Month: March 2010
SingTel – BT
SingTel offers cheaper broadband solution for ships
SINGTEL is making innovative use of technology to bring down the cost of high speed broadband services at sea which can potentially save up to US$120,000 in infrastructure costs per vessel.
The first in Asia solution was launched this week and aims to reach out initially to the existing fleet of at least 1,500 vessels in the Asia-Pacific region that are already equipped with television receive only (TVRO) antennae with an expected market share of 5 per cent to 10 per cent within three years. Other potential users include floatel operators and interest may even extend down to the so-called middle segment of smaller bulk carriers and high-end yachts.
The solution offers unlimited broadband connectivity with a download speed of 2Mbps, and is available on a subscription basis from US$1,999 per month. Its development was co-funded by the Maritime and Port Authority of Singapore’s Maritime Innovation and Technology Fund.
‘In the past, the cost of satellite infrastructure prevented many maritime companies from equipping their ships with high-speed broadband services,’ said executive vice-president of Business Group Bill Chang.
Not only will the cost of equipment be reduced but data costs will also come down with SingTel offering an affordable package. ‘We are the only telco and satellite operator that has now integrated this in a commercial offering,’ said vice-president of Satellite Titus Yong.
SingTel’s current satellite provides good coverage in the Asia-Pacific and with the launch of its new satellite within a year, this will be extended to the Mediterranean area as well. SingTel is in talks with another satellite operator to provide North American coverage, which should be tied up soon, Mr Yong revealed.
Among the services that will become possible with the new service is SingTel’s recently launched suite of entertainment services including the first-of-its-kind Karaoke-On-Demand service. In addition, seafarers can also enjoy a wide selection of movies and content with SingTel’s maritime video-on-demand service.
Other possible applications include e-learning programmes, downloading of e-books and web-based TV content.
SingTel is also working with local content providers from the countries where ships’ crews predominantly come from such as the Philippines to provide more programming from home.
ComfortDelgro – DB
Double digit growth in Feb10 rail ridership
ComfortDelgro’s Feb10 figures showed a strong growth in rail and a slower turnaround in bus ridership. Rail ridership rose by 11.8% YoY to 0.4m while bus ridership declined by 4.7% YoY to 2.3m.
On a YTD basis, rail ridership grew 10.3% YoY, above our forecast of 8.0% YoY in 2010. While bus ridership, came in below our forecast of 2.0% YoY, declined 0.8% YoY. We expect bus ridership to turnaround in the 2Q10 onwards, helped by the recovery in the economy and a low base.
Maintain buy on CD, but SMRT remains our top pick for the sector. TP of S$1.75 implies a PE of 14.8x for FY10E. Key risks are: 1) a sharp increase in diesel prices; 2) forex; 3 potential regulatory actions affecting both domestic and overseas ventures.
SingPost – DBS
The hunt for acquisition?
• Strong credentials help Singpost raise cheap debt.
• Potential investments should more than offset weakness due to higher terminal dues.
• HOLD with TP of S$1.05 based on 6% target yield.
Strong credentials help Singpost raise cheap debt. Singpost is issuing S$200m 10-year notes at fixed rate of 3.5% per annum. The company intends to use the proceeds for (i) working capital requirements (ii) machine related capex and (iii) regional investments. S&P has rated the notes as AA-, the same rating that Singpost secured for its S$300m notes issued in 2000. Although, not reflected in our model yet, it would raise FY10F net debt to equity to 1.3x from 0.5x.
