chief executive of NVL, added that he is confident in Civmec&rsquo s ability to finish the remaining works, and assured that NVL will support the group until it successfully completes the existing project. 

 

&ldquo We appreciate there are many details to work through, and we look forward to engaging with all stakeholders, including the Commonwealth, Luerssen Australia employees and suppliers to ensure a smooth and successful transition,&rdquo said Wagner.

 

Maybank Securities analyst Eric Ong has kept &ldquo buy&rdquo on Civmec P9D 0.00% with a target price of $1.05 following the company&rsquo s FY2024 ended June results.

 

For its 2HFY2024, Civmec posted a patmi of A$32.5 million, up 10.6% y-o-y, bringing full year earnings to A$64.4 million, up 11.7% y-o-y.

 

Civmec declared a final dividend per share (DPS) of 3.5 Australian cents, taking the total DPS to 6 Australian cents. Given its net cash balance sheet, Ong believes there is still room for the company to raise its payout ratio. 

 

Turnover for 2HFY2024 rose 31.3% y-o-y to A$541.1 million, mainly due to increased activity levels especially in its resource and infrastructure and defence segments, which more than offset the weaker energy segment, which was down 58% y-o-y.

 

While Ong notes that Civmec&rsquo s order book declined by 17.9% y-o-y to A$853.4 million as at end-June, the company is currently working towards formalising the MoU for a strategic joint venture to tender on the LAND8710 landing craft heavy shipbuilding programme for the Australian government. This could potentially open the opportunity for Civmec to participate in over A$25 billion of future works.

 

Meanwhile, Civmec&rsquo s new facility in Port Hedlands is now fully operational. The company has commenced on delivering maintenance work for local clients, Ong points out.

The company has also purchased an established adjoining workshop next to its existing land in Gladstone, Central Queensland. This acquisition has expedited Civmec&rsquo s objective to establish a permanent base of operations in the region, Ong notes. The company has since moved into the newly acquired facility, thus enabling it to further enhance its service offering and capabilities.

 

On Aug 1, the move to redomicile Civmec&rsquo s parent company to Australia was passed and has been sanctioned by the court on Aug 28. Civmec will lodge the court order on September 4 with the Accounting and Corporate Regulatory Authority of Singapore and the scheme will take effect on the date of lodgement. 

 

The NewCo shares will then commence trading on both the Singapore Exchange S68 0.18% and Australian Securities Exchange on September 5. 

 

This strategic initiative is designed to better align Civmec with local manufacturing requirements in Australia, thereby improving the number of opportunities available to the group, Ong highlights.

Dual-listed construction and engineering services provider Civmec P9D 0.00% Limited has reported another record set of results for the FY2024 ended June 30. Earnings rose by 11.6% y-o-y to A$64.4 million ($57.0 million) while revenue grew by 24.4% y-o-y to A$1.03 billion.

 

The higher revenue was attributed to the group&rsquo s increased activity levels as well as the timing of revenue recognition on projects. Revenue for the group&rsquo s resources and infrastructure, marine & defence segments rose while revenue for Civmec&rsquo s energy segment fell.

 

FY2024 gross profit increased by 9.0% y-o-y to A$119 million thanks to the higher revenue.

 

Other income during the year surged by 102.6% y-o-y to A$5.3 million mainly due to the fair value gain on an investment property and higher interest income.

 

The group&rsquo s ebitda stood at A$120.8 million while cash from operations stood at $96.9 million, representing a conversion rate of 80%.

 

Earnings per share (EPS) stood at 12.70 Australian cents, up from 11.42 Australian cents in FY2023.

 

As at June 30, Civmec&rsquo s order book came in at over A$853 million.

 

&ldquo It is pleasing to deliver another record result for our shareholders, with the group achieving over A$1 billion in revenue and A$64 million in NPAT. This continued strong performance has allowed us to propose a final dividend of 3.5 Australian cents, taking total dividends payable for the year to 6 Australian cents, a 20% increase on FY2023,&rdquo says Civmec&rsquo s chairman James Fitzgerald.

 

&ldquo As in the past, the dividends are fully franked for Australian taxpayers. As recently announced, the resolution to change the domicile of the parent entity of the group to be Australian was passed at the shareholders&rsquo scheme meeting on Aug 1. The change in domicile of the group will broaden the future opportunities that will align with Civmec&rsquo s strategic growth plans,&rdquo he adds.

The shareholders&rsquo scheme was sanctioned by the court on Aug 28. Civmec will lodge the court order with the Accounting and Corporate Regulatory Authority of Singapore (ACRA) on Sept 4. The scheme will take effect on and from the date of lodgement.

