Author: kktan
ComfortDelgro – DBSV
Another record year
- Record 4Q/FY13 profits within expectations
- Dividend payout inched up to 56.5% with 4 Scts final DPS (FY13: 7Scts vs FY12: 6.4 Scts)
- Healthy balance sheet to pursue growth via M&As; medium term target of 60% overseas contribution
- Steady profile; maintain BUY rating and S$2.19 TP
4Q13 results in line. 4Q13 net profit inched up 4% y-o-y to S$59.9m, taking FY13 net profit to a record S$263m (+6% yo-y), despite cost challenges, particularly in Singapore. 4Q revenue grew 9.5% y-o-y driven by all segments except Automotive Engineering. However, EBIT margin dipped 1ppt to 9.6% on higher operating expenses (+10.7%), largely staff costs (+17.7%), fuel & electricity (+21.1%), but there were partly offset by lower materials & consumables costs (-10%).
Higher dividend payout. The Group declared 4 Scts DPS in the quarter, taking full year dividends to 7 Scts. This implies 56.5% payout (FY12: 6.4 Scts, 54.2% payout).
Healthy balance sheet to pursue growth. The Group is in net cash position which means it has headroom to pursue growth and/or raise dividend payouts. Either option could be a share price catalyst. Management has a medium term (5-7 years) target to increase overseas profit contribution to 60%, from 48% currently; we believe the Group would achieve this via M&As. We like the Group’s strategy and track record of bite-sized accretive acquisitions.
Maintain BUY for steady profile; TP S$2.19. Despite challenges at its Singapore bus and rail operations as well as a rising cost environment, the Group has been delivering steady growth. We attribute this to its geographical and business diversification. This differs markedly from its local peer, SMRT. Valuation remains reasonable at 15x FY14F PE.
ComfortDelgro – DBSV
Another record year
- Record 4Q/FY13 profits within expectations
- Dividend payout inched up to 56.5% with 4 Scts final DPS (FY13: 7Scts vs FY12: 6.4 Scts)
- Healthy balance sheet to pursue growth via M&As; medium term target of 60% overseas contribution
- Steady profile; maintain BUY rating and S$2.19 TP
4Q13 results in line. 4Q13 net profit inched up 4% y-o-y to S$59.9m, taking FY13 net profit to a record S$263m (+6% yo-y), despite cost challenges, particularly in Singapore. 4Q revenue grew 9.5% y-o-y driven by all segments except Automotive Engineering. However, EBIT margin dipped 1ppt to 9.6% on higher operating expenses (+10.7%), largely staff costs (+17.7%), fuel & electricity (+21.1%), but there were partly offset by lower materials & consumables costs (-10%).
Higher dividend payout. The Group declared 4 Scts DPS in the quarter, taking full year dividends to 7 Scts. This implies 56.5% payout (FY12: 6.4 Scts, 54.2% payout).
Healthy balance sheet to pursue growth. The Group is in net cash position which means it has headroom to pursue growth and/or raise dividend payouts. Either option could be a share price catalyst. Management has a medium term (5-7 years) target to increase overseas profit contribution to 60%, from 48% currently; we believe the Group would achieve this via M&As. We like the Group’s strategy and track record of bite-sized accretive acquisitions.
Maintain BUY for steady profile; TP S$2.19. Despite challenges at its Singapore bus and rail operations as well as a rising cost environment, the Group has been delivering steady growth. We attribute this to its geographical and business diversification. This differs markedly from its local peer, SMRT. Valuation remains reasonable at 15x FY14F PE.
SATS – DBSV
Grounded by weak Yen and high staff costs
- 3Q14 results below expectations; net profit dropped by 8.7% to S$42.9m
- Weaker contribution from Food Solutions arising from weaker JPY, higher staff costs
- Trim forecasts by 9%/2%
- Maintain HOLD, TP revised to S$3.25
3Q14 results underperform on weaker JPY, higher staff costs. 3Q14 net profit dropped by 8.7% y-o-y to S$42.9m, which was below our expectations. The Group’s revenue slipped by 1.1% to S$465.5m, largely on weaker contribution from its Food Solutions’ segment (-3.9%), mitigated partially by higher contribution from Gateway Services (+4.3%). Food Solutions’ revenue was impacted by JPY depreciation, as well as fewer unit meals served (-5.7%) in 3Q14.
EBIT margins weakened by 0.9ppt to 9%. Operating expenses dipped by a slower pace vis-à-vis topline, largely on the back of higher staff costs. The Group continued to be impacted by higher worker levies. As a result, EBIT margins dipped by 0.9ppt to 9% (3Q13: 9.9%).
