Month: May 2009
SingTel – BT
MTN’s No 2 shareholder backs Bharti deal
* Mikati family would vote for tie-up
* Says proposed Bharti-MTN deal ‘fair for all parties’
* Will remain long-term MTN shareholder
MTN’s No 2 shareholder, Lebanon’s Mikati family, said it supported merger talks with India’s Bharti Airtel and would vote in favour of an initial US$23 billion cash and share swap.
Azmi Mikati, CEO of the family’s M1 Group, told Reuters in a telephone interview that a proposed deal, under which the firms take stakes in each other, was ‘fair for all parties’ and said the family would back it if a firm offer was made.
‘We are fully supportive of the transaction. It will add value for both Bharti Airtel and MTN shareholders,’ Mr Mikati said.
‘We are fully behind the transaction and the management of MTN. We will vote in favour of it. We don’t look at any transaction with short-term view, but through a long-term view.’
MTN, Africa’s biggest mobile operator and Bharti, India’s leading cellular firm, have revived talks aimed at creating the world’s third-biggest wireless group with more than 200 million subscribers and combined revenue of US$20 billion.
They are discussing an initial cash and share swap deal worth more than US$23 billion that could lead to a full merger of the companies, which have a combined market value of about Us$60 billion based on current market prices.
The Mikati family owns about 10 per cent of MTN via the M1 Group, making it the second biggest shareholder after South African state pension fund Public Investment Corporation.
The Mikati family is the first major MTN shareholder to publicly support the deal, which smaller investors have said is skewed in Bharti’s favour. They want the terms to be sweetened.
Shares in MTN extended losses after the comments, falling 1.1 per cent to 118.21 rand in brisk volume, lagging a 2-per cent firmer JSE Top-40 index of blue-chip stocks.
Bharti Airtel shares closed 3 per cent higher at 819.65 rupees, outperforming the broader Mumbai market, which gained 2.3 per cent.
The Mikati family became a major MTN shareholder when the South African firm bought its majority-owned Middle East operator Investcom in 2006.
May 2009
Result Annoucement:
- 5 May 09 : STEng (Q109) – EPS 2.84ct
- 7 May 09 : StarHub (Q109) – EPS 4.82ct ; Div 4.5ct
- 12 May 09 (AM) : SPAusNet (2H09) – EPS A6.99ct ; Div A5.927ct (Gross)
- 13 May 09 (AM) : MIIF (Q109) – EPS -6.11ct
- 13 May 09 : SBSTransit (Q109) – EPS 6.1ct
- 14 May 09 (AM) : SingTel (FY09) – EPS 5.68ct (todate 21.67ct) ; Div 6.9ct (todate 12.5ct)
- 14 May 09 : ComfortDelgro (Q109) – EPS 2.52ct
|
Stock |
Period |
DPS ct |
Price |
Yield |
PE |
Div Breakdown |
|---|---|---|---|---|---|---|
|
SPH |
FY08 : Aug |
27.0 |
S$2.96 |
9.122% |
10.96 |
Interim 8ct ; Final 9ct + 10ct (Special) |
|
SingPost |
FY09 : Mar |
6.25 |
$0.85 |
7.353% |
11.00 |
Q1 1.25ct ; Q2 1.25ct ; Q3 1.25ct ; Q4 2.5ct |
|
STI ETF |
Dec-08 |
5.0 |
S$2.37 |
4.219% |
— |
Dec-08 5ct ; Jun-08 6ct |
|
STEng |
FY08 : Dec |
15.8 |
S$2.33 |
6.781% |
14.73 |
Final 4ct + 8.8ct (Special) ; Interim 3ct |
|
Stock |
Period |
DPS ct |
Price |
Yield |
PE |
Div Breakdown |
|---|---|---|---|---|---|---|
|
SBSTransit |
FY08 : Dec |
6.6 |
S$1.59 |
4.151% |
12.05 |
Interim 3ct ; Final 3.6ct |