 

Looking ahead, the group says it continues to grow its engineering design capability as it sees strong demand for original equipment manufacturer (OEM) material handling machines, for both new facilities and replacement of ageing assets.

 

Based on its estimates, there is demand for over 30 OEM machines over the next 10 years in Australia and the group is the only one in the country with a full in-house service offering so far.

 

In addition, the group says it is committed to supporting future shipbuilding programmes in the defence sector.

 

&ldquo As we celebrate 15 years of successful operations in Australia, the group&rsquo s outstanding financial performance and ability to deliver over A$1 billion in revenue this year is a testament to our group&rsquo s operational excellence,&rdquo says CEO Patrick Tallon.

 

On the same day, Civmec announced the appointment of Bojan Cica as its new chief financial officer (CFO). The appointment is internal with the current acting CFO, Kevin Deery, serving in a dual capacity. Deery is also the group&rsquo s chief operating officer (COO).

 

Cica, who was most recently Civmec&rsquo s group manager commercial and operational risk, will step into his new role from Sept 1.

The deals include fabrication, manufacturing, construction and maintenance work in Australia

 

CONSTRUCTION and engineering group Civmec Limited : P9D +1.22% on Monday (Jul 1) said it has bagged multiple projects with a combined contract value of about A$174 million (S$157.5 million). 

 

These include a &ldquo significant&rdquo contract for the supply, manufacture and offsite assembly of a new shiploader for the Dalrymple Bay Terminal in Queensland, Australia, said Civmec, which is listed in Singapore and Australia. 

 

&ldquo The project will create significant opportunities for local employment and subcontracting, reinforcing Civmec&rsquo s commitment to contributing positively to the communities in which we operate,&rdquo it said. 

 

It also follows the recent completion of manufacturing of a shiploader for the Hay Point Coal Terminal, said Patrick Tallon, Civmec&rsquo s chief executive officer, in a bourse filing. 

 

Additionally, the group said it recently secured a number of new contracts and work orders under existing term contracts and framework agreements across Australia. These include a shiploader travel bogie changeout project, as well as risk management and inspection services in Western Australia, wharf remediation activities on the country&rsquo s east and west coasts, and balance machine design and investigative work. 

 

There is ongoing shutdown and maintenance work throughout Australia as well, and the group&rsquo s plans for a new east coast maintenance hub in Gladstone are progressing, said Civmec. 

 

&ldquo (This) is expected to further add to Civmec&rsquo s growth across the maintenance service sector nationally,&rdquo it said. 

 

At the same time, Civmec said additional scopes of work were added to &ldquo numerous&rdquo existing manufacturing and construction contracts, and tendering activities remain at &ldquo historically high levels&rdquo .

 

&ldquo (This will provide) significant opportunities for both order book replenishment and growth in the medium and longer term,&rdquo said the group.

 

Tallon added: &ldquo We have made significant investments into our capabilities over the years, enabling successful delivery of a wide range of materials-handling equipment for many clients and commodities.&rdquo

 

Engineering firm Civmec P9D 0.00% ' s application to shift its domicile from Singapore to Australia, where it operates, will help increase opportunities to win new contracts with stringent " local content" requirements.

 

By doing so, Civmec can also tap capital willing to help fund local manufacturing activities, according to UOB Kay Hian analysts John Cheong and Heidi Mo in their June 21 note.

 

Even as its order book reaches A$821 million, the analysts note that Civmec is still expanding both its service offerings and client base. 

 

Meanwhile, they' ve kept their " buy" call and $1.23 target price on this stock, which is pegged to 11x FY2024 earnings, which is at 0.5 sd below its long-term historical mean. 

 

" We think its current valuation of 7x FY2024 earnings is attractive, given its strong order book. The stock is trading at a deep 55% discount to its regional peers that are trading at an average of 16x FY2024 earnings," state Cheong and Mo.

 

According to the analysts, tendering activities across Civmec' s operations are at historically high levels, with current priced opportunities approaching A$10 billion.

 

Civmec, the analysts say, is working closely with a range of clients on approved expansion, sustaining and maintenance opportunities as well as on a budgetary level for projects under feasibility studies. 

 

As a result of these engagements, Civmec sees significant opportunities for both order book replenishment and growth in the medium and longer term. 

 

The company has a strong pipeline of tendering opportunities in all the sectors it operates in, ranging from resources, energy and infrastructure, marine and defence.

 

Civmec is winning over a bigger share of maintenance-related contracts, with clients such as old major Chevron. It provides construction services too to mining giant Rio Tinto, according to Cheong and Mo.

