Author: kktan
SingTel – DBSV
1Q12F may disappoint
• SingTel may report 1Q12F earnings of S$920m (-2% YoY) on 11th Aug, slightly below street expectations.
• The key negatives would be weak Singapore earnings besides lower contribution from Bharti
• In the long term, Bharti should improve although Singapore & Australia may face more challenges. HOLD for 6% yield at 12x FY12F PE (Hist. average 13.4x)
1Q12F results on 11th Aug may be unexciting. We estimate that SingTel may report 1Q12F earnings of S$920m (-2% YoY, – 8% QoQ). This may be slightly below the street expectations of flat to low-single digit growth in earnings
Singapore earnings could be the key disappointment Management has guided for stable Singapore EBITDA in FY12F taking into account high content cost for full FY12F and competitive pressures in the enterprise broadband business. However, depreciation & amortization expenses have been rising in the light of higher capex for mobile & submarine networks along with IT infrastructure. So stable EBITDA may not translate into stable net earnings. We estimate that 1Q12F Singapore earnings could decline 15% YoY, although improve 4% QoQ. Optus earnings may decline 17% QoQ, as 4Q11 (seasonally strongest quarter) benefited from one-off cost savings.
Associate contribution can slip marginally. Bharti reported 14% QoQ decline in 1Q12 earnings, which can partly be offset by 10% QoQ growth at Telkomsel. However, overall associates’ contribution may decline 3% QoQ due to strong Singapore dollar versus regional currencies (INR & PHP).
With 3% earning growth in FY12F, investors might appreciate regular yield exceeding 6%. SingTel is trading at ~12x FY12F PE below its four-year average of 13.2x. However, we believe that SingTel may not outperform unless earnings payout ratio is raised above 80% or capital management is performed more frequently. HOLD with SOP-based TP of S$3.20.
STEng – BT
Warthog keeping Taliban at bay
Vehicle’s success has led to a rethink on British tactics in Afghanistan
EVEN as hardware made by Singapore Technologies Engineering (STE) were put through their paces by the Singapore Armed Forces (SAF) at the National Day Parade yesterday, a tracked fighting carrier made by the group has continued to win battlefield accolades in the service of British forces.
In a report last Friday, The (London) Telegraph highlighted the success of the Warthog, a 22-ton tracked armoured vehicle whose off-road ability allows it to frequently outflank the fleet-footed Taliban in Afghanistan. The vehicle’s success has led to a rethink on British tactics as it is not only able to deliver troops and supplies, it can also bring down heavy firepower from unexpected directions, the paper said.
The Warthog, a variant of the Bronco which is used by the SAF, can carry up to a dozen soldiers who can be deployed either to fight insurgents or engage with the local population to build up an intelligence picture of tribal communities.
‘It has almost certainly saved lives after 11 Warthogs were hit in one tour by large IEDs (Improvised Explosive Device) without anyone inside being killed although two were badly wounded,’ The Telegraph reported. The Warthog has also proved adept at being able to drive through the notoriously difficult terrain of Helmand province’s irrigated ‘green zone’.
In one epic six-week-long battle earlier this year, the vehicles provided a perimeter defence for the Royal Engineers as they laid a key road in central Helmand called Route Trident. With heavy weaponry such as heavy machine guns and grenade launchers, the Warthogs kept the Taliban at bay.
‘You can put Warthog into places you would not dream of with other armoured vehicles as it has very low ground pressure giving us the ability to move around the battlespace in a completely different way,’ Major James Cameron, the 2nd Royal Tank Regiment squadron commander, the first to use the vehicle on operations, was quoted as saying. ‘We have been able to manoeuvre in an extraordinary way. Literally we can go over ditches, swim rivers or go up ravines getting right in behind the enemy where they least expect us. We run on them at speed and before they know anything about it we are right on top of them.’
Towards the end of the unit’s six-month tour, radio intelligence showed that Taliban commanders were warning their men, ‘Don’t fire at the tank’.
The Warthog was first introduced to the British forces in 2009. It was the first armoured vehicle to be built for a Western army by an Asian company. When ST Kinetics, the land division of STE, won a £150 million contract for 115 vehicles from the British, it represented a major breakthrough for the Singapore company.
STE produced the first Warthog within nine months of the order, on time and ahead of schedule although there was a delay of several months as the armour protection was improved. The Warthog was ordered to replace the BAE Systems’ Viking, which is being withdrawn from service after almost a quarter of the fleet was destroyed by Taliban bombs.
STE beat BAE Systems, which had offered a Viking II variant, to the British contract.
STEng – BT
Warthog keeping Taliban at bay
Vehicle’s success has led to a rethink on British tactics in Afghanistan
EVEN as hardware made by Singapore Technologies Engineering (STE) were put through their paces by the Singapore Armed Forces (SAF) at the National Day Parade yesterday, a tracked fighting carrier made by the group has continued to win battlefield accolades in the service of British forces.
In a report last Friday, The (London) Telegraph highlighted the success of the Warthog, a 22-ton tracked armoured vehicle whose off-road ability allows it to frequently outflank the fleet-footed Taliban in Afghanistan. The vehicle’s success has led to a rethink on British tactics as it is not only able to deliver troops and supplies, it can also bring down heavy firepower from unexpected directions, the paper said.
