Month: September 2010
STEng – Kim Eng
Currency concerns
What’s New
• With the US dollar at an all‐time low, we reiterate that a weak greenback is negative for ST Engineering. The recovery of the aerospace market has also been relatively muted. However, ST Engineering’s (STE) dividend yield is still attractive at 3.9%. Maintain HOLD and target price of $3.15.
Our View
• The US dollar has slid by 6% against the Singapore dollar over the past three months, weakening to an all‐time low of S$1.317. We note that the majority of STE’s commercial contracts are in US dollars, while a significant cost base is in Singapore dollars. STE had previously guided that every one cent decline in the exchange rate would translate to a S$1.3m slide in earnings.
• Furthermore, we continue to expect the aerospace market to lag in its recovery. Typically, the first positive impact on the MRO industry will come to line maintenance and eventually to heavy maintenance, which ST Aerospace is focused on. While we had anticipated a gradual pickup in this division, ongoing concerns over the US economic recovery and a lack of new orders suggest that this business will take longer to get back up to speed.
• STE’s last reported orderbook at 2Q10 was $11.3b, providing a baseload for the next three years. The company expects to convert about $2.2b in 2H10, which reinforces our expectation of 4.6% revenue growth for the full year. However, we may see a gradual dwindling of its orderbook for the reasons stated above, unless there is a pickup in overall business. Its recent contract to procure trainer aircraft and ground solutions to the Republic of Singapore Air Force for $543m is expected to have thinner margins due to the high equipment content.
Action & Recommendation
Our FY10 earnings forecast stands at $476.1m, which is slightly below consensus but still in line with management’s guidance. We are leaving our forecast unchanged, as the forex decline should be capped at around $10‐15m for now. Our forecast also implies healthy earnings growth of 7% and a dividend yield of 3.9%. STE’s stock price has held steady over the past few months, but at 21x FY10F earnings, we believe the stock is fully valued. Maintain HOLD.
September 2010
Results Announcement
- 12 Oct 10 : SPH (Q410)
STI = 3097.63 (-8.40)
|
Stock |
Period |
EPS cts |
DPS cts |
Mkt |
Yield |
PE |
Div Breakdown |
|
SPH |
FY09 (Aug) |
26 |
25 |
$4.25 |
5.882% |
16.35 |
Interim 7ct ; Final 9ct + 9ct (Special) |
|
SingPost |
FY10 (Mar) |
8.563 |
6.25 |
$1.22 |
5.123% |
14.25 |
Q1, Q2, Q3 1.25ct ; Q4 2.5ct |
|
STI ETF |
Jun-10 |
— |
3 |
$3.14 |
1.911% |
— |
Jun10 3ct ; Dec09 3ct |
|
SATS |
FY10 (Mar) |
16.7 |
13 |
$2.85 |
4.561% |
17.07 |
Final 8ct ; Interim 5ct |
|
ST Engg |
FY09 (Dec) |
14.78 |
13.3 |
$3.36 |
3.952% |
22.73 |
Final 4ct + 6.28ct (Special) ; Interim 3ct |
Transport
|
Stock |
Period |
EPS cts |
DPS cts |
Mkt |
Yield |
PE |
Div Breakdown |
|
SBSTransit |
FY09 (Dec) |
17.75 |
8.8 |
$1.86 |
4.731% |
10.48 |
Interim 4.5ct ; Final 4.3ct |
|
ComfortDelGro |
FY09 (Dec) |
10.52 |
5.3 |
$1.52 |
3.487% |
14.45 |
Interim 2.63ct ; Final 2.67ct |
|
SMRT |
FY10 (Mar) |
10.7 |
8.5 |
$2.05 |
4.146% |
19.16 |
Interim 1.75ct ; Final 6.75ct |
TELCO
|
Stock |