 

Separately, the Australian government recently halved the number of offshore patrol vessels it had wanted to order from 12 to 6. Civmec was earlier seen to tap on this series of contracts. 

 

Nonetheless, Civmec has already completed its scope of work for the 6 vessels and has shifted its resources towards other contracts. " This is therefore not expected to impact FY2024' s financial performance, demonstrating Civmec' s effective diversification of contracts across sectors," state Cheong and Mo.

 

Even so, given the Australian government' s stance to beef up its defence spending over the longer term, Civmec remains a " strong contender" for future contracts given its long-standing ties with the Department of Defence.

 

Australian engineering firm Civmec P9D -0.65% has reported earnings of A$17.1 million for its 3QFY2024, up 16.9% y-o-y, on the back of a 37.6% jump in revenue to A$258.3 million.

 

The company says it is well poised to capture potential construction, service and manufacturing contracts from multiple venues over the medium and longer term, from both commercial and public sector customers.

 

&ldquo I am proud to announce another strong quarter for our shareholders, with continued growth in both top-line revenue and bottom-line earnings and resilient profit margins," says chairman James Fitzgerald.

 

" An increase in the volume of maintenance-related awards reflects our increasing focus on maintenance works as a significant pillar of growth for the company," he adds.

 

The company says its order book is at A$821 million.

 

ENGINEERING and construction company posted a 12.8 per cent increase in net profit to A$31.9 million (S$27.9 million) for the first half ended Dec 31, 2023, on the back of higher revenue.

 

This is up from A$28.3 million in the previous corresponding period, the Australia-headquartered company said in a bourse filing on Wednesday (Feb 14).

 

Earnings per share came in at A$0.063 compared to A$0.056 in the same period a year earlier.

 

The board of Civmec has declared an interim dividend of A$0.025 per share, up from A$0.02 per share.

 

H1 revenue increased by 17.5 per cent to A$492.3 million from A$418.9 million, while net profit margin dropped 0.2 percentage point to 6.5 per cent over the same period.

 

The group also strengthened its balance sheet, increasing its net cash position to A$83.1 million from A$12.8 million, with its net assets growing 12.4 per cent to A$437.9 million. Net asset value per share rose to A$0.863 from A$0.771.

 

Civmec aims to build on growth through continued cost management, maintenance segment boom

Operational highlights from the six-month period included the completion of the Port Hedland maintenance facility, described as a &ldquo significant milestone&rdquo in helping the company increase its market share in maintenance services in the Pilbara.

 

It also completed a major civil and concrete works package for the Iron Bridge Magnetite Project, also in the Pilbara, and secured its first contract under a statewide road project in Western Australia.

 

The group also noted that its order book has been maintained above A$1 billion, which it says demonstrates its ability to perform multiple maintenance and capital upgrade contracts as well as resources construction packages.

 

It is also continuing the process of its proposed change of domicile from Singapore to Australia (first announced in October 2023), which will be achieved through a restructuring of the company by way of a scheme of arrangement.

 

It added that it is working with the relevant regulatory bodies in both countries to gain approval and finalise the scheme documents before submitting the proposal to a shareholder vote, though it did not specify a time frame.

CONSTRUCTION and engineering services provider Civmec : P9D +2.68% is on a roll.

 

For its first quarter ended September, the Australia-headquartered company reported a 7.3 per cent year-on-year increase in net profit of A$15.2 million (S$13.4 million).

 

Its top line grew in tandem to A$245.1 million in Q1, from A$228.3 million in the year-ago period.

 

The company has posted higher full-year net profit for the past four consecutive years, with earnings jumping from A$6.1 million in FY2019 to A$57.7 million in the FY2023 ended June.

 

The key to Civmec&rsquo s consistent earnings growth, according to chief executive and co-founder Patrick Tallon, is careful attention to cost management.

 

&ldquo Cost is fundamental to what you want to make in profit,&rdquo said Tallon.

 

&ldquo In Australia, in particular, the cost of ... staff and labour is probably our biggest cost. It&rsquo s at least 50 per cent or more of the cost, compared to other nations where the labour cost is less,&rdquo he added.

 

&ldquo So we spent a lot of time making sure people have the correct processes, the systems (and) the correct training as much as we can (provide) to be able to perform their job as efficiently as they can.&rdquo

 

Expanding capacity

Civmec provides a range of services across three major segments: construction work involving structural, mechanical and piping work structural concrete work and some electrical work.

 

It also manufactures equipment used in shipbuilding and provides maintenance work in refractory and industrial insulation, among other things.