|
ComfortDelgro |
FY08 : Dec |
5.0 |
S$1.29 |
3.876% |
13.45 |
Interim 2.6ct ; Final 2.4ct |
|
SMRT |
FY09 : Mar |
7.75 |
S$1.59 |
4.874% |
14.86 |
Interim 1.75ct ; Final 6.0ct |
|
Stock |
Period |
DPS ct |
Price |
Yield |
PE |
Div Breakdown |
|---|---|---|---|---|---|---|
|
SingTel |
FY09 : Mar |
12.5 |
S$3.01 |
4.153% |
13.89 |
Interim 5.6ct ; Final 6.9ct |
|
M1 |
FY08 : Dec |
13.4 |
S$1.48 |
9.054% |
8.81 |
Interim 6.2ct ; Final 7.2ct |
|
StarHub |
FY08 : Dec |
18.0 |
S$2.20 |
8.182% |
12.04 |
Q1 4.5ct ; Q2 4.5ct ; Q3 4.5ct ; Q4 4.5ct |
|
Stock |
Period |
DPS ct |
Price |
Yield |
NAV |
Div Breakdown |
|---|---|---|---|---|---|---|
|
SPAus |
2H : Mar-09 |
A5.6578 |
S$0.925 |
14.034% |
A$0.89 (NTA) |
2H A5.6578ct ; 1H A5.7431ct |
|
MIIF |
2H : Dec-08 |
3.0 |
S$0.35 |
17.143% |
$0.89 |
2H 3.0ct ; 1H 4.25ct |
|
MacCookPSF |
Q2 : Dec-08 |
A1.0 (Gross) |
S$0.15 |
30.592% |
A$0.56 (NTA) |
Q209 A1.0ct ; Q109 A1.75ct |
* SPAus and MacCookPSF DPU in A$. Yield is Calculated Using Latest Exchange Rate (1.1472) fm Yahoo
NOTES :
- Mkt Price is as on 29-May-09
- SingTel : Q409 (Mar09) – Final 6.9ct ; Q209 (Sep08) – Interim 5.6ct
- SPAus : Projected DPU = A8ct (FY10 – Year End Mar-10) ; Proposed 1-for-4 Rights @ A$0.78
- SPAus : 2H09 (Mar09) – AA5.927ct (before tax) / A5.6578ct (after tax) ; 1H09 (Sep08) – A5.927ct (before tax) / A5.7431ct (after tax)
- MacCookPSF : Q309 (Mar09) DPU Decision Deferred – SGX 8-May-09
- StarHub : Q109 (Mar) – 4.5ct
- SingPost : Q409 (Mar09) – 2.5ct ; Q309 (Dec08) – 1.25ct ; Q209 (Sep08) – 1.25ct ; Q109 (Jun08) – 1.25ct
- SMRT : Q409 (Mar09) – Final 6ct ; Q209 (Sep08) – Interim 1.75ct
- SPH : 1H09 (Feb) – 7ct
- ST Engg : Q408 (Dec) – 4ct (Final) + 8.8ct (Special) ; Q208 (Jun) – 3ct
- ComfortDelgro : Q408 (Dec) – 2.4ct ; Q208 (Jun) – 2.6ct
- SBSTransit : Q408 (Dec) – 3.6ct ; Q208 (Jun) – 3ct
- StarHub : FY09 Div Policy 18ct ie 4.5ct/Q
- M1 : 2H08 (Dec) – Final 7.2ct ; 1H08 (Jun) – Interim 6.2ct
- MIIF (Dec) : 2H08 ; 3.0ct ; 1H08 (Jun) – 4.25ct
SPH – UOBKH
Advertising spending bounces back from depressed level
Advertising spending bounces back from a depressed level. Deep-value defensives will play catch-up with cyclicals, SPH being the favourite.
Corporate Events
Advertising spending is bouncing back from a depressed level. This is evidenced in our page counts of The Straits Times. The Saturday papers, the barometer of advertising spending, point to the beginning of a recovery in advertising spending. Saturday issues typically more than double the average weekday’s pagination as advertisers prefer to advertise on Saturdays. As evidenced in the table overleaf, advertising spending hit a depressed level with The Straits Times’ Saturday issues falling to around 190 pages in March compared with 270 pages a year ago and 250 pages six months ago. Pagination bottomed in April and has since rebounded to above 210 pages in May, albeit The Great Singapore Sales started two weeks ago.
Nevertheless, monthly data from ACNielsen also points to SPH’s advertising revenue (AR) contraction getting smaller from -18% yoy in March to -9% yoy in April. A similar trend is emerging in our page counts of The Straits Times, which suggest SPH’s AR contraction has improved from -22% yoy in March to -16% yoy in April.
