Month: November 2007
November 2007
Results Announced
- 21-Nov-07 (before mkt open) : SPAusNet 1H08 – EPS A5.72ct ; DPS A5.776ct
- 13-Nov-07 (mkt close) : ComfortDelfro Q307 – EPS 2.84ct (todate 8.33ct)
- 12-Nov-07 (mkt close) : SBSTransit Q307 – EPS 3.27ct (todate 13.61ct) ; DPS 8ct (todate 14ct)
- 7-Nov-07 (before mkt open) : SingTel Q207 – EPS 6.21ct (todate 12.04ct) ; DPS 5.6ct
- 1-Nov-07 (mkt close) : StarHub Q307 – EPS 4.78ct (todate 13ct) ; DPS 4ct
|
Stock |
Period |
DPS ct |
Price |
Yield |
PE |
Div Breakdown |
|---|---|---|---|---|---|---|
|
SPH |
FY07 – Aug |
26.0 |
S$4.54 |
5.727% |
14.19 |
Interim 7ct ; Final 9ct + 10ct (Special) |
|
SingPost |
FY07 : Mar |
6.25 |
S$1.09 |
5.734% |
14.95 |
Q1 1.25ct ; Q2 1.25ct ; Q3 1.25ct ; Q4 2.5ct |
|
Sing Food |
FY06 : Dec |
5.4 |
S$0.80 |
6.750% |
13.56 |
Interim 2.2ct ; Final 3.2ct |
|
Stock |
Period |
DPS ct |
Price |
Yield |
PE |
Div Breakdown |
|---|---|---|---|---|---|---|
|
SBSTransit |
FY06 : Dec |
28.5 |
S$2.95 |
9.661% |
15.96 |
Interim 5ct ; Final 6.5ct + Special 17ct |
|
ComfortDelgro |
FY06 : Dec |
11.0 |
S$1.91 |
5.759% |
16.19 |
Interim 3.125ct + Special 3.375 ; Final 3ct + Special 1.5ct |
|
SMRT |
FY07 : Mar |
7.25 |
S$1.61 |
4.503% |
18.09 |
Interim 1.5ct ; Final 5.75ct |
|
Stock |
Period |
DPS ct |
Price |
Yield |
PE |
Div Breakdown |
|---|---|---|---|---|---|---|
|
SingTel |
FY07 : Mar |
20.6 |
S$3.88 |
5.309% |
16.69 |
Interim 4.6ct ; Final 6.5ct + Special 9.5ct |
|
M1 |
FY06 : Dec |
13.3 |
S$2.01 |
6.617% |
12.11 |
Interim 5.8ct ; Final 7.5ct |
|
StarHub |
FY06 : Dec |
11.5 |
S$3.00 |
3.833% |
17.05 |
Q1 2.5ct ; Q2 2.5ct ; Q3 3ct ; Q4 3.5ct |
|
Stock |
Period |
DPS ct |
Price |
Yield |
NAV |
Div Breakdown |
|---|---|---|---|---|---|---|
|
SPAus |
1H : Sep-07 |
7.2535 |
S$1.62 |
8.955% |
A$1.11 (NTA) |
1H A5.6143ct @ 1.292 |
|
MIIF |
1H : Jun-07 |
4.15 |
S$1.00 |
8.300% |
$1.19 |
1H 4.15ct |
|
MacCookPSF |
Q1 : Sep-07 |
3.03626 |
S$1.33 |
9.132% |
A$1.06 |
Q108 A2.31ct @ 1.3144 |
* SPAus and MacCookPSF DPU in A$. Yield is thus also Dependent on Exchange Rate
NOTES :
- Mkt Price is as on 30-Nov-07
- SPAus : 1H08 (Sep07) – A5.776ct (before tax) / A5.6142ct (after tax) or S7.2535ct @ 1.292 Exchange Rate fm Yahoo (Rate to be Updated on Payment Day 19-Dec-07)
- SBSTransit : Q307 (Sep) – 8ct ; Q207 (Jun) – 6ct
- SingTel : Q208 (Sep07) – Interim 5.6ct
- StarHub : Q307 (Sep) – 4ct ; Q207 (Jun) – 4ct ; Q107 (Mar) – 3.5ct
- SingPost : Q208 (Sep) – 1.25ct ; Q108 (Jun) – 1.25ct
- SMRT : Q208 (Sep07) – Interim 1.75ct
- MacCookPSF : Q108 (Sep07) – A2.625ct (Gross) / A2.31ct (After With-hldg Tax)
- Sing Food : Q307 (Sep) – 1.8ct
- SPH : FY07 (Aug) – Final 9ct + Special 10ct ; Interim (Feb) 7ct
- ComfortDelgro : Q207 (Jun) – Interim 3.35ct + Special 4.15ct
- MIIF : 1H07 (Jun) – 4.15ct
- ST Engg : Q207 (Jun) – 2ct
- M1 : 1H07 (Jun) – Interim 2.5ct + Capital Reduction 4.6ct
Thomson Medical – CIMB
There’s demand, but where’s the space?