 

In November 2022, Civmec broke ground on construction of its new engineering, manufacturing and maintenance facility in Port Hedland in Western Australia.

 

A year later, the new site is now fully operational, featuring a workshop and an office facility of approximately 5,000 square metres (sq m).

 

The facility will serve as a centre for maintenance support in the Pilbara region, and allow the company to provide specialised fabrication and maintenance services locally in Port Hedland. These include structural repairs, modifications and rotable item maintenance.

 

Tallon said the company had chosen to build a facility there for its prime and strategic location &ndash in close proximity to mines as well as some major iron ore exporters.

 

Sitting on 50,000 sq m of land, the new facility is expected to support the company&rsquo s verticals across segments.

 

Civmec is also eyeing another piece of land in Gladstone, Queensland, where it already has a facility that supports the maintenance works it provides.

 

The acquisition of this land is still subject to regulatory approval. When completed, however, the new addition could signify a potential new area of growth for Civmec &ndash in the liquefied natural gas (LNG) space.

 

Tallon noted that numerous LNG trains pass by, transporting the natural gas that has been cooled to a liquid state to and from Australia&rsquo s 10 liquefaction facilities.

 

&ldquo While we&rsquo re not involved in that type of work right now, they have an area for growth for us where we think we can actually get involved in that energy space &hellip (sometime) down the line,&rdquo he said.

 

Shifting operations

Meanwhile, analysts are positive about dual-listed Civmec&rsquo s plans &ndash announced in late October this year &ndash to redomicile from Singapore to Australia.

 

UOB Kay Hian analysts John Cheong and Heidi Mo believe the move would allow the company to clinch more projects in Australia, as the Australian government and corporations increasingly introduce assessment criteria for local corporations.

 

&ldquo In particular, this may bolster Civmec&rsquo s chances of contributing significantly to defence projects brought about by (Australia&rsquo s) 2023 Defence Strategic Review,&rdquo they said.

 

The group has an order book worth A$1.1 billion as at end September &ndash up nearly 18 per cent from the year before.

 

In its Q1 update, the company said it expects its order book to grow further, as tendering activities remain strong across all sectors.

 

In particular, Tallon is most optimistic about growth from the company&rsquo s maintenance arm.

 

He believes that the segment is one that would give the company the most &ldquo immediate return&rdquo , given that Civmec had just launched its new facility in Port Hedland, near the mining companies that it gets most of its maintenance business from.

 

&ldquo We&rsquo ve built the projects, we built the plant,&rdquo Tallon said. &ldquo So we&rsquo re hoping that we can actually deliver maintenance cycles for the clients in that space.&rdquo

 

HEAVY-ENGINEERING company Civmec : P9D 0% posted on Monday (Oct 30) a 7.3 per cent increase in its net profit after tax to A$15.2 million (S$13.2 million) for its first quarter ended Sep 30, from A$14.2 million a year ago.

 

Revenue rose 7.3 per cent to A$245.1 million in Q1, from A$228.3 million in the year-ago period. 

 

Earnings per share stood at 3.01 Australian cents, up 6.7 per cent year on year from 2.82 cents. 

 

In a business update, the company noted that maintenance and capital works recorded continued growth in the first quarter of the year, with several new agreements and contract extensions awarded. This included a three-year contract with an east coast-based client for maintenance works on their metallurgical coal assets, as well as a two-year extension to the contract of an existing client for maintenance, major overhaul and repair services. 

 

Tendering activity remained strong across all sectors, with the group focused on &ldquo securing projects that will allow for sustainable growth&rdquo , it added. The group&rsquo s order book also remained healthy at over A$1.1 billion, an increase of 17.9 per cent year on year, it said. 

 

&ldquo As recently announced, the company has also commenced the process of gaining regulatory approvals to allow the group to redomicile to Australia,&rdquo said Civmec chairman James Fitzgerald.

 

&ldquo It is anticipated that this will increase Civmec&rsquo s opportunity pipeline for contracts with governments and other Australian entities, where local content policies, or strong intentions to utilise local manufacturing, exist.&rdquo  

 

Analysts say sustainability of dividends more important in long run

 

FIVE companies &ndash Civmec : P9D -1.25%, Uni-Asia Group : CHJ +1.1%, Second Chance Properties : 528 -2.17%, Jason Marine Group : 5PF 0% and SUTL Enterprise : BHU 0% &ndash have grown their dividends by more than 20 per cent over the past five years. Another eight have grown their dividends by at least 10 per cent, according to Bloomberg data.