Stock Impact/Valuation
SPH offers an attractive risk-reward proposition. As high-beta cyclicals have rallied strongly, the defensives now offer a relatively more attractive riskreward proposition and should start to attract investor interest. SPH, trading at a P/B of 2.6x, offers a 36% upside to its long-term P/B mean valuation of 3.6x. The stock will likely be favoured by investors starting to search for value among the laggard defensives that have not rallied as much as the cyclicals. In addition, SPH offers annual dividend yield of 7-8%. Maintain BUY and our target price of S$3.90, which is based on our sum-of-the-parts (SOTP) valuation of S$3.94/share.
SingPost – CIMB
Acquires 30% of Postea
Acquires Postea, a technology development company for postal services
SingPost announced this morning that it will be acquiring 30% of USA-incorporated Postea Inc. SingPost will be making a cash payment of US$9.4m and a non-cash consideration comprising intellectual property (IP) rights for its own SAM, SAM PLUS, retail system POST21 and vPOST online bill payment system to Postea valued at US$24.3m. A cash payment of US$6.4m is to be paid on 28 May 09, with the remaining US$3.0m to be paid in equal instalments of US$1m over three years on 31 Dec 09, 31 Dec 10 and 31 Dec 11. The investment will be funded by internal resources.
Postea. Postea was founded in 2007. It develops and operates companies which provide technology and support the retail environment in postal, courier and other distribution markets. It is involved in R&D and through its subsidiary, Innovations Group, Inc., is currently the prime contractor for the USPS Contract Postal Units project. With this new investment from SingPost, Postea will be able to accelerate its research and development of innovative solutions to transform postal and logistics industries globally.
Rationale for investment. SingPost “will leverage Postea’s expertise and technology to further enhance and develop its own intellectual property (IP)… SingPost aims to tap the market potential of the resultant IP together with Postea”.
Comments
In line with strategy. This is not a surprise to us as SingPost reportedly has been eyeing strategic investments for some time. This is SingPost’s second acquisition this year. In April, SingPost acquired 100% of G3 Worldwide Aspac (G3AP), which allows it to exercise full control over the operations of G3AP, in line with its intention to expand its regional business. We believe that the two acquisitions will benefit SingPost in the long term, enhancing its core postal business. With growth in its domestic postal business fairly limited, given the small population in Singapore, we are encouraged by SingPost’s move to tap regional markets via G3AP and further enhance its IP rights via Postea.
No changes to earnings estimates. As technology development and IP enhancement would take time, we make no changes to our earnings estimates for now. SingPost has indicated that its minimum dividend payout of 5 Scts p.a. will not change.
Valuation and recommendation
Maintain Neutral and DDM-derived target price (discount rate 8.5%) of S$0.80. Although dividend yields are attractive at 6-7%, we remain Neutral on the stock given limited share-price upside. Key risks to our rating would include a change in its dividend policy and higher-than expected costs.
ComfortDelgro – DB
Key takeaways from meeting with management
We hosted a group meeting for investors with the CFO and IR of CD today. Below are several key takeaways from the meeting:
1) Central planning has been delayed as the government is having consultations at the grass roots level. LTA could start to amend the bus routes in 2H09 but has not revealed plans as to how the bus industry will be deregulated.
2) CD expects its bus routes to be unaffected by the opening of Circle Line. Bidding for Downtown line has been postponed till next year and mgmt believes that they stand a good chance of winning given their prior experience operating a driverless system.
3) Question on the 41% YoY jump in insurance costs in the 1Q09. Mgmt replied that this was due to a change in the formula of calculating its insurance from burning cost (back-end loaded) to a fixed cost formula in 2009. On an annualized basis, CD’s cost of insurance would only have increased by 3.7% YoY.
4) CD has kept its hedge on its diesel and electricity costs at 50% in FY09E at an average cost that is 30% lower than the actual cost in 2008 (average price of oil was US$99/bbl in 2008).
5) Overseas operations continue to see growth. CD can benefit from long-dated fixed operating bus contracts in Australia and UK. Bus and taxi operations in China continue to perform well. However, its taxi call centre in the UK has been affected.
Maintain Buy on CD with TP of S$1.75. We remain comfortable with our earnings forecast as the company can continue to benefit from resilient ridership, moderating costs and higher overseas contribution. The stock has been an underperformer and is trading at a 25% discount to the market PE, below its long term average which is at a 22% premium to the market. We expect the stock to outperform the market if there is a pullback.