Author: kktan
SingTel – CIMB
Lacking catalysts
We are little less optimistic on SingTel after its conference call today as the negatives pileup: rivalry in Australia’s mobile sector remains stiff and competition could intensify in the Philippines. We also see Australia’s fixed broadband competition heat up due to the NGNBN.
SingTel intends to retain its rights to carry the BPL but expects to be more rational with its bid. We downgrade SingTel to Neutral from Outperform, maintain our earnings estimates but tweak our SOP-based target price given its rising risks and CIMB’s rising optimism on the stock market.
What Happened
SingTel held a conference call after its 3QFY12 results. We are a little more negative on the stock as we think fixed broadband competition in Australia may intensify ahead of the introduction of the next generation broadband (NGNBN), similar to what happened in Singapore. Competition in the Australian mobile space remains intense with no sign of a let-up.
In Singapore, it expects to be more rational in bidding for the rights to the 2013-15 BPL seasons in 2H12. We believe SingTel intends to win the rights to this content, although it will be non-exclusive, given that is the anchor content for its pay TV.
We expect SingTel to continue to aggressively acquire both mobile and fixed broadband customers given its view to upsell them with content and applications down the road. It has a commanding 63% market share in fibre broadband.
What We Think
We think risks are rising for SingTel. Competition in Australia’s fixed broadband could intensify with the migration to NBN, similar to what happened in Singapore. StarHub’s broadband revenue and ARPU declined ahead of the launch of NGNBN as it jostled with SingTel for market share. In the Philippines, we think competition will be intense despite industry consolidation as Globe and PLDT slug it out for market share. Lastly, the Indian rupee remains weak.
What You Should Do
We advocate switching from SingTel to StarHub which we think will undertake a capital management in 2H12. We think SingTel’s earnings will likely be flattish in the coming quarters with growth in Singapore offset by competitive pressures in Australia, the Philippines and currency weakness in India.
SingTel – CIMB
Lacking catalysts
We are little less optimistic on SingTel after its conference call today as the negatives pileup: rivalry in Australia’s mobile sector remains stiff and competition could intensify in the Philippines. We also see Australia’s fixed broadband competition heat up due to the NGNBN.
SingTel intends to retain its rights to carry the BPL but expects to be more rational with its bid. We downgrade SingTel to Neutral from Outperform, maintain our earnings estimates but tweak our SOP-based target price given its rising risks and CIMB’s rising optimism on the stock market.
What Happened
SingTel held a conference call after its 3QFY12 results. We are a little more negative on the stock as we think fixed broadband competition in Australia may intensify ahead of the introduction of the next generation broadband (NGNBN), similar to what happened in Singapore. Competition in the Australian mobile space remains intense with no sign of a let-up.
In Singapore, it expects to be more rational in bidding for the rights to the 2013-15 BPL seasons in 2H12. We believe SingTel intends to win the rights to this content, although it will be non-exclusive, given that is the anchor content for its pay TV.
We expect SingTel to continue to aggressively acquire both mobile and fixed broadband customers given its view to upsell them with content and applications down the road. It has a commanding 63% market share in fibre broadband.
What We Think
We think risks are rising for SingTel. Competition in Australia’s fixed broadband could intensify with the migration to NBN, similar to what happened in Singapore. StarHub’s broadband revenue and ARPU declined ahead of the launch of NGNBN as it jostled with SingTel for market share. In the Philippines, we think competition will be intense despite industry consolidation as Globe and PLDT slug it out for market share. Lastly, the Indian rupee remains weak.
What You Should Do
We advocate switching from SingTel to StarHub which we think will undertake a capital management in 2H12. We think SingTel’s earnings will likely be flattish in the coming quarters with growth in Singapore offset by competitive pressures in Australia, the Philippines and currency weakness in India.
ComfortDelgro – BT
ComfortDelGro’s Q4 profit up 3.5%
Full-year net up 3.1% at $235.6m; rise driven mainly by taxi, rail businesses
COMFORTDELGRO’S net profit for the 2011 fourth quarter climbed 3.5 per cent to $56.5 million, from $54.6 million a year earlier.
The rise in profit attributable to shareholders came on the back of a 7.2 per cent year-on-year rise in group revenue to $887.2 million.
Total operating expenses for the quarter increased 7.7 per cent to $791.5 million, contributed in part by a 20.2 per cent year-on-year surge in fuel and electricity costs to $73.9 million. The quarter saw taxi drivers’ benefits dropping 14.2 per cent to $19.3 million.
