Author: kktan
SPH – DBSV
Potential dividend upside in 4Q
At a Glance
• 3Q results expectedly strong; EBIT +36% yoy to S$186.5m
• Print ad revenue showed a stronger growth of 28% yoy to S$204.3m vs 2Q’s growth of 13.4%
• Sky@Eleven received TOP in May’10; earnings slack hereon is expected
• Looking forward to higher-than-expected dividends in 4Q (DBSV estimate 20 Scts); retain Buy and sum-of-parts TP: S$4.42
Comment on Results
Strong 3Q. Revenue grew 27% to S$415m in 3Q, largely contributed by newspaper & magazine operations (+20% yoy), rental revenue (+14%) and final recognition of Sky@Eleven (Sky11) development property (S$101m, +57%).
EBIT grew by a strong 36% to S$186.5m largely arising from lower newsprint charge-out costs (US$529/mt vs US$779/mt in 3Q09), offset partially by higher staff costs (+36% yoy) arising from higher bonus provisions from improved operating results. Newsprint charge-out is expected to be below US$550/mt in FY10F and the Group has locked in its print requirements till Mar’11.
Ad revenues jumped 28% in tandem with the strong economic growth. Print ad revenues jumped 28% yoy, higher than 13.4% growth we saw in 2Q. In 3Q, display, classifieds and magazines registered growths of 31%, 24% and 26% yoy respectively. YTD, print ad revenues grew 11.8%.
Sky11 TOP; look for higher dividends with cash inflow? Sky11 has received its temporary occupation permit (TOP) in May’10 with S$674m revenue and S$480m profit. The earnings slack as profit recognition ceases is largely expected. We remain optimistic of potentially higher special dividends when the remaining 80% cash proceeds are eventually received (S$539m).
Recommendation
Maintain Buy, TP: S$4.42. We maintain our Buy call for the counter as a proxy to the economy, coupled with a potentially higher than expected final/special dividends. Our sum-of-parts TP remains at S$4.42.
Thomson Medical – AmFraser
Q3 Results Stronger than Expected
• Q3 beat our forecast. Thomson Medical Centre (“TMC”) announced a 25.4% YoY rise in FY2010 Q3 revenue to S$21.8m. NPAT for the quarter came to S$4.9m, a rise of 43.5% YoY. Strong patient load and contributions from the new Cancer Centre and Paediatric Centre are helping to shape FY2010 as TMC’s strongest yet.
• Childbirths holding steady. After peaking at 2,478 births in Q1, the number of childbirths remained steady at 2,207 and 2,291 in Q2 and Q3 respectively. The economic recovery should continue to underpin revenue growth from both local and foreign patients. Management has shown great finesse and creativity in squeezing efficiency out of existing space but we should be careful when diminishing marginal returns set in.
• Brandname attracting senior specialists. 2 senior specialists commenced tenancy in May. Management had been excited about this development as the specialists would be able to increase patient referrals and utilisation of hospital services. Moreover, we believe the best people to ‘advertise’ for the Company are the senior specialists who vote with their own reputation and commitment.
• Vietnam hospital soft opening on track. TMC’s first consultancy and management project in Hanh Phuc is targeted to have its soft opening in Oct 2010. This would be well into Q1FY2011 and we already expect any meaningful contribution to come only in FY2012. Being the first of three Vietnam hospitals to be built under the agreement, there may be a learning curve to scale. We expect things to be smoother when the 2nd hospital in Hanoi comes around.
• Maintain ‘ACCUMULATE’ and raise FV to 79.5 SG cents. The stronger-than-expected Q3 leads us to raise our FY10 revenue and NPAT forecasts to S$79.0m and S$15.7m. FY11 and FY12 NPAT forecasts are also raised slightly by 2.6% and 1.8% respectively. The next significant catalyst that we expect to see on the horizon are more concrete plans for the 2nd hospital project in Hanoi. Our FV is raised to 79.5 SG cents and recommendation remains at ACCUMULATE.
Thomson Medical – AmFraser
Q3 Results Stronger than Expected
• Q3 beat our forecast. Thomson Medical Centre (“TMC”) announced a 25.4% YoY rise in FY2010 Q3 revenue to S$21.8m. NPAT for the quarter came to S$4.9m, a rise of 43.5% YoY. Strong patient load and contributions from the new Cancer Centre and Paediatric Centre are helping to shape FY2010 as TMC’s strongest yet.
