Month: July 2010
Thomson Medical – BT
Thomson Med net up 39% to $4.8m
THOMSON Medical Centre (TMC), which provides private healthcare services for women and children, posted a 39 per cent jump year-on-year in net profit to $4.8 million for the third quarter ended May 31, 2010.
Revenue rose 25.4 per cent to $21.83 million on the back of robust performances by both its hospital operations & ancillary services segment and specialised & other services segment. Better margins from both operations also improved gross profit margin from 42.7 per cent to 44.7 per cent. Earnings per share for the quarter were up from 1.18 cents per share in 3Q09 to 1.64 cents in 3Q10.
‘Thomson Women Cancer Centre (TWCC) and newly started Thomson Paediatric Centre (TPC) together contributed 38 per cent of (specialised and other services) segment revenue. These results are very encouraging to us as TWCC and TPC only opened in February 2009 and January 2010 respectively,’ said Allan Yeo, group chief executive. Its seven Thomson Women Clinics (TWC) accounted for 40 per cent of revenue for the segment.
‘We continue to actively look out for new high-density areas island-wide to expand our network of women’s satellite clinics under TWC,’ Mr Yeo added.
During the quarter, its specialised and other services segment grew 68.4 per cent to $6.84 million while its hospital operations & ancillary services segment increased 12.3 per cent to $15 million. In Q310 itself, TMC delivered 2,291 babies, up 2.7 per cent from 2,231 babies in Q309.
Overseas, TMC’s consultancy and management project in Vietnam – the Hanh Phuc International Women and Children Hospital – is now slated for a soft opening in October. The group’s second consultancy project in Hanoi, Vietnam will commence after a suitable site has been found.
TMC shares closed 0.7 per cent up at $0.72 yesterday.
SPH – BT
SINGAPORE – OCBC has raised its target price for Singapore Press Holdings to $4.63 from $4.31 and kept its 'buy' rating, citing stronger than expected third-quarter earnings and positive outlook for the rest of the fiscal year.
'In view of the strong results and positive outlook, we therefore believe that the group is likely to gain further traction within its various business segments,' said OCBC in a report.
But OCBC noted newsprint prices are likely to rise due to cost pressures, hence potentially increasing newsprint charge-out rates. Staff costs are also expected to rise amid higher bonus provisions.
SPH shares have risen about 7 per cent year-to-date to its last closing price of $3.93.
On Monday, SPH said its February-May net profit rose 29.9 per cent from a year ago to $164.6 million (US$119.3 million). — REUTERS
M1 – DB
1Q10 not as good as earlier thought and 2Q10 preview
1Q10 performance not as good as previously thought; stay cautious
M1 is the best performing Singapore telco YTD with its 3M share price supported to some extent by the view that the 1Q10 results were “not as bad as earlier feared”. But M1’s 1Q10 was in fact flattered by a new accounting treatment, which we believe masked 7-yr EBITDA and NPAT lows. Although margins are expected to improve in 2Q10e and continue to recover over 2010e, the new accounting treatment clearly raises some uncertainty around M1’s relative performance. We remain fundamentally cautious but maintain Hold for the yield.
New accounting treatment flattered 1Q10 financials
M1’s 1Q10 results were flattered to an extent by a new iPhone accounting treatment (currently only adopted in the sector by M1), under which a subscriber’s lifetime revenues are front-end loaded. M1 has not disclosed specific details on the methodology, but our analysis suggests 1Q10 revenues may have been boosted by approx S$10-20m. Without the accounting adjustment, we estimate the 1Q10 EBITDA margin would have compressed to approx 25-27% (vs reported 31%) and driven EBITDA to a 7-yr low while NPAT would have fallen by up to 45% YoY (vs reported -6% YoY). M1 is expected to provide more clarity on the new accounting methodology with the 2Q10e results, but its adoption does raise uncertainties around M1’s performance vs the S’pore telcos and historical trends.
Recovering margin the key theme for 2Q10e
We expect QoQ margin recovery to be the key theme when M1 announces 2Q10e results on 15 Jul. Handset revenues will remain the key driver of M1’s 2Q10e performance (despite slowing iPhone sales) and we expect total reported revenues of S$230m (+20% YoY). But otherwise, mobile service revenue growth is likely to be modest. Positively, handset costs should moderate with lower volumes sold (although acquisition cost per sub expected to stay high) and drive QoQ margin recovery to 34.5%. Overall, we expect 2Q10e EBITDA to inch up to S$79m and NPAT to reach S$40m (+7% YoY), taking 1H10 NPAT to S$79m.
DCF-derived S$2 TP; key risks include competition and fixed-line execution
Our M1 TP is derived from DCF analysis using 7.2% WACC and 0% g to reflect the long-term ex-growth nature of Singapore’s telco market. Key risks include competition, fixed-line execution and capex.