2008 outlook
Higher baby deliveries and inpatient admissions expected in 2008, on the back of: 1) increased patient loads seen by tenant specialists, peripheral specialists and the network of Thomson Women’s Clinics, with another clinic to be added in 1H08; 2) TMC’s strong branding and reputation as the only private women’s and children’s hospital in Singapore; 3) the government’s marriage and procreation incentives; 4) an immigration boom, especially of skilled professionals of reproductive age; and 5) a still-healthy Singapore economy and relatively robust regional economies.
Room to raise rates. TMC renovated two wards this year and will be renovating another two in FY08. After renovation, it will be positioning one as a premium ward. With its fees among the lowest of the private hospitals, there remains much potential for fee hikes, particularly with its enhanced facilities.
Still room to grow? TMC’s hospital is near full occupancy at more than 80%. While it has actively rationalised space to create additional capacity and increased patient admissions by encouraging patients to be discharged earlier, we remain cautious that capacity constraints could limit its longer-term growth.
Recurring fee income from Vietnam project. We expect the group to receive US$0.5m and US$0.3m in consultancy fees in FY08 and FY09 respectively. Upon completion in 2009, the group will manage the Vietnam hospital for five years with the option for another five. Hospital management fees are typically 2-4% of revenue and 3-5% of net profit. We have not imputed fee income from hospital management in our forecasts as details are not yet available. Further upside could come from the exercise of a second option to take an equity stake of up to 25% within three years from the commencement of operation. In addition, management announced in Nov 06 that it would be undertaking project-consultancy contracts for two more greenfield women’s and children’s hospitals within the next 18-36 months on an exclusive basis.
Valuation and recommendation
Target price reduced to S$0.77 from S$0.88; downgrade to Neutral from Outperform. We have reduced our earnings estimates by 5-10% for FY09-10 on the back of potential capacity constraints (lower number of beds assumed). Following this, our target price has been lowered to S$0.77 from S$0.88, based on 15x CY09 P/E, still a 15% discount to the peer average. Stock catalysts could come from: 1) regional hospital projects and management consultancy contract wins; and 2) significant capacity expansion.
SingTel – OCBC
Challenges ahead
Growth to be constrained by S$ strength. SingTel’s regional associates have been its key driving force. Going into 2008, besides Bharti and possibly Telkomsel, we do not expect its other mobile associates to see strong growth. Even with Bharti and Telkomsel, the appreciating S$ could mean that their growth impact on SingTel is likely to be diluted. There is also the risk that SingTel might have to divest its stake in Telkomsel in the event that the dispute between Temasek Holdings and the Indonesian anticompetition body is not resolved amicably.
Nationalism against sovereign fund is negative on SingTel. Previously, one of SingTel’s key strengths was its strong parentage. However, in the current nationalistic sentiment against sovereign companies/fund, SingTel’s association with Temasek Holdings could be a disadvantage. This is particularly negative for SingTel as one of its key growth drivers has been its ability to identify and acquire undervalued mobile telcos. In the current climate, SingTel could potentially be disallowed to bid for any future regional telcos, and even if permitted, the stake is likely to be as a minority thus constraining its future growth.
Singapore to see margin compression. In the domestic front, SingTel is fighting many battles. It is trying to regain mobile market share (especially on the pre-paid segment) via attractive promotions. SingTel has also launched Mio pay TV with an equally aggressive campaign that undercut its rival and we also see it likely to embark on a “bid to win” strategy on NBN. In terms of financial impact, all these initiatives are likely stretch SingTel, and could possibly result in margin compression.