Trim forecasts by 9%/2%. We cut our net profit forecasts by 9%/ 2% for FY14F/15F, on the back of a slower topline growth assumption due to a weaker JPY. Our FY15F downward revision is mitigated by the inclusion of contribution from its proposed Singapore Cruise Centre acquisition, which is currently being reviewed by the Competition Commission of Singapore. Management remains hopeful for an outcome by May 2014.
Maintain HOLD, TP at S$3.25. Our TP is adjusted down to S$3.25, due to lower earnings forecasts but mitigated partially, as we roll over our valuation base to FY15F. SATS trades at c.15.9x FY15F PE, which is +0.5 std deviation above its historical mean, and largely in line with regional peers. We believe downside to its share price should be muted, with its strong cash generation and relatively attractive dividend yield of c.5%. Maintain HOLD.
SATS – DBSV
Grounded by weak Yen and high staff costs
- 3Q14 results below expectations; net profit dropped by 8.7% to S$42.9m
- Weaker contribution from Food Solutions arising from weaker JPY, higher staff costs
- Trim forecasts by 9%/2%
- Maintain HOLD, TP revised to S$3.25
3Q14 results underperform on weaker JPY, higher staff costs. 3Q14 net profit dropped by 8.7% y-o-y to S$42.9m, which was below our expectations. The Group’s revenue slipped by 1.1% to S$465.5m, largely on weaker contribution from its Food Solutions’ segment (-3.9%), mitigated partially by higher contribution from Gateway Services (+4.3%). Food Solutions’ revenue was impacted by JPY depreciation, as well as fewer unit meals served (-5.7%) in 3Q14.
EBIT margins weakened by 0.9ppt to 9%. Operating expenses dipped by a slower pace vis-à-vis topline, largely on the back of higher staff costs. The Group continued to be impacted by higher worker levies. As a result, EBIT margins dipped by 0.9ppt to 9% (3Q13: 9.9%).
Trim forecasts by 9%/2%. We cut our net profit forecasts by 9%/ 2% for FY14F/15F, on the back of a slower topline growth assumption due to a weaker JPY. Our FY15F downward revision is mitigated by the inclusion of contribution from its proposed Singapore Cruise Centre acquisition, which is currently being reviewed by the Competition Commission of Singapore. Management remains hopeful for an outcome by May 2014.
Maintain HOLD, TP at S$3.25. Our TP is adjusted down to S$3.25, due to lower earnings forecasts but mitigated partially, as we roll over our valuation base to FY15F. SATS trades at c.15.9x FY15F PE, which is +0.5 std deviation above its historical mean, and largely in line with regional peers. We believe downside to its share price should be muted, with its strong cash generation and relatively attractive dividend yield of c.5%. Maintain HOLD.
SingTel – OSK DMG
Some FX Reprieve
At 69-73%, SingTel’s 9MFY14 results were slightly below our expectations but in line with consensus. The improvement in Optus’ cost structure and a steadier SGD/AUD mitigated a seasonally weaker Singapore business. Our forecast is under review pending the results call with management later today. SingTel stays NEUTRAL on lack of re-rating catalyst and competitive headwinds.
Broadly in line. SingTel’s 3QFY14 core earnings of SGD910m (+3.9% y-oy, 2.8% q-o-q) brought 9MFY14 core earnings to SGD2.69bn (+3.1% y-o-y). A reprieve is seen from the recovery in the AUD and INR vs the SGD q-o-q (feeding into 1QCY14), although the IDR and THB depreciated another 2-10% q-o-q.
Seasonal uptick in mobile revenue. As expected, SingTel’s consumer revenue (-11% y-o-y) was clipped by the double-digit decline in Optus (80% of revenue) from lower mobile termination rates (MTR). It rose 4% q-o-q on the high base of seasonal sales in 4QFY13. Group enterprise revenue was stable on the back of the cautious business environment. The improved cost structure (mostly at Optus) contributed to the y-o-y EBITDA growth but was down q-o-q on seasonality.
Associate contribution up 4% y-o-y. Bharti Airtel (BHARTI IN, NR) posted an improved showing (higher ARPU and data usage), but rising competition and 3G related costs dragged down Advanced Info Service (ADVANC TB, BUY, TP: THB2.48)’s contribution (+1% y-o-y). Telkomsel (+15% y-o-y) benefited from a stable market and higher data usage.
Digital business (GDL) in embryonic stage. Although revenue momentum improved further in 3QFY14 (+14.3% q-o-q/+40% y-o-y), EBITDA losses widened to SGD114m in 9MFY14 from SGD72m in 1HFY14. The bulk of the revenue came from Amobee.
Guidance tweaked. Management has reiterated its broad guidance of: i) Singapore revenue to increase by low single-digits, ii) Optus revenue to decline by mid-single digits, and iii) GDL to incur start-up losses. It has, however tweaked guidance for group consumer revenue to “decline by low double-digits” from a “decline of high single-digits”.