For the full year ended Dec 31, 2011, net profit rose 3.1 per cent to $235.6 million, with the increase driven mainly by its taxi and rail businesses.
Full-year revenue climbed 6.4 per cent to a record $3.41 billion, with the land transport giant attributing growth from all business segments. Revenue could have been higher if not for the negative foreign currency effect of $16.0 million.
Group operating expenses for the 12 months rose 6.9 per cent to $3.01 billion on increases in materials and consumables, fuel and electricity costs, staff costs and depreciation, among others, although these were mitigated by a positive foreign currency translation effect of $20.2 million. For example, materials and consumables jumped 23.8 per cent to $336.4 million, while fuel and electricity costs surged 20.7 per cent to $283.3 million. Staff costs, the group’s biggest cost component, rose 5.0 per cent to $1.04 billion. Taxi drivers’ benefits fell 14.3 per cent to $66.7 per cent.
Operating profit was 2.8 per cent higher at $399.2 million.
ComfortDelGro said that overseas operating profit accounted for 45.8 per cent of group operating profit, while overseas revenue made up 42.2 per cent of group revenue. Its global fleet size of buses, taxis and rental vehicles has also increased to a record of some 46,300 vehicles.
Full year earnings per share rose to 11.26 cents from 10.95 cents, while the group’s net asset value was 90.46 cents as at Dec 31, 2011, up from 86.20 cents 12 months earlier.
A final dividend of 3.30 cents per share has been proposed.
As its biggest business segment, buses brought in revenue of $1.69 billion for the group in 2011, or up 4.5 per cent. Operating profit slipped 2.8 per cent to $145.0 million due mainly to decreases in SBS Transit and the China bus business but was offset by an increase in the Australian bus business. The operating profit of the overseas bus business continued to outstrip that of the Singapore bus business and accounted for 85.8 per cent of group bus operating profit.
The group’s taxi business chalked up revenue of $1.039 billion or a 5.8 per cent hike, with taxi revenue crossing the $1 billion mark for the first time thanks to a larger global fleet. Operating profit rose 8.6 per cent to $129.6 million. In Singapore, revenue from the local taxi business climbed 7.6 per cent to $748.7 million due to an increase in replacement taxis, a larger fleet, and a higher volume of cashless transactions. Operating profit was 9.7 per cent higher at $83.8 million.
Revenue from the rail business grew 10.5 per cent to $134.4 million due to an increase in average daily ridership and in spite of lower average fares, with operating profit rising 8.2 per cent to $27.7 million.
Also showing an improvement in operating profit was the vehicle inspection and testing business. Revenue rose 8.7 per cent to $93.5 million, with operating profit rising 12.5 per cent to $30.7 million as more cars were inspected and higher sales were achieved by Setsco Services.
Looking ahead, ComfortDelGro sees bus and rail ridership increasing at a slower rate because of the expected economic slowdown. It expects revenue from the UK bus business to continue being affected by the currency translation effect of the weaker pound sterling. But improvements are likely from the Australian bus business, and the taxi businesses in Singapore, China and Australia.
ComfortDelGro shares closed trading yesterday at $1.48, up half a cent.
ComfortDelgro – BT
ComfortDelGro’s Q4 profit up 3.5%
Full-year net up 3.1% at $235.6m; rise driven mainly by taxi, rail businesses
COMFORTDELGRO’S net profit for the 2011 fourth quarter climbed 3.5 per cent to $56.5 million, from $54.6 million a year earlier.
The rise in profit attributable to shareholders came on the back of a 7.2 per cent year-on-year rise in group revenue to $887.2 million.
Total operating expenses for the quarter increased 7.7 per cent to $791.5 million, contributed in part by a 20.2 per cent year-on-year surge in fuel and electricity costs to $73.9 million. The quarter saw taxi drivers’ benefits dropping 14.2 per cent to $19.3 million.
For the full year ended Dec 31, 2011, net profit rose 3.1 per cent to $235.6 million, with the increase driven mainly by its taxi and rail businesses.
Full-year revenue climbed 6.4 per cent to a record $3.41 billion, with the land transport giant attributing growth from all business segments. Revenue could have been higher if not for the negative foreign currency effect of $16.0 million.
Group operating expenses for the 12 months rose 6.9 per cent to $3.01 billion on increases in materials and consumables, fuel and electricity costs, staff costs and depreciation, among others, although these were mitigated by a positive foreign currency translation effect of $20.2 million. For example, materials and consumables jumped 23.8 per cent to $336.4 million, while fuel and electricity costs surged 20.7 per cent to $283.3 million. Staff costs, the group’s biggest cost component, rose 5.0 per cent to $1.04 billion. Taxi drivers’ benefits fell 14.3 per cent to $66.7 per cent.