Maintain HOLD. Even though we see SingTel’s generous dividend as fairly defensive, in the current volatile market condition, our preference is predictability of earnings and maintenance of status quo. In that respect, its earnings growth is likely to face many challenges (as highlighted above both on the macro and micro fronts). The net effect of these challenges
happening at about the same time is that its earnings growth could be capped. We thus maintain our S$3.91 fair value estimate and our HOLD rating.
StarHub – OCBC
Domestic play with minimal earnings risks
Defending its turf. StarHub recently reported an impressive 3Q07 results with a 16% YoY increase in 3Q revenue to S$460.6m and with net profit up 25% YoY to S$81.4m. EBITDA improved 22% YoY to S$156.6m due to slower cost escalation, and this led to margin expansion to 35.7%. All business units did well, registering double-digit revenue growth. StarHub managed this despite the onslaught from its much bigger rival in almost all its business segments.
Mobile continues to dominate. On the mobile front, StarHub continued to grow with revenue up 11% YoY to S$233.7m in 3Q. Sequentially, subscriber growth was 3.0% and revenue growth was 5.3%, implying OEM of 1.75x. This is even more remarkable as growth came from the price sensitive prepaid segment and despite SingTel’s aggressive strategy to capture market share. Going into 2008, with the introduction of number portability, we expect competition to become more intense. However, if StarHub remains disciplined in its focus on profitability (as opposed to market share), it is likely to continue to deliver growth.
Cable TV to see stiff competition. In 2008, we anticipate SingTel to ramp up its promotion of Mio TV to try to capture market share. However, until SingTel improves on its content offerings, StarHub is likely to reign supreme in this area. As for margins, the recent revision of rates should arrest any decline post the EPL rights.
Upgrade to BUY on low earnings risks. Starhub’s investment case remains its domestic exposure and its ability to continue to provide growth from a mature market via innovative marketing strategies such as its bundling of services also known as Hubbing. Furthermore, even in the face of the onslaught from SingTel to garner pre-paid market share, StarHub remains steadfast and somehow has managed to balance subscribers’ growth with revenue growth to provide OEM of over 1.5x. Even on the pay-TV space, it continues to reign supreme and we do not see SingTel’s Mio as likely to threaten its supremacy in content in the short to medium term. Since our downgrade to HOLD in early Nov, StarHub has corrected by about 4%. At present trading range, we see meaningful upside. This together with a dividend of 16 cents (5.3% yield) and the fact that it is a pure Singapore play make StarHub an attractive alternative and safer proposition. We thus upgrade StarHub to BUY with a revised fair value of S$3.41.
M1 – OCBC
High yield defensive play
Good results due to lower costs and interest expenses. MobileOne (M1) recently delivered a good set of 3Q07 results. Revenue came in at S$200.2m (flat QoQ, +5.8% YoY) with net profit at S$43.6m (+8.0% QoQ, +1.6% YoY). The stronger sequential bottom-line was due to lower operating expenses (specifically due to lower handset costs) and borrowing costs (due to debt repayment).
Number portability likely in 1H08. Moving into 2008, M1 expects mobile number portability (MNP) to be introduced by 1H08. Prior to MNP introduction by regulators, the market place is likely to heat up with the 3 telcos attempting to tie up customers with attractive promotions. Presently, we are seeing some evidence of pre-MNP competition. More importantly, this in turn is likely to raise acquisition and retention costs, thus eroding margins even more. However, unlike its rivals, M1 does not offer many other services to spread its costs. As such, we see MNP to be negative to M1.
Opportunity for wireless broadband. In order to capitalize on the broadband market growth, M1 has launched its High-Speed Packet Access (HSPA) which is a wireless broadband system piggybacking on its 3G network. The new system will offer downlink of 3.6Mbps or 9-10 times faster than current speed. However, the window of opportunity on its mobile system could be short-lived with the roll-out of the free wireless broadband access under the proposed National High Speed Network. Indeed with M1’s introduction of its wireless broadband, its rival has recently also launched similar offering.
M1 is a defensive yield play. M1 has underperformed over the last 12 months losing over 8% in capital value. We believe the key reason is due to its inability to grow and that is as a result of its limited telco service offerings. M1 remains a very profitable business with ROE of over 21% (compared to SingTel’s 4.8%), albeit mature and with not much growth. However, its key attraction remains its very generous dividend policy of paying out at least 80% of profits. For FY08, we project a payout of 15 cents giving investors a return of about 8%. This together with a potential upside of about 20% to our fair value of S$2.33 makes M1 a very attractive and defensive proposition. We maintain our BUY rating.