Month: September 2008
SMRT – BT
By WONG WEI KONG
SMRT Corporation Ltd, through its subsidiary SMRT Hong Kong Ltd, has entered into an agreement to acquire a 49 per cent equity interest in Shenzhen Zona Transportation Group Co Ltd (Zona), a leading road transport company in Shenzhen.
The S$89.7 million (US$62.8 million) acquisition is a significant overseas investment for SMRT. National Express Transportation Group Co Ltd (NE) will hold the remaining stake in Zona.
Said SMRT president and chief executive officer Saw Phaik Hwa: ‘This acquisition marks the beginning of a strategic relationship between SMRT and NE to further grow Zona’s transport services in Shenzhen and beyond…This acquisition is a milestone in the expansion of our business overseas.’
Following the acquisition, Zona will be an associate company under SMRT. The investment will be accretive to earnings. However, it is not expected to yield any material financial impact on SMRT’s full year FY2009 results.
STEng – BT
ST Engg US unit clinches US$393m navy deal
Phase II brings total contract value for overall missile craft project to US$642m
ST Engineering’s US shipyard unit VT Halter Marine has secured a US$393 million contract for Phase II of the Egyptian Navy’s Fast Missile Craft (FMC) project. This new deal, in addition to another US$13.5 million awarded due to changes in work scope in Phase I brings the total contract value for the overall project for the three FMCs to US$642 million.
Work commences immediately, and delivery of the first FMC is expected by mid-2012 with full completion by April 2013. ST Engineering had previously announced on Dec 1, 2005 that it had secured the initial Phase I functional design contract for approximately US$29 million. At the time, it was estimated that the programme’s value could grow to over US$450 million after Phase II was added.
Two subsequent contract modifications were awarded in November 2006 and June 2007 respectively for procuring the project’s long lead items which added US$206.5 million to the contract. Subsequent changes in the scope of work further increased the Phase I contract value to the current US$249.2 million. The contract is from the US Navy for the Egyptian Navy under its Foreign Military Sales programme.
The FMCs are designed to perform coastal patrol, surveillance, interdiction, surface strike and naval battle group support for Egypt’s naval needs of the future. These vessels will allow Egypt to maintain the security of its coastal regions for both itself and friendly countries, while denying access to the areas by any future adversaries.
Each vessel will be approximately 62 m in length and will incorporate ship signature control technology. High speed and manoeuvrability are two of the ship’s primary assets to fulfil these roles. The vessels will also incorporate numerous combat systems and electronic sensors that give them capabilities in anti-aircraft, anti-surface and electronic warfare. The Egyptian Navy has been planning a programme since the mid-1990s to replace its ageing fleet of 21 Fast Attack Craft, most of which are past their effective service lives.
‘VT Halter Marine is honoured to partner the US Navy in this Fast Missile Craft project. This Phase II contract award attests to the US Navy’s growing trust in our design capability and sophisticated engineering forte,’ said ST Marine president Chang Cheow Teck.
This contract is not expected to have any material impact on the consolidated net tangible assets per share and earnings per share of ST Engineering for the current financial year.
ST Engineering stock closed four cents lower at $2.60 yesterday.
September 2008
|
Stock |
Period |
DPS ct |
Price |
Yield |
PE |
Div Breakdown |
|---|---|---|---|---|---|---|
|
SPH |
FY07 : Aug |
26.0 |
S$3.98 |
6.533% |
12.44 |
Interim 7ct ; Final 9ct + 10ct (Special) |
|
SingPost |
FY08 : Mar |
6.25 |
S$0.955 |
6.545% |
12.30 |
Q1 1.25ct ; Q2 1.25ct ; Q3 1.25ct ; Q4 2.5ct |
|
Sing Food |
FY07 : Dec |
5.0 |
S$0.755 |
6.623% |
12.38 |
Interim 1.8ct ; Final 3.2ct |
|
STEng |
FY07 : Dec |
16.88 |
S$2.69 |
6.275% |
15.87 |
Final 4ct + 10.88ct (Special) ; Interim 2ct |
|
Stock |
Period |
DPS ct |
Price |
Yield |
PE |
Div Breakdown |
|---|---|---|---|---|---|---|
|
SBSTransit |
FY07 : Dec |
17.25 |
S$1.90 |
9.079% |
11.61 |
Interim 6ct ; Special 8ct ; Final 3.25ct |
|
ComfortDelgro |
FY07 : Dec |
10.15 |
S$1.49 |
6.812% |
13.89 |
Interim 3.125ct + Special 3.375 ; Final 3ct + Special 1.5ct |
|
SMRT |
FY08 : Mar |
7.75 |
S$1.98 |
3.914% |
20.00 |
Interim 1.75ct ; Final 6.0ct |
|
Stock |
Period |
DPS ct |
Price |
Yield |
PE |
Div Breakdown |
|---|---|---|---|---|---|---|
|
SingTel |
FY08 : Mar |
12.5 |
S$3.25 |
3.846% |
13.05 |
Interim 5.6ct ; Final 6.9ct |
|
M1 |
FY07 : Dec |
15.4 |
S$1.82 |
8.462% |
9.84 |
Interim 2.5ct + 4.6ct (Capital Reduction) ; Final 8.3ct |
|
StarHub |
FY07 : Dec |
16.0 |
S$2.58 |
6.202% |
13.78 |
Q1 3.5ct ; Q2 4.0ct ; Q3 4.0ct ; Q4 4.5ct |
|
Stock |
Period |