 

If you&rsquo re an investor looking to build a Singapore Exchange (SGX) version of the S& P US Dividend Growers Index, however, some analysts say these may not be the names you want in your portfolio.

 

SGX is known for its dividend payers, and Singapore-focused indices tend to have a higher average yield. This is partly because of the market&rsquo s high number of real estate investment trusts (Reits), which must pay out 90 per cent of their income to avoid a tax on that income.

 

Strip out the Reits, however, and an analysis by The Business Times found that few companies have been able to grow their dividends over the past five years. After incorporating several other factors for a margin of safety, the number falls further.

 

A screen of profitable companies with growing earnings and gearing levels of under 50 per cent found only 32 that had managed to grow their dividends in that period.

 

Dividend growth is particularly important amid rising interest rates. With the risk-free rate at its highest in roughly 16 years, even companies with very high dividend payouts have begun to look relatively unattractive.

 

Yield-hungry investors may drop such companies in favour of safer investments with similar yields, or seek higher-yielding but riskier plays.

 

Saira Malik, chief investment officer at Nuveen, cautioned against focusing too much on current dividend yields.

 

Investors who adopt such a strategy, she said, may overlook &ldquo a wide universe of well-run companies with a history of growing dividends&rdquo .

 

Dividend growers tend to outperform over time. Malik noted that global dividend payers with a more modest yield of up to 3 per cent generally have better earnings growth potential, stronger profitability metrics and higher profit margins.

 

These help to mitigate risk when volatility prevails, she said.

 

&ldquo We believe dividend-paying stocks that exhibit both the ability and willingness to consistently grow the dividend are high-quality companies, given their ability to balance dividend payments with additional capital reinvestment for future growth initiatives.&rdquo

 

Generous dividend payouts may also harm a business in the longer term, she warned. 

 

Companies that are earning just enough to pay dividends, or are paying most of their earnings as dividends, have less capital to invest back into the business.

 

This limits future growth opportunities, and could threaten both share price appreciation and dividend growth.

 

&ldquo In addition, a company with a high dividend yield or, more importantly, a high payout ratio, may be more vulnerable to competitive pressure, as cash flow may be insufficient to support operations during volatile environments,&rdquo Malik said.

 

Pedro Choi, research analyst at S& P Global Market Intelligence, said stocks with high yields are also at risk of dividend cutbacks or suspensions.

 

Look long-term

So, should investors be loading their portfolios with names from the above list of dividend growers?

 

Only if those dividends are sustainable, analysts said.

 

Indeed, several of the companies on the list are already reporting financial weakness.

 

Uni-Asia, an investment company with property and shipping assets, posted a 74 per cent fall in net profit in the first half of the year. This was due primarily to a slowdown in the shipping market, which caused a decline in revenue.

 

Meanwhile, palm oil player First Resources : EB5 -1.29% saw its earnings fall 44.1 per cent in H1, on the back of a decline in sales and lower gross margins due to the drop in crude palm oil prices.

 

Several of the other counters with significant growth in dividend payouts saw their bottom lines inch up less than 1 per cent in H1. Among them are bus and train company SBS Transit : S61 -1.55%, healthcare provider Raffles Medical Group : BSL -0.79% and coffee shop operator Kimly : 1D0 +1.56%.

 

S& P&rsquo s Choi noted that historical records are not necessarily &ldquo an indicator for future success&rdquo , particularly with the level of uncertainties that the global economy is currently facing.

 

&ldquo Investors should make assessments of a company&rsquo s future profitability and (whether its) cashflow&hellip can support future dividend continuity,&rdquo he added.

 

Choi is more optimistic of the prospects of some of the larger and steadier dividend payers.

 

S& P estimates that the Singapore stocks it tracks will grow their dividends by 6 per cent in the current year. This is ahead of expectations for stocks it tracks in other developed Asia-Pacific economies.

 

Dividend growth will taper to between 3 per cent and 4 per cent next year, even as other developed Asia-Pacific markets are set to recover from their slower growth.

 

In Singapore, Choi said the banking sector has been one of the top dividend payers. DBS : D05 +0.36%, OCBC : O39 +0.96% and UOB : U11 +0.56% are expected to pay out an aggregate of S$10.4 billion in dividends this year, up 26 per cent in nominal terms from 2022.

 

With interest rates forecast to peak, however, he expects the banking sector&rsquo s dividends to grow by a low- to mid-single digit figure in 2024.

 

One bank to watch is UOB, which is among the list of top dividend growers over a five-year period. According to Bloomberg data, it has grown its dividend by 6.2 per cent.