Month: November 2009
StarHub – CIMB
Highlights from roadshow
• Maintain Neutral. We brought StarHub on a non-deal roadshow following the release of its 3Q09 results, which left us slightly more positive on the telco. StarHub provided a detailed analysis of the impact from the loss of BPL broadcast rights. We met eight investors. Discussions mostly centred on the loss of the BPL rights, and the ESPN Star Sports (ESS) suite of channels, NGNBN, capital management and revenue growth. StarHub was represented by its CEO, Mr Terry Clontz and its Head of Investor Relations and Corporate Communications, Ms Jeannie Ong. We retain our earnings forecasts, DCF target price (WACC 9.7%) of S$2.15 and Neutral rating.
• Revisiting the BPL and ESS losses. After dissecting its subscribers into various risk profiles, StarHub believes that fewer than 10% of its subscribers would churn. In the worst case, it noted that the BPL and ESS losses would not hurt its EBITDA or free cash flow as subscriber losses would be compensated by lower content costs.
• Negative impact from NGNBN. While StarHub does not see much competition in the residential segment except from M1 because of high international bandwidth costs, we believe M1 will pack a punch with its ability to bundle and cross-sell to its mobile customers. We also believe that the small market would not entice large players. However, the corporate market would likely attract foreign telcos looking to service their MNC clients in Singapore. Overall, we believe NGNBN will be negative for StarHub, with gains from inroads in the corporate segment insufficient to make up for the loss of its duopoly in the residential market.
November 2009
Results Announcement
- 3 Nov 09 : STEng (Q309) – EPS 4.01ct (to date 10.47ct)
- 10 Nov 09 : StarHub (Q309) – EPS 4.97ct ( to date 14.34ct) ; Div 5ct (to date 14ct)
- 11 Nov 09 (AM) : MIIF (Q309) – No DPU as Semi-Annual Payout Policy ; NAV $0.81
- 11 Nov 09 (AM) : SingTel (Q210) – EPS 6ct (to date 11.95ct) ; DPU 6.2ct
- 11 Nov 09 : SBSTransit (Q309) – EPS 3.44ct (to date 13.94ct)
- 12 Nov 09 (AM) : SPAusNet (1H10) – Div A4ct
- 12 Nov 09 : ComfortDelgro (Q309) – EPS 2.67ct (to date 7.93ct)
STI = 2732.12 (-30.10)
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Stock
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Period
|
DPS ct
|
Price
|
Yield
|
PE
|
Div Breakdown
|
|
SPH
|
FY09 : Aug
|
25.0
|
S$3.73
|
6.702%
|
14.35
|
Interim 7ct ; Final 9ct + 9ct (Special) |
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SingPost
|
FY09 : Mar
|
6.25
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$0.975
|
6.410%
|
12.62
|
Q1 1.25ct ; Q2 1.25ct ; Q3 1.25ct ; Q4 2.5ct |
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STI ETF
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Jun-09
|
4.0
|
S$2.81
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2.847%
|
—
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Jun09 4ct ; Dec08 5ct ; Jun08 6ct |
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STEng
|
FY08 : Dec
|
15.8
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S$3.03
|
5.215%
|
19.15
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Final 4ct + 8.8ct (Special) ; Interim 3ct |
Transport
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Stock
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Period
|
DPS ct
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Price
|
Yield
|
PE
|
Div Breakdown
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|
SBSTransit
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FY08 : Dec
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6.6
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S$1.70
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3.882%
|
12.89
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Interim 3ct ; Final 3.6ct |
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ComfortDelgro
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FY08 : Dec
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5.0
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S$1.48
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3.378%
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15.43
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Interim 2.6ct ; Final 2.4ct |
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SMRT
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FY09 : Mar
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7.75
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S$1.76
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4.403%
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16.45
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Interim 1.75ct ; Final 6.0ct |
TELCO
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Stock
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Period
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DPS ct
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Price
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Yield
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PE
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Div Breakdown
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SingTel
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FY09 : Mar
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12.5
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S$2.93
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4.266%
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13.52
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Interim 5.6ct ; Final 6.9ct |
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M1
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FY08 : Dec
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13.4
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S$1.73
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7.746%
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10.30
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Interim 6.2ct ; Final 7.2ct |
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StarHub
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FY08 : Dec
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18.0
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S$1.94