DPS ct |
Price |
Yield |
NAV |
Div Breakdown |
|---|---|---|---|---|---|---|
|
SPAus |
2H : Mar-08 |
A5.6225 |
S$1.21 |
10.703% |
A$1.08 (NTA) |
2H A5.6225ct ; 1H A5.6142ct @ 1.2585 |
|
MIIF |
1H : Jun-08 |
4.25 |
S$0.445 |
19.101% |
$1.25 |
1H 4.25ct |
|
MacCookPSF |
FY09 : Jun |
A1.75 (Gross) |
S$0.39 |
20.672% |
A$0.762 (NTA) |
Q408 A2.31ct @ 1.3092 ; Q308 A2.31 @ 1.2525 ; Q208 A2.31ct @ 1.2485 ; Q108 A2.31ct @ 1.3144 |
* SPAus and MacCookPSF DPU in A$. Yield is Calculated Using Latest Exchange Rate (1.1517) fm Yahoo
NOTES :
- Mkt Price is as on 30-Sep-08
- ComfortDelgro : Q208 (Jun) – 2.6ct
- SBSTransit : Q208 (Jun) – 3ct
- MIIF : 1H08 (Jun) – 4.25ct
- ST Engg : Q208 (Jun) – 3ct
- StarHub : Q208 (Jun) – 4.5ct ; Q108 (Mar) – 4.5ct
- SingPost : Q109 (Jun08) – 1.25ct
- Sing Food : Q208 (Jun) – 1.8ct
- M1 : 1H08 (Jun) – Interim 6.2ct
- MacCookPSF : FY09 (Jun) – A1.75ct (Gross ie. before with-holding tax) / Quarter ; Source : SGX
- MacCookPSF : Q408 (Jun08) A2.31ct @ 1.3092 ; Q308 (Mar08) A2.31ct @ 1.2525 ; Q208 (Dec07) A2.31ct @ 1.2485 ; Q108 (Sep07) – A2.625ct (Gross) / A2.31ct (After With-hldg Tax)
- SPAus : 2H08 (Mar08) – A5.788ct (before tax) / A5.6225ct (after tax) ; 1H08 (Sep07) – A5.776ct (before tax) / A5.6142ct (after tax)
- SingTel : Q408 (Mar) – Final 6.9ct ; Q208 (Sep07) – Interim 5.6ct
- SMRT : Q408 (Mar08) – Final 6.0ct ; Q208 (Sep07) – Interim 1.75ct
- SPH : 1H08 (Feb) – 8ct
TELCOs – DBS
Writing is on the wall – NBN
Story: The award of NetCo contract to OpenNet (SingTel consortium) is as per market expectations. Three new key points to note are:
(i) OpenNet has offered whole price of S$15 and S$50 for residential and non-residential users, compared to cap of S$25 and S$75 imposed by IDA.
(ii) SingTel would transfer its existing network to a new company called AssetCo, which would lease the network to OpenNet consortium. SingTel has committed to reduce its stake in AssetCo in another five years.
(iii) OpenNet would spend about S$2bn over the next 25 years, including up to S$750m in subsidy.
Point: We highlight three key implications for the sector:
(a) NBN to benefit consumers and business at the cost of service providers. NBN would bring a shift to regulated wholesale price and multiple retail service providers (RSP) from unregulated price and effective duopoly today. This should result in more competitive pricing and differentiated offerings. We estimate retail price could be S$25-30 per month for 100 Mbps in 2010, compared to S$45-50 for 8- 12 Mbps today. This is also supported by the fact that broadband tariff in Hong Kong is less than S$20 for 10 Mbps today.
(b) Less impact on SingTel than StarHub due to its diversified earnings base. StarHub’s existing network may not be able to compete with the high speed and competitive rates offered by NBN. Broadband business constitutes an estimated 20% of StarHub’s earnings, and less than 10% of SingTel’s earnings. These companies may have to contend with lower margin – RSP business in the future.
(c) M1 is the only beneficiary. Unlike SingTel and StarHub, M1 stands to gain from NBN by entering as retail service provider (RSP). Although, RSP opportunities may not be big due to high broadband penetration in Singapore, it would still help M1 to grow its bottom-line.
Relevance: We prefer M1 for its attractive valuations and regular dividend yield of c. 8%. We see more downside for StarHub, and believe that the large valuation gap between it and M1 should narrow going forward. We rule out capital management with FY08 results from StarHub and M1 due to higher borrowing costs. StarHub has indicated that it might wait for six months or more to refinance its debt, which will mature soon.
SPAusNet – CIMB
20/20 visibility
• Regulated and safe. Based in Australia, SPN is a regulated natural monopoly which owns Victoria’s primary electricity transmission network, an electricity distribution network in eastern Victoria and a gas distribution network in western Victoria.
• Excellent earnings visibility. SPN offers defensive qualities in the current riskaverse climate where investors are searching for revenue and earnings assurance. Following recent revenue and tariff regulatory resets in 1H08, almost 90% of its revenue has been locked in until 2011.
• No refinancing issues until Sep 2010. Despite difficult credit-market conditions, SPN successfully refinanced A$320m of debt maturing in Nov 08 through a £250m 10-year bond to raise A$535m. It has also secured a A$1.55bn bank facility in Feb 08, demonstrating its ability to access competitively priced debt. It has an A1 credit rating from Moody’s and an A- credit rating from Standard & Poor’s.
• Initiate with Outperform. We like SPN’s high earnings visibility and predictability as well as its attractive yields per stapled security. Our DCF computation (WACC 10%, terminal growth 3%) values SPN at A$1.34 or S$1.59, which offers potential upside of over 30%, supported by distribution yields of over 11%.