SMRT – BT
More MRT retail areas coming
SMRT shares plans for Orchard, Circle Line at launch of Esplanade Xchange
SMRT is carving out a new shopping area at Orchard MRT station – and plans more such spaces at upcoming stations on the Circle Line.
The transport group shared the plans at the launch yesterday of Esplanade Xchange – a 2,000 sq m retail enclave at the Esplanade MRT station.
Teo Chew Hoon, vice-president of SMRT’s commercial and taxi divisions, said that Orchard Xchange could be ready at the end of the year and will have a lettable area of around 1,500 sq m. The tender process for space has started and the group expects good take-up.
There are also plans for ‘a few’ Xchanges at MRT stations in Stages 4 and 5 of the Circle Line, Ms Teo said, without elaborating on where they might be. These stages of the line will run through such places as Botanic Gardens and Holland Village.
SMRT now has seven Xchanges. Esplanade Xchange is the third largest, after Raffles Xchange (about 2,400 sq m) and Tanjong Pagar Xchange (about 2,000 sq m). The group has about 29,000 sq m of retail space across the SMRT network.
Esplanade Xchange is fully let and there will be 26 shops. Tenants include the Infocomm Development Authority of Singapore’s iExperience centre, Coffee & Toast, Dunkin Donuts and IT gadget retailer Juzz1. More than 90 per cent of the outlets have opened and all will be operating by the middle of this month.
Rents at Esplanade Xchange are at ‘market rates’, Ms Teo said, declining to elaborate further. At the nearby Suntec City Mall, the committed average passing rent was $10.89 per sq ft per month in March, according to Suntec Real Estate Investment Trust’s first-quarter financial results.
Ms Teo said that Esplanade Xchange’s location is a strong selling point. It is near Suntec City, Marina Square, CityLink Mall and Bras Basah, and will be directly linked to Raffles City Shopping Centre around the middle of the month. She expects pedestrian traffic to grow after the Circle Line is completed.
Juzz1 general manager Warren Teh said that the store has about 600 walk-in customers a day, and he expects the number to grow after the link to Raffles City opens.
SMRT shares closed unchanged yesterday at $2.32.
SingTel – MS
Optus Investor Day: Key Takeaways
Quick Comment – Conclusion: We remain EW following the Optus Investor day. While the Australian business appears to be performing well in a wireless market that continues to deliver stronger growth than global peers, we see risks to the core Singapore business from NBN as well as “fairish” valuations at F’11e PE of 12.3x.
What’s new: Optus presented a bullish outlook for the Australian business at its investor day yesterday, driven principally by Optus’ continued strong growth in an increasingly attractive Australian wireless market. Opportunities may also emerge in fixed line, as the open-access National Broadband Network gradually replaces Telstra’s copper network, but these are a lot less clear. The question of a local IPO for Optus continues to be asked by the Australian financial community, but continues to be answered by SingTel management in the same way: there are no current plans to reduce SingTel’s stake in Optus, and any transaction must be value accretive.
Three Key Takeaways: 1) Australian mobile revenue growth at 8.8% in CY09 continues to comprehensively outpace other developed markets, which are flat or falling; 2) 60% of the mobile market growth is due to wireless broadband, which Australians are clearly embracing, refocusing the market away from calling to data services; 3) Optus is currently out-growing its rivals, at the expense of higher acquisition costs and consequently lower margins. Our view remains that this above-market growth is unlikely to be sustained. Telstra has already launched its competitive response to market share losses with the introduction of new ‘any-net’ cap plans. Notably, these plans extend down to the A$49 price point, Optus territory, but not to A$29, traditionally a Vodafone-3 stronghold.
Fixed Line Opportunity May Emerge post-NBN, But Competition is Likely to Erode Margins
Optus has been hampered in the fixed line market, in its view, by an uneven competitive environment dominated by Telstra. The National Broadband Network (NBN), a government-owned fibre replacement for the current copper last mile network, promises to improve Optus’ access to fixed line infrastructure. Unfortunately for Optus, the NBN will also improve infrastructure access for everyone else also. Optus management commented that they expect aggressive competition at the outset, but that new entrants may underestimate the skills required for success in fixed line, and subsequently exit, or be consolidated in the longer term. For Telstra, we assume that fixed line EBITDA margins will fall to ~20% post-NBN, and we attribute very little value to Telstra’s fixed line business post-NBN. At this stage we see a broadly similar outlook for Optus in fixed line.
Customer Transition to NBN Key to Retaining Value in Existing Fixed Line Business
We see some risk to the market share of incumbent fixed line service providers in the transition to NBN fibre-based services. If the government and/or competition regulator prompts customers to re-evaluate their choice of service provider as the NBN is connected to the customer’s premises (or customers do so of their own volition), incumbent market shares could be threatened by new entrants. Optus currently enjoys a 16.4% fixed revenue market share, which is well behind Telstra’s share, but still threatened in our view.