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9.278%
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10.61
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Q1 4.5ct ; Q2 4.5ct ; Q3 4.5ct ; Q4 4.5ct |
Funds / Infrastructure
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Stock
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Period
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DPS ct
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Price
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Yield
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NAV
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Div Breakdown
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SPAus
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1H10 : Sep09
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A4.0 (Gross)
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S$1.09
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9.287%
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A$0.91 (NTA)
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2H09 A5.6578ct ; 1H09 A5.7431ct |
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MIIF
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1H : Jun-09
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1.5
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S$0.435
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6.897%
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$0.81
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2H08 3.0ct ; 1H08 4.25ct |
* SPAus DPU in A$. Yield is Calculated Using Latest Exchange Rate (1.2654) fm Yahoo
NOTES :
- Mkt Price is as on 30-Nov-09
- SPAus : 1H09 (Sep08) – A4ct (before tax) / Est. A3.8113ct (after tax)
- SingTel : 1H10 (Sep09) – Interim 6.2ct
- StarHub : FY09 Div Policy 19ct ie. Q1/Q2 : 4.5ct ; Q3/Q4 : 5ct
- StarHub : Q309 (Sep) – 5ct ; Q209 (Jun) – 4.5ct ; Q109 (Mar) – 4.5ct
- SMRT : Q210 (Sep09) – Interim 1.75ct
- SingPost : Q210 (Sep09) – 1.25ct ; Q110 (Jun09) – 1.25ct
- SPH : 2H09 (Aug) – Final 9ct ; Special 9ct ; 1H09 (Feb) – 7ct
- ComfortDelgro : Q209 (Jun) – 2.63ct
- SBSTransit : Q209 (Jun) – 4.5ct
- MIIF : 1H09 (Dec) – 1.5ct
- ST Engg : Q209 (Jun) – 3ct
- M1 : 1H09 (Jun) – Interim 6.2ct
- SPAus : Projected DPU = A8ct (FY10 – Year End Mar-10) ; 1-for-4 Rights @ A$0.78/S$0.86
- MacCookPSF : Removed from this Blog from Nov-09 as it’d stopped paying dividends and Does Not Qualify as a Yield Stock. Q409 (Jun09) – DPU Decision Deferred, SGX 10-Aug-09 ; Last DPU Paid was Q209 (Dec08)
TELCO – AmFraser
Mobile broadband bumps numbers up
Investment Highlights
• IDA statistics show aggregate residential and corporate broadband subscribers grew a strong 9% QoQ in 3Q09 to 1.6 million. But fixed broadband (BB) subscribers – predominantly xDSL and cable modem subscribers – grew a slower 3% QoQ to 1.1 million. The fixed BB market share continued to fall from 77% at end 2008 to 66%.
• Mobile broadband provided boost, surging 26% QoQ to 560,000 subscribers. Voracious appetite for Internet access over mobile networks via smartphones and laptops, remain unabated. Via laptop access alone, M1 reported a 9% QoQ rise in mobile data users to 149,000. Including those accessing via smartphones, M1’s base is 35% higher at 201,000, after net adds of nearly 8,000/month in 3Q09. SingTel added a much stronger 27,000/month by this broader measure to 306,000 subscribers, attributed largely to its launch of the new iPhone 3G S. StarHub does not disclose its mobile data user base, but revealed a 36% QoQ surge in mobile data traffic to 2.2 million gigabytes in 3Q09.
• StarHub continues to take fixed broadband market share from SingTel. StarHub’s cable modem platform enjoyed net adds of 7,500/month in 3Q09, far exceeding net add of 1,100 for xDSL users on SingTel’s platform. That said, much of StarHub’s net adds were due to its free 1Mbps offering bundled with its HubStation service (a value-added cable TV set-top box). As StarHub reported 392,000 paying broadband subscribers, its free 1Mbps service accounted for net adds of 6,500/month. Overall, cable modem BB had a market share of 52%, with xDSL having 48%. StarHub’s paying cable modem base had a share of 36%.
• Legacy broadband approaching saturation. While IDA reports household broadband penetration at 129%, this figure is being bumped up by double counting from the inclusion of mobile broadband. We estimate household broadband penetration at closer to 80%, stripped of mobile BB. Even so, this represents a saturated market for broadband. On paid BB services, take-up has been hovering at an unexciting 1% QoQ growth in recent quarters. We project StarHub reporting 6% YoY growth in paying broadband subscribers to 397,000 for FY09, and SingTel to report 2% YoY growth to 510,000 for FY10 (YE March).
• Broadband ARPU to fall in run-up to NGNBN. After a 7% QoQ fall in 2Q09, StarHub continued to see a 2% QoQ fall in 3Q (to S$50/month) due to down-trading of broadband speeds. SingTel fared better at -1% QoQ fall in 3Q09 (to S$59.5/month) and flat for the previous quarter. In the run-up to the commercial launch of the Next Generation National Broadband Network (NGNBN) in 2Q10, we expect downward pressure on broadband ARPU to continue.
• Next growth phase from NGNBN from 2Q10. NBN’s network rollout by OpenNet (NetCo in which SingTel has 30%-stake) is scheduled for 60% completion by end 2009. After which, Nucleus Connect (StarHub’s 100%-owned OpCo) will start to wholesale fibre connectivity in 2Q10. As NBN provides broadband speeds starting from minimum 100Mbps, scalable up to 1 Gbps, Retail Service Providers (RSPs) will be tagging on advanced applications and services for a higher value proposition. M1, StarHub and SingTel will be participating as RSPs, among other entrants to broadband.
• New NBN opportunities have biggest impact on M1. We think incremental benefit will be felt most at M1, which is hitherto a mobile service provider while NBN opens up a new revenue stream. Whereas incremental benefit to StarHub and SingTel will be more marginal as they shift their legacy broadband base over to NBN.
• Reiterate BUY rating on M1 with fair value at S$2.20/share. Maintain HOLD ratings on StarHub and SingTel.
