Author: kktan
SingTel – BT
SingTel buys Silicon Valley advertising startup
Singapore Telecommunications Ltd , Southeast Asia's largest telecoms company, has acquired a Silicon Valley startup in the mobile advertising sector, its second such purchase in two months.
SingTel's Amobee unit said on Tuesday it bought AdJitsu, which provides tools to make three-dimensional animated ads in mobile apps for iPhone and iPads. The acquisition of AdJitsu follows SingTel's purchase of mobile advertising firm Amobee in March for US$321 million.
Terms of the latest deal were not disclosed.
AdJitsu will be folded into Redwood City, California-based Amobee, according to both companies.
STEng – BT
ST Engg Q1 profit up 20.9% to $134.37m
ST Engineering on Wednesday posted a 20.9 per cent increase in year on year earnings to $134.37 million for the first quarter ended March 31, 2012.
Turnover dipped 1.7 per cent to $1.54 billion from a year ago. Revenue of its aerospace and electronics sector was flat, while land systems and marine sectors registered lower revenue, down 11 per cent and 10 per cent, respectively.
The group posted earnings per share of 4.39 cents, up from 3.65 cents a year ago.
StarHub – DBSV
Great quarter but costs may rise in coming quarters
• Net profits of S$88m were 10% ahead of expectations; due to lower handset subsidy and traffic costs.
• Management has ruled out capital management in FY12F but has maintained guidance of 5 Scts DPS each quarter.
• Our DCF-based TP raised to S$3.10 as we raise FY12F earnings by 5% and roll forward our valuation base. Hold for 6% yield, however stock is not cheap at 17x FY12 PE versus historical average of 14x.
Highlights
Prudent cost management lifted earnings. Its 1Q12 net profits of S$88m (+28% y-o-y, -5% q-o-q) beat market expectations of S$80m. This was due to lower handset subsidy and traffic costs. The handset subsidy cost for each smartphone
was lower due to a higher adoption of Android phones which comprise 50% of new smartphone sales versus 25% a year earlier. Traffic costs also declined as StarHub, as a Vodafone partner, had managed to negotiate lower interconnect rates for some destinations.
Management sees cost pressures in upcoming quarters. Management has maintained its FY12F service EBITDA margins guidance of 30% despite having achieved 32% margins in 1Q12. The recent launch of the Galaxy S3 phone could raise the subsidy bill for telcos. The upcoming iPhone 5 launch is another cost factor (launch rumored in Oct 2012) to consider. StarHub will also incur the cost of exclusive UEFA Cup rights in 2Q12. It will be paying an undisclosed cross-carriage fee to SingTel for carrying Euro Cup matches on SingTel’s pay TV platform.
Our View
Raise FY12F earnings by 5% on higher margins. We project service EBITDA margins of 30.6% in FY12 compared to 29.7% earlier. We do not expect capital management in the near term, as the company may want to preserve cash for the spectrum auction for 1800 MHz and 2600 MHz bands, possibly in 2013.
Recommendation
Maintain HOLD. Our DCF-based (WACC 7.6%, terminal growth 0%) TP has been raised to S$3.10 as we had rolled forward the valuation to FY13F. Currently the stock is trading with a 6.3% yield, with minimal growth prospects. Its quarterly 5 Scts DPS is the key attraction; however that seems to have been priced in, with a FY12F PE of 17x versus the historical average PE of 14x.
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.