Free cash flow adequate for capex and working capital, in our view. Management had earlier indicated that capex for replacement or upgrade of its mail-sorting machine in 2013-2014 would be S$70m-S$100m. Assuming dividend payout of S$130m cash (6.7 Scts DPS) and S$30m cash to be retained each year, Singpost should generate sufficient operating cash to fund machine capex in 2013-14. We do not see any issue with refinancing of existing notes in 2013 either
Potential investments (if any) could more than offset weakness due to higher terminal dues. While Singpost has not indicated anything specific, our key assumption is that Singpost can make S$200m worth of investments in the region (possibly logistics industry as indicated earlier) at a reasonable 12-13x PER, similar to its own. After deducting the cost of debt, the investments would still add S$10m or 6% to Singpost FY11F earnings. This should offset potential weakness of up to 5% due to higher terminal dues (interoperator charges) in the international mail segment as Singapore has been re-classified as a developed country from March 2010 onwards (was not reflected in our model).
SATS – DBS
Better results on the cards
• Air travel recovery faster than expected
• Project 20% yoy rise in 4Q earnings, ending FY10 at S$185.4m, above mean estimates
• Overall market growth more than offset potential entry of 3rd Ground Handler
• Reiterate Buy, TP raised to S$3.20
Project 20% growth yoy for 4Q10F. Most recent data from Changi Airport showed flights, passengers and cargo grew by 5.5%, 10.1% and 20% yoy respectively in Jan'10. We project SATS to show a 4Q10F net profit growth of 20% yoy, ending its full year at S$185.4m, above mean and our original estimates of S$178m. We are also expecting a final dividend of 8 Scents, bringing full year DPS to 13 Scents (76% payout). Going forward, we expect continued recovery in its aviation division, driven by a projected surge in CY2010 tourist arrivals (11.5m-12.5m: STB).
Market growth more than offset entry of 3rd player. The potential entry of a 3rd ground handler could happen soon, given that Changi Airport Group called for tender in Nov'09. In our view, the two likely candidates are Aero-Care and JetStar/AirAsia. We have factored in a 2ppt decline in its share of passengers handled from FY11F. However, SATS will benefit from market growth, which more than offset any potential erosion of market share, in our view.
Reiterate Buy, TP raised to S$3.20. We raised our FY10F forecast by 4% and FY11F/12F by c.2%, factoring in (i) higher pax/cargo handled; (ii) higher contribution from JVs; (iii) lower interest expenses, but offset partially by lower market share assumed. We adjust up our TP to S$3.20, from S$3.09. The counter is trading at 15.2x FY10F PE, but in view of its strong CAGR of 17%, this is projected to decline to 12.1x in FY12F. Valuations are still reasonable at prospective PE of 13.6x, P/B of 1.8x and a yield of c.5.4% (on FY11F earnings), which will support share price.
MIIF – BT
MIIF sells Arqiva stake
SHARES of Macquarie International Infrastructure Fund (MIIF) rose 3.7 per cent yesterday after it announced that it has agreed to sell its 8.7 per cent interest in Arqiva in the UK for a total cash consideration of £116.5 million (S$244.9 million).
The net proceeds are expected to total $240.1 million, said MIIF, which is now targeting acquisitions in Asia.
The announcement, made before the start of trading, led the stock to close up two cents at 56 cents, after touching an intraday high of 58 cents.
The divestment will be made to three infrastructure investors, all of which are existing shareholders of Arqiva.
‘Following the sale of MIIF’s interest in Arqiva, its portfolio will comprise entirely of direct investments in Asia. This will be a significant milestone for MIIF,’ said John Stuart, CEO of MIMAL, MIIF’s manager. ‘Importantly, the proposed sale is at a significant premium to the value implied by MIIF’s prevailing share price.’
Assuming the sale of MIIF’s interests in Arqiva as well as Macquarie European Infrastructure Fund and Canadian Aged Care, MIIF is expected to have a cumulative cash balance at the end of May this year of approximately $474.0 million which equates to 35 cents per share. The value of MIIF’s remaining investments is $523 million, or 39 cents per share, according to the fund.
‘MIIF’s management is now focused on identifying attractive acquisition investments in Asia. With this significant cash balance, MIIF is well positioned to capitalise on these opportunities should they arise in the course of the year,’ said Mr Stuart.
Other options include a share buy-back or payment of a special dividend, he added.