Period |
EPS cts |
DPS cts |
Mkt |
Yield |
PE |
Div Breakdown |
|
SingTel |
FY10 (Mar) |
24.55 |
14.2 |
$3.14 |
4.522% |
12.79 |
Interim 6.2ct ; Final 8ct |
|
M1 |
FY09 (Dec) |
16.8 |
13.4 |
$2.19 |
6.119% |
13.04 |
Interim 6.2ct ; Final 7.2ct |
|
StarHub |
FY09 (Dec) |
18.68 |
19 |
$2.58 |
7.364% |
13.81 |
Q1 4.5ct ; Q2 4.5ct ; Q3 5ct ; Q4 5ct |
Funds / Infrastructure
|
Stock |
Period |
DPS cts |
Mkt |
Yield |
NAV |
Div Breakdown |
|
SPAus |
2H10 (Mar-10) |
A4.0 (Gross) |
$1.090 |
9.344% |
A$0.94 |
2H10 A4.0ct ; 1H10 A4.0ct |
|
MIIF |
1H – Jun10 |
1.50 |
$0.545 |
5.505% |
$0.830 |
2H09 1.5ct ; 1H09 1.5ct |
* SPAus DPU in A$. Yield is Calculated Using Latest Exchange Rate (1.2731) fm Yahoo
NOTES :
- Mkt Price is as on 30-Sep-10
- SBSTransit : Q210 (Jun) – 4.5ct
- ComfortDelgro : Q210 (Jun) – 2.7ct
- MIIF : 1H10 (Jun) – 1.5ct
- StarHub : Q210 (Jun) – 5ct ; Q110 (Mar) – 5ct
- ST Engg : Q210 (Jun) – 3ct
- SingPost : Q111 (Jun10) – 1.25ct
- M1 : 1H10 (Jun) – Interim 6.3ct
- SingTel : 2H10 (Mar10) – Final 8ct ; 1H10 (Sep09) – Interim 6.2ct
- SPAus : 2H10 (Mar10) – A4ct (before tax) / A3.7739ct (after tax) ; 1H10 (Sep09) – A4ct (before tax) / A3.8113ct (after tax)
- SATSvcs : Q410 (Mar10) – Final 8ct ; Q210 (Sep09) – Interim 5ct
- SMRT : Q410 (Mar10) – Final 6.75ct ; Q210 (Sep09) – Interim 1.75ct
- SPH : 1H10 (Feb) – 7ct
- StarHub : FY10 Div Policy 20ct ie. 5ct/Q
September 2010
Results Announcement
- 12 Oct 10 : SPH (Q410)
STI = 3097.63 (-8.40)
|
Stock |
Period |
EPS cts |
DPS cts |
Mkt |
Yield |
PE |
Div Breakdown |
|
SPH |
FY09 (Aug) |
26 |
25 |
$4.25 |
5.882% |
16.35 |
Interim 7ct ; Final 9ct + 9ct (Special) |
|
SingPost |
FY10 (Mar) |
8.563 |
6.25 |
$1.22 |
5.123% |
14.25 |
Q1, Q2, Q3 1.25ct ; Q4 2.5ct |
|
STI ETF |
Jun-10 |
— |
3 |
$3.14 |
1.911% |
— |
Jun10 3ct ; Dec09 3ct |
|
SATS |
FY10 (Mar) |
16.7 |
13 |
$2.85 |
4.561% |
17.07 |
Final 8ct ; Interim 5ct |
|
ST Engg |
FY09 (Dec) |
14.78 |
13.3 |
$3.36 |
3.952% |
22.73 |
Final 4ct + 6.28ct (Special) ; Interim 3ct |
Transport
|
Stock |
Period |
EPS cts |
DPS cts |
Mkt |
Yield |
PE |
Div Breakdown |
|
SBSTransit |
FY09 (Dec) |
17.75 |
8.8 |
$1.86 |
4.731% |
10.48 |
Interim 4.5ct ; Final 4.3ct |
|
ComfortDelGro |
FY09 (Dec) |
10.52 |
5.3 |
$1.52 |
3.487% |
14.45 |
Interim 2.63ct ; Final 2.67ct |
|
SMRT |
FY10 (Mar) |
10.7 |
8.5 |
$2.05 |
4.146% |
19.16 |
Interim 1.75ct ; Final 6.75ct |
TELCO
|
Stock |
Period |
EPS cts |
DPS cts |
Mkt |
Yield |
PE |
Div Breakdown |
|
SingTel |
FY10 (Mar) |
24.55 |
14.2 |
$3.14 |
4.522% |
12.79 |
Interim 6.2ct ; Final 8ct |
|
M1 |
FY09 (Dec) |
16.8 |
13.4 |
$2.19 |
6.119% |
13.04 |
Interim 6.2ct ; Final 7.2ct |
|
StarHub |
FY09 (Dec) |
18.68 |
19 |
$2.58 |
7.364% |
13.81 |
Q1 4.5ct ; Q2 4.5ct ; Q3 5ct ; Q4 5ct |
Funds / Infrastructure
|
Stock |
Period |
DPS cts |
Mkt |
Yield |
NAV |
Div Breakdown |
|
SPAus |
2H10 (Mar-10) |
A4.0 (Gross) |
$1.090 |
9.344% |
A$0.94 |
2H10 A4.0ct ; 1H10 A4.0ct |
|
MIIF |
1H – Jun10 |
1.50 |
$0.545 |
5.505% |
$0.830 |
2H09 1.5ct ; 1H09 1.5ct |
* SPAus DPU in A$. Yield is Calculated Using Latest Exchange Rate (1.2731) fm Yahoo
NOTES :
- Mkt Price is as on 30-Sep-10
- SBSTransit : Q210 (Jun) – 4.5ct
- ComfortDelgro : Q210 (Jun) – 2.7ct
- MIIF : 1H10 (Jun) – 1.5ct