SingTel – BT
SingTel to conduct 4G trials in S’pore, region
SINGAPORE Telecom and its partners will begin a trial in the first half of next year to test a 4G mobile technology that can wirelessly deliver broadband content to and from mobile devices much faster than what is commonly available now.
The telco said yesterday that it is testing a technology known as Long Term Evolution (LTE), which promises top speeds of up to 340Mbps – zippy enough to deliver high-definition TV content to mobile device users. SingTel’s trial will cover Singapore, Australia, Indonesia and the Philippines. The telco will join hands with its Australian subsidiary Optus, as well as Indonesia’s Telkomsel and the Philippines’ Globe Telecom.
Six network vendors – Alcatel-Lucent, Ericsson, Huawei, NEC, Nokia Siemens Networks and ZTE – have also been invited to take part.
In a statement, SingTel said that the trial will help the parties involved ‘better understand LTE and determine the best approach and strategy for its adoption in their respective local markets’. It will also lay the groundwork to establish a ‘regionally compatible’ LTE network.
‘LTE will open doors to new and more powerful mobile solutions that will transform the way our customers across the region live, work and play,’ said Lim Chuan Poh, SingTel’s CEO International Group. There is no indication when SingTel might roll out commercial LTE services. ‘We will make a decision on the launch date after the trials,’ a SingTel spokesman told BT.
‘The time frame for the launch of commercial LTE services is dependent on the availability of spectrum slots and LTE mobile devices,’ he noted.
LTE has been coined a fourth-generation – or 4G – wireless technology and is expected to succeed the popular High Speed Packet Access (HSPA) technology.
Demand for mobile broadband services has soared in recent years, sparked by the proliferation of Internet-savvy smartphones such as Apple’s iPhone. This demand has fanned interest in upcoming mobile broadband technologies such as LTE.
According to market research firm IDC, there will be 43.6 million HSPA connections by year-end in the Asia-Pacific region excluding Japan. Juniper Research said that the market for LTE services will exceed US$70 billion globally by 2014.
SingTel currently offers mobile broadband plans with download speeds of up to 7.2Mbps, but said that its HSPA network is capable of supporting 21Mbps. StarHub and MobileOne both have plans with download speeds of up to 21Mbps.
SingTel, StarHub – BT
SingTel officially rejects StarHub offer
IT looks like the ugly spat between SingTel and StarHub over whose hardware to use may have come to an end, with Singapore’s No 1 telco officially rejecting StarHub’s offer to host its pay-TV content after it received a formal proposal from the green camp last week.
‘The feature functionality of our platform is superior to theirs, and our users will get a much better experience when they view our channels,’ said SingTel’s chief executive Allen Lew yesterday.
‘At the end of the day, we are a pay-TV operator. For pay-TV operators, there is a very strong differentiation we can create from the quality of the content, the quality of the infrastructure and the features that we have. So three of these things working together help us build up value in our TV system.’
In addition, SingTel has already invested in its own pay-TV infrastructure, he said.
When contacted, StarHub confirmed that it was notified of SingTel’s decision yesterday.
‘We have heard from many customers who are concerned about linking multiple boxes to their TV sets, and are therefore disappointed with SingTel’s decision as our proposal was aligned with public interest and consumers’ wishes,’ said a StarHub spokesman.
‘While we support a universal set-top box solution that would be operator agnostic, like mobile number portability and unlocked SIM cards, it now appears that a single set-top box option for consumers will not happen through just commercial negotiation.’
The formal decline likely puts an end to the saga which began soon after SingTel outbid StarHub to score the sought-after broadcast rights for the next three seasons of the English Premier League (EPL).
Besides winning the coveted rights, SingTel also convinced ESPN Star Sports to migrate from cable to its mio TV platform.
What followed was a flood of complaints from viewers about having to deal with multiple set tops to view entertainment and sports content starting next year.
This culminated in an offer to SingTel from Star- Hub’s chief executive Terry Clontz to host SingTel’s content on its network, and to allow SingTel to carry its exclusive content like HBO on the mioTV platform.
Last week, SingTel said that StarHub’s older set-top boxes might need to be upgraded if viewers want to make the most of the upcoming NGNBN (Next-Generation National Broadband Network), a new fibre-optic network capability that will be rolled out nationwide from next year.
StarHub refuted the remark, saying it ‘completely disagrees with any claims about technological reasons’ for not accepting its proposal. It added that it was untrue that customers with older set-top boxes would have to get them upgraded next year.
Yesterday, SingTel and ESPN STAR Sports launched their 24/7 sports news channel, ESPNEWS, on the mio TV platform.
Touted as the ‘sports news channel specially dedicated to Asian sports fans’, ESPNEWS will deliver content from local, regional and international sporting events by providing a continuous update of news, latest team or player standings, rankings and statistics from the top professional leagues around the world, SingTel and ESPN STAR Sports said in a joint statement.
Currently launched with an English voice-over, the channel will also be available in Cantonese and Malay once the network is launched in Hong Kong and Malaysia, said ESPN STAR Sports managing director Manu Sawhney.