Operating profit was 2.8 per cent higher at $399.2 million.
ComfortDelGro said that overseas operating profit accounted for 45.8 per cent of group operating profit, while overseas revenue made up 42.2 per cent of group revenue. Its global fleet size of buses, taxis and rental vehicles has also increased to a record of some 46,300 vehicles.
Full year earnings per share rose to 11.26 cents from 10.95 cents, while the group’s net asset value was 90.46 cents as at Dec 31, 2011, up from 86.20 cents 12 months earlier.
A final dividend of 3.30 cents per share has been proposed.
As its biggest business segment, buses brought in revenue of $1.69 billion for the group in 2011, or up 4.5 per cent. Operating profit slipped 2.8 per cent to $145.0 million due mainly to decreases in SBS Transit and the China bus business but was offset by an increase in the Australian bus business. The operating profit of the overseas bus business continued to outstrip that of the Singapore bus business and accounted for 85.8 per cent of group bus operating profit.
The group’s taxi business chalked up revenue of $1.039 billion or a 5.8 per cent hike, with taxi revenue crossing the $1 billion mark for the first time thanks to a larger global fleet. Operating profit rose 8.6 per cent to $129.6 million. In Singapore, revenue from the local taxi business climbed 7.6 per cent to $748.7 million due to an increase in replacement taxis, a larger fleet, and a higher volume of cashless transactions. Operating profit was 9.7 per cent higher at $83.8 million.
Revenue from the rail business grew 10.5 per cent to $134.4 million due to an increase in average daily ridership and in spite of lower average fares, with operating profit rising 8.2 per cent to $27.7 million.
Also showing an improvement in operating profit was the vehicle inspection and testing business. Revenue rose 8.7 per cent to $93.5 million, with operating profit rising 12.5 per cent to $30.7 million as more cars were inspected and higher sales were achieved by Setsco Services.
Looking ahead, ComfortDelGro sees bus and rail ridership increasing at a slower rate because of the expected economic slowdown. It expects revenue from the UK bus business to continue being affected by the currency translation effect of the weaker pound sterling. But improvements are likely from the Australian bus business, and the taxi businesses in Singapore, China and Australia.
ComfortDelGro shares closed trading yesterday at $1.48, up half a cent.
STEng – BT
ST Engg offer to Nera good for all: DMG analysts
THE offer by Singapore Technologies Engineering (ST Engg) to take Nera Telecommunications private is – according to DMG & Partners Research – a positive move for both companies and their shareholders.
In a report released yesterday, Edison Chen and Terence Wong of DMG said that ‘the valuation is fair and (Nera) shareholders should accept the offer’.
Calling it a win-win outcome, the analysts said: ‘The acquisition allows (ST Engg’s electronics arm) to leverage Nera’s in-depth expertise in system integration in the fields of both telecommunications and info-communications, to enhance its existing business in terrestrial and wireless broadband networks.’
‘On the other hand, shareholders of Nera can also monetise their investments with an offer price that is equivalent to 12.1x FY2011 price-to-earnings (8.6 ex-cash), and is around our intrinsic value estimates of 47 cents per share.’
Late last Friday night, ST Engg announced the move to acquire Nera by way of a scheme of arrangement. If successful, the move will see the generally thinly-traded Nera delisted from the Singapore Exchange (SGX) mainboard.
Nera shareholders stand to receive an aggregate cash amount of 45 cents per share, comprising 6 cents to be paid by Nera as a cash dividend, and 39 cents to be paid by ST Engg. The acquisition consideration, excluding the dividend, is $141.1 million.
Said the analysts: ‘Since we put up a ‘buy’ recommendation for Nera back in October 2011, the share price has surged 43 per cent, surpassing our target price of 47 cents. The offer price may be lower than the last traded, but this is largely due to investors playing up the shares of what was once a quiet stock.’
ST Engg said separately yesterday that its marine arm has won two shipbuilding contracts worth about $75 million from a wholly owned subsidiary of Swire Pacific. It also announced that wholly-owned ST Electronics (Info-Comm Systems) has acquired a further 2.77 per cent stake in Telematics Wireless for US$1.1 million.
Nera’s share price fell 11 per cent to close trading at 44.5 cents yesterday. ST Engg closed 0.33 per cent higher at $3.