• Childbirths holding steady. After peaking at 2,478 births in Q1, the number of childbirths remained steady at 2,207 and 2,291 in Q2 and Q3 respectively. The economic recovery should continue to underpin revenue growth from both local and foreign patients. Management has shown great finesse and creativity in squeezing efficiency out of existing space but we should be careful when diminishing marginal returns set in.
• Brandname attracting senior specialists. 2 senior specialists commenced tenancy in May. Management had been excited about this development as the specialists would be able to increase patient referrals and utilisation of hospital services. Moreover, we believe the best people to ‘advertise’ for the Company are the senior specialists who vote with their own reputation and commitment.
• Vietnam hospital soft opening on track. TMC’s first consultancy and management project in Hanh Phuc is targeted to have its soft opening in Oct 2010. This would be well into Q1FY2011 and we already expect any meaningful contribution to come only in FY2012. Being the first of three Vietnam hospitals to be built under the agreement, there may be a learning curve to scale. We expect things to be smoother when the 2nd hospital in Hanoi comes around.
• Maintain ‘ACCUMULATE’ and raise FV to 79.5 SG cents. The stronger-than-expected Q3 leads us to raise our FY10 revenue and NPAT forecasts to S$79.0m and S$15.7m. FY11 and FY12 NPAT forecasts are also raised slightly by 2.6% and 1.8% respectively. The next significant catalyst that we expect to see on the horizon are more concrete plans for the 2nd hospital project in Hanoi. Our FV is raised to 79.5 SG cents and recommendation remains at ACCUMULATE.
SPH – BT
SPH profit up a robust 29.9% in Q3
Rise due to rebound in ad sales, higher contribution from property segment
SINGAPORE Press Holdings (SPH) reported a 29.9 per cent increase in its net profit for the third quarter on the back of a strong rebound in advertising sales and higher contribution from its property segment.
Earnings for the three months ended May 31 stood at $165 million, up from $127 million in the same period a year ago, the group said yesterday.
This translated to earnings of 10 cents per share for the quarter, against earnings of eight cents per share a year ago.
Recurring earnings grew 34.7 per cent to $177 million from a year ago, buoyed by better performance in the group’s newspaper and magazine segment.
With a rebound in advertising sales, revenue from the segment rose 19.8 per cent to $266 million.
Print advertisement revenue was up 28.1 per cent to $204 million, thanks to higher sales in advertisement categories such as recruitment.
Circulation sales, however, dipped 3.1 per cent for the quarter to about $53 million.
Revenue from its property segment jumped 43.4 per cent to $135 million, due to higher revenue from Sky@eleven – which secured its temporary occupation permit in May – and the increase in rental income from Paragon.
But the media group also posted a 33 per cent drop in investment income to $11.7 million compared to a year ago. The income mainly comprised dividend and interest income.
Property development costs of $28.1 million were recognised for Sky@eleven, up 54.3 per cent.
Staff costs increased by 36.1 per cent to $96.4 million due to higher variable bonus provision in line with the improved profits from the newspaper business and lower government jobs credit grant received this year.
This was also met by a 14.6 per cent decline in materials, consumables and broadcasting costs to $38.8 million, thanks largely to lower newsprint costs.
As in the previous corresponding quarter, no dividend was declared for the period.
For the nine months, net profit surged 47.4 per cent to $423 million. Recurring profits stood at $464 million, up 31.4 per cent compared to the nine-month period a year ago.
Operating revenue of the newspaper and magazine segment rose 8.3 per cent to $732 million.
Print advertisement revenue rose 11.8 per cent to $552 million, while circulation revenue dipped 2.4 per cent to about $157 million.
Investment income for the nine-month period swung into the black to $25.4 million, compared to an investment loss of $16.2 million a year ago.
‘Our print advertisement revenue and profit from our core newspaper business have rebounded strongly, in tandem with the economic recovery,’ said SPH chief executive Alan Chan.
SPH remains committed to developing its digital and interactive media businesses, he added.
Barring unforeseen circumstances, the directors expect the group’s overall FY2010 performance to be better than that of the previous financial year.
SPH shares gained four cents yesterday, or a shade over one per cent, to close at $3.93.
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.