The Warthog, a variant of the Bronco which is used by the SAF, can carry up to a dozen soldiers who can be deployed either to fight insurgents or engage with the local population to build up an intelligence picture of tribal communities.
‘It has almost certainly saved lives after 11 Warthogs were hit in one tour by large IEDs (Improvised Explosive Device) without anyone inside being killed although two were badly wounded,’ The Telegraph reported. The Warthog has also proved adept at being able to drive through the notoriously difficult terrain of Helmand province’s irrigated ‘green zone’.
In one epic six-week-long battle earlier this year, the vehicles provided a perimeter defence for the Royal Engineers as they laid a key road in central Helmand called Route Trident. With heavy weaponry such as heavy machine guns and grenade launchers, the Warthogs kept the Taliban at bay.
‘You can put Warthog into places you would not dream of with other armoured vehicles as it has very low ground pressure giving us the ability to move around the battlespace in a completely different way,’ Major James Cameron, the 2nd Royal Tank Regiment squadron commander, the first to use the vehicle on operations, was quoted as saying. ‘We have been able to manoeuvre in an extraordinary way. Literally we can go over ditches, swim rivers or go up ravines getting right in behind the enemy where they least expect us. We run on them at speed and before they know anything about it we are right on top of them.’
Towards the end of the unit’s six-month tour, radio intelligence showed that Taliban commanders were warning their men, ‘Don’t fire at the tank’.
The Warthog was first introduced to the British forces in 2009. It was the first armoured vehicle to be built for a Western army by an Asian company. When ST Kinetics, the land division of STE, won a £150 million contract for 115 vehicles from the British, it represented a major breakthrough for the Singapore company.
STE produced the first Warthog within nine months of the order, on time and ahead of schedule although there was a delay of several months as the armour protection was improved. The Warthog was ordered to replace the BAE Systems’ Viking, which is being withdrawn from service after almost a quarter of the fleet was destroyed by Taliban bombs.
STE beat BAE Systems, which had offered a Viking II variant, to the British contract.
Land Transport – BT
PTC gives nod for net 1% hike in bus, train fares
THE Public Transport Council (PTC) has allowed an overall net fare adjustment of one per cent, and operators SBS Transit and SMRT can expect a combined increase in annual revenue of $15 million.
From Oct 8, 2011, adult card fares for buses and trains will go up by two cents a journey, while senior citizen concessionary card fares will increase by one cent a journey although senior citizens will now get concessionary travel all day throughout the week.
Child/student concessionary card fares remain unchanged. But cash fares for adult bus and train rides will be 10 cents higher per trip across-the-board. There will be no change to senior citizen and child/student cash fares.
The PTC said that overall, the average fare increase translates to about 15 cents a week or about $8 a year for the 85 per cent of commuters who would experience a fare increase.
In July, the two public transport operators applied for the maximum fare adjustment of 2.8 per cent allowed under the fare formula for 2011, citing rising fuel and manpower costs.
‘The approved fare adjustment of one per cent is significantly less than the quantum of adjustment that the operators have applied for,’ said PTC chairman Gerard Ee.
He said that the decision comes after careful deliberation, and the council balanced the need to keep fares affordable with the long-term viability of the public transport operators so that they can continue to make capital investments and provide the expected quality of service.
Mr Ee cited the example of SMRT, which has already bought 238 new buses for $100 million to renew and expand its fleet from next month until December 2012, and SBST, which has purchased 600 buses for $268 million for delivery this year and the next.
‘We have tried to keep the fare adjustment small for commuters but we know that any fare adjustment, no matter how small, would still be felt by commuters, especially those from needy families,’ he said, adding that those who need additional assistance will get help from the government’s Public Transport Fund. To help needy families cope with the fare adjustment, the government together with SMRT and SBS Transit have set aside $4 million to fund 200,000 public transport vouchers.
Mr Ee also said that the PTC focused on senior citizens because of the greying population and to support moves to encourage them to work beyond retirement age.
The PTC said that the fare adjustment took into consideration Singapore’s economic outlook and the affordability of public transport.
‘The economic outlook remains positive with the latest forecast for GDP to grow by 5-7 per cent in 2011, and the latest unemployment rate as at June 2011 remains low at 2.1 per cent,’ the council said. ‘The public transport affordability indicator has also been on a downtrend for the past seven years, falling from 5.3 per cent in 2003 to 3.7 per cent in 2010. This indicates that bus and train fares have remained affordable for the majority of commuters.’
Under the fare formula, the maximum fare adjustment allowable is calculated by subtracting 1.5 per cent from the Price Index, where 1.5 per cent is the productivity extraction set for the five years from 2008-2012. As for the Price Index, it is derived from adding half of the change in the Consumer Price Index over the preceding year, to half of the change in the average monthly earnings for all workers over the preceding year.
The PTC delayed 2011’s fare adjustment to coincide with the opening of the final two phases of the Circle Line on Oct 8. The exercise usually takes place in the middle of the year.