- StarHub : Q210 (Jun) – 5ct ; Q110 (Mar) – 5ct
- ST Engg : Q210 (Jun) – 3ct
- SingPost : Q111 (Jun10) – 1.25ct
- M1 : 1H10 (Jun) – Interim 6.3ct
- SingTel : 2H10 (Mar10) – Final 8ct ; 1H10 (Sep09) – Interim 6.2ct
- SPAus : 2H10 (Mar10) – A4ct (before tax) / A3.7739ct (after tax) ; 1H10 (Sep09) – A4ct (before tax) / A3.8113ct (after tax)
- SATSvcs : Q410 (Mar10) – Final 8ct ; Q210 (Sep09) – Interim 5ct
- SMRT : Q410 (Mar10) – Final 6.75ct ; Q210 (Sep09) – Interim 1.75ct
- SPH : 1H10 (Feb) – 7ct
- StarHub : FY10 Div Policy 20ct ie. 5ct/Q
SPAUSNET-BT
SP AusNet said on Friday that it has filed its defence with the Supreme Court of Victoria concerning the Feb 7, 2009, Black Saturday bushfire known as the Kilmore East fire.
SP AusNet denies it was negligent and claims that its conduct was at all times reasonable as well as in compliance with technical regulations.
The company is facing a class action with more than 600 claimants against it. The action claims that proper maintenance and correctly identifying a damaged power line could have avoided the Kilmore East fire.
SP AusNet has also made counterclaims against several parties: the Department of Sustainability and Environment, the State of Victoria (Victoria Police), the Country Fire Authority and a contracted inspector of electricity assets.
The purpose of the counterclaim is to join other parties where they may be relevant to the Court's consideration of the causes and consequences of the Kilmore East fire.
If SP AusNet's defence of the claim is successful, the counterclaim will become irrelevant and will not be pursued.
SingTel – CIMB
Smartening the pipe
• Maintain UNDERPERFORM. SingTel showcased its ambitions to become the leader in cloud computing by hosting an i.Luminate Business Innovations Forum. We view this as SingTel’s attempt to reinvent itself from being a “dumb pipe” broadband provider to one that offers businesses value-added services, much like its ambition to be a multimedia company for residential users. Cloud computing should also help SingTel retain customers with the advent of NGNBN. Riding its existing infrastructure, SingTel can provide these services across the region. While we view its move positively, we estimate that contributions from cloud computing will not be significant in the foreseeable future. Meanwhile, SingTel faces earnings pressure in Singapore, India and Australia. Hence, we maintain our UNDERPERFORM rating and SOP-based target price of S$3.09. We prefer M1 as we believe it will be the largest beneficiary of NGNBN, and offers capital-management potential.
• One-stop ICT solutions provider. SingTel wants to move up the value chain from a mere provider of managed and professional services to cloud computing i.e. SingTel has assembled solutions from many providers, offering software, platform and infrastructure services to which businesses can subscribe as and when they need them.
• SingTel’s counter-attack. We view the above as part of SingTel’s defence of its dominance in broadband services to small and medium enterprises. SingTel’s near monopoly in this market segment has been made vulnerable by NGNBN which will connect all buildings and commercial areas in Singapore with fibre optics.