Month: May 2012
SIAEC – CIMB
Unwavering confidence
We like SIE’s net-cash balance sheet and attractive dividend yieldsof about 6%. Despite a choppy global outlook, we continue to expect decent earnings growth backed by strong demand for MRO.
FY12 net profit is in line at 99% of our forecast and consensus. SIE declared a final DPS of 15 Scts, bringing FY12 DPS to 21 Scts for an 86% payout, as expected. We adjust our EPS by -0.4% for housekeeping matters and maintain Outperform and target price (blended P/E and DCF).
More work in the hangar
We expect average earnings growth of 6% for FY13-15 from an expanding fleet management programme and fleet size as well as strong demand for airframe MRO. We believe hangars are booked out with good visibility and at least 70% utilisation in the next five years.
4Q12 revenue was another record, at S$316.5m (+16% yoy), thanks to a bigger workload from fleet management, MRO and a cabin interior reconfiguration project for four B777-300 aircraft. EBITDA margins dipped to 13.5% from 14.8% in 4Q12, we believe due to higher outsourcing costs for fleet management.
JVs and associates back to pre-crisis levels
Share of profits from associates and JVs grew by about 9 % yoy to S$157m in FY12, after being hit in 2010-11. We expect 10% yoy growth in FY13-15, backed by stronger business volumes, reflecting the recovery in its engine and component business. Associates and JVs should contribute about 60% to SIE’s net profit.
Strong cash and inexpensive
SIE is trading at about 14.7x CY13 P/E, slightly below its 5-year average of 15x. We believe the market has not priced in its earnings growth through 2015 as it is now trading at its Mar 10 valuations when its earnings slipped 10%. SIE also boasts a strong balance sheet with net cash of S$496m.
SIAEC – CIMB
Unwavering confidence
We like SIE’s net-cash balance sheet and attractive dividend yieldsof about 6%. Despite a choppy global outlook, we continue to expect decent earnings growth backed by strong demand for MRO.
FY12 net profit is in line at 99% of our forecast and consensus. SIE declared a final DPS of 15 Scts, bringing FY12 DPS to 21 Scts for an 86% payout, as expected. We adjust our EPS by -0.4% for housekeeping matters and maintain Outperform and target price (blended P/E and DCF).
More work in the hangar
We expect average earnings growth of 6% for FY13-15 from an expanding fleet management programme and fleet size as well as strong demand for airframe MRO. We believe hangars are booked out with good visibility and at least 70% utilisation in the next five years.
4Q12 revenue was another record, at S$316.5m (+16% yoy), thanks to a bigger workload from fleet management, MRO and a cabin interior reconfiguration project for four B777-300 aircraft. EBITDA margins dipped to 13.5% from 14.8% in 4Q12, we believe due to higher outsourcing costs for fleet management.
JVs and associates back to pre-crisis levels
Share of profits from associates and JVs grew by about 9 % yoy to S$157m in FY12, after being hit in 2010-11. We expect 10% yoy growth in FY13-15, backed by stronger business volumes, reflecting the recovery in its engine and component business. Associates and JVs should contribute about 60% to SIE’s net profit.
Strong cash and inexpensive
SIE is trading at about 14.7x CY13 P/E, slightly below its 5-year average of 15x. We believe the market has not priced in its earnings growth through 2015 as it is now trading at its Mar 10 valuations when its earnings slipped 10%. SIE also boasts a strong balance sheet with net cash of S$496m.
SIAEC – BT
SIA Engg Q4 earnings rise 8.9%
SIA Engineering Co (SIAEC) posted a net profit of $66.3 million for the fourth quarter ended March 31, 2012, an 8.9 per cent rise from $60.9 million for the previous corresponding quarter on the back of higher profits from associated and joint venture companies.
Earnings per share came to 6.04 cents, up from 5.59 cents previously. Operating profit totalled $32.5 million, a 6.2 per cent rise from $30.6 a year ago on higher revenue.
The group, which posted its results late yesterday, said that revenue for the three months jumped 16.4 per cent to $316.5 million.
On its outlook, SIAEC noted that uncertainties in the world's major economies and oil price volatility continue to impact the aviation industry.
SIAEC – BT
SIA Engg Q4 earnings rise 8.9%
SIA Engineering Co (SIAEC) posted a net profit of $66.3 million for the fourth quarter ended March 31, 2012, an 8.9 per cent rise from $60.9 million for the previous corresponding quarter on the back of higher profits from associated and joint venture companies.
Earnings per share came to 6.04 cents, up from 5.59 cents previously. Operating profit totalled $32.5 million, a 6.2 per cent rise from $30.6 a year ago on higher revenue.
The group, which posted its results late yesterday, said that revenue for the three months jumped 16.4 per cent to $316.5 million.
On its outlook, SIAEC noted that uncertainties in the world's major economies and oil price volatility continue to impact the aviation industry.
StarHub – Phillip
Great start to the year! But still too pricey!
Company Overview
Starhub (STH) is the 2nd largest Telecommunications company in Singapore. The company also has a very strong PayTV franchise with subscriber base of more than 500k that is 60% larger than its closest competitor.
• Strong start with 28% increase in profits
• Stagnant subscriber acquisitions a disappointment
• Guidance maintained for DPS of 20.0cents
• Maintain Neutral with revised TP of S$2.94
What is the news?
Starhub posted a very strong set of results in the first quarter of the year with profit increase of 28% on the back of 6% growth in sales. The strong set of sales was led by higher Postpaid mobile (+6% y-y) and PayTV (+4% y-y) revenue. Starhub exhibited strong cost control for the quarter with lower marketing and promotion expenses as the key source of variance from our expectations. Starhub maintained its guidance of low single digit revenue growth and DPS of 20.0cents for the year.
How do we view this?
The results were above our expectations. However, subscriber acquisitions were slightly disappointing with relatively stagnant Mobile, PayTV & Broadband subscriber base. We think that the key source of earnings uncertainty for this year’s results would be in 2QFY12, where Starhub would likely book in significantly higher content cost for Euro 2012. Despite its low gearing with Net Debt to EBITDA of c.0.5X, management highlighted that there would be no capital management this year and maintained their guidance of 20.0cents DPS in the year.
Investment Actions?
We maintain our view that Starhub’s stock is fairly pricey at current levels and see little upside from hereon. Maintain Neutral.