This year’s hike comes on the back of two straight years of cuts. Last year, the PTC granted an overall 2.5 per cent reduction in bus and train fares and that took effect on July 3, 2010 with the introduction of Distance Fares. Under Distance Fares, the transfer penalty was removed completely, so commuters travelling the same distance pay the same fare for the same type of service, whether they travel direct or make transfers. Then, the PTC said that the 63 per cent of commuters who enjoyed fare savings spent an average of 48 cents a week less, or $25 a year. As for the 34 per cent of commuters who saw an increase in their public transport expenditure, the average increase was 31 cents a week or $16 a year.
In 2009, SBST and SMRT announced that they would not apply for fare adjustments that year due to the global financial crisis. Both worked with the PTC to pass back savings from the 2009 Singapore Budget, so that from April 1, 2009, commuters benefited from an overall 4.6 per cent cut in bus and train fares.
Under the fare adjustment formula in 2009, the public transport operators could have applied for an increase of up to 5 per cent. But before 2009, fares were increased in the preceding three years – 0.7 per cent in 2008, 1.1 per cent in 2007, and 1.7 per cent in 2006.
Land Transport – BT
PTC gives nod for net 1% hike in bus, train fares
THE Public Transport Council (PTC) has allowed an overall net fare adjustment of one per cent, and operators SBS Transit and SMRT can expect a combined increase in annual revenue of $15 million.
From Oct 8, 2011, adult card fares for buses and trains will go up by two cents a journey, while senior citizen concessionary card fares will increase by one cent a journey although senior citizens will now get concessionary travel all day throughout the week.
Child/student concessionary card fares remain unchanged. But cash fares for adult bus and train rides will be 10 cents higher per trip across-the-board. There will be no change to senior citizen and child/student cash fares.
The PTC said that overall, the average fare increase translates to about 15 cents a week or about $8 a year for the 85 per cent of commuters who would experience a fare increase.
In July, the two public transport operators applied for the maximum fare adjustment of 2.8 per cent allowed under the fare formula for 2011, citing rising fuel and manpower costs.
‘The approved fare adjustment of one per cent is significantly less than the quantum of adjustment that the operators have applied for,’ said PTC chairman Gerard Ee.
He said that the decision comes after careful deliberation, and the council balanced the need to keep fares affordable with the long-term viability of the public transport operators so that they can continue to make capital investments and provide the expected quality of service.
Mr Ee cited the example of SMRT, which has already bought 238 new buses for $100 million to renew and expand its fleet from next month until December 2012, and SBST, which has purchased 600 buses for $268 million for delivery this year and the next.
‘We have tried to keep the fare adjustment small for commuters but we know that any fare adjustment, no matter how small, would still be felt by commuters, especially those from needy families,’ he said, adding that those who need additional assistance will get help from the government’s Public Transport Fund. To help needy families cope with the fare adjustment, the government together with SMRT and SBS Transit have set aside $4 million to fund 200,000 public transport vouchers.
Mr Ee also said that the PTC focused on senior citizens because of the greying population and to support moves to encourage them to work beyond retirement age.
The PTC said that the fare adjustment took into consideration Singapore’s economic outlook and the affordability of public transport.
‘The economic outlook remains positive with the latest forecast for GDP to grow by 5-7 per cent in 2011, and the latest unemployment rate as at June 2011 remains low at 2.1 per cent,’ the council said. ‘The public transport affordability indicator has also been on a downtrend for the past seven years, falling from 5.3 per cent in 2003 to 3.7 per cent in 2010. This indicates that bus and train fares have remained affordable for the majority of commuters.’
Under the fare formula, the maximum fare adjustment allowable is calculated by subtracting 1.5 per cent from the Price Index, where 1.5 per cent is the productivity extraction set for the five years from 2008-2012. As for the Price Index, it is derived from adding half of the change in the Consumer Price Index over the preceding year, to half of the change in the average monthly earnings for all workers over the preceding year.
The PTC delayed 2011’s fare adjustment to coincide with the opening of the final two phases of the Circle Line on Oct 8. The exercise usually takes place in the middle of the year.
This year’s hike comes on the back of two straight years of cuts. Last year, the PTC granted an overall 2.5 per cent reduction in bus and train fares and that took effect on July 3, 2010 with the introduction of Distance Fares. Under Distance Fares, the transfer penalty was removed completely, so commuters travelling the same distance pay the same fare for the same type of service, whether they travel direct or make transfers. Then, the PTC said that the 63 per cent of commuters who enjoyed fare savings spent an average of 48 cents a week less, or $25 a year. As for the 34 per cent of commuters who saw an increase in their public transport expenditure, the average increase was 31 cents a week or $16 a year.
In 2009, SBST and SMRT announced that they would not apply for fare adjustments that year due to the global financial crisis. Both worked with the PTC to pass back savings from the 2009 Singapore Budget, so that from April 1, 2009, commuters benefited from an overall 4.6 per cent cut in bus and train fares.
Under the fare adjustment formula in 2009, the public transport operators could have applied for an increase of up to 5 per cent. But before 2009, fares were increased in the preceding three years – 0.7 per cent in 2008, 1.1 per cent in 2007, and 1.7 per cent in 2006.