Author: kktan
SingPost – DBSV
Regional E-commerce player in the making
- 1Q13 underlying profit of S$36.2m (-0.9% y-o-y, +13.8% q-o-q) was slightly below estimate due to forex losses; declared S$1.25 Scts interim DPS, in line
- Transforming into a major E-commerce player in Asia, where it can ride on last mile delivery network of postal peers in various countries
- Maintain BUY with a revised TP of S$1.50; has S$146m net cash for more acquisitions
1Q13 underlying profit of S$36.2m (-0.9% y-o-y, +13.8% q-o-q) was slightly below estimate due to forex losses; declared S$1.25 Scts interim DPS, in line
Highlights
Revenue grew 33% y-o-y. Excluding contribution from new subsidiaries, revenue grew 6.5%. Overall operating profit edged down 1% to S$49m as it develops the new businesses. Mail segment healthy. This segment booked S$36.8m operating profit, up 6.3% y-o-y after consolidating Novation Solutions. The Logistics segment booked S$3.3m operating profit, up 36%. But operating profit for Retail & E-commerce fell 35% to S$2.4m due to development activities. Trimmed FY14F/15F earnings by 3%. Singpost booked S$2m forex losses from its international mail & logistics businesses. It will manage forex losses more pro-actively going forward but it cannot avoid that completely.
Our View
Singpost is positioned to ride on E-commerce growth in Asia. The company is pursuing a Low-Cost-Carrier (LCC) strategy rather than speed to compete with the likes of DHL and FedEx Singpost enjoys a niche due to its access to last mile delivery network of postal peers in various countries. It has a strong balance sheet with S$146m net cash, and acquires a business only if it is earnings-accretive and provides new capabilities or geographies. Singpost has spent S$179m on acquisitions over the last few years.
Recommendation
Singpost offers mid-single digit growth plus ~5% yield. New acquisitions may give fillip to growth. Our revised S$1.50 TP (DCF: WACC 6%, terminal growth 0%) implies 20% total potential returns.
July 2013
Results Announcement
- 15 Jul 13 : SPH (Q313) – EPS = 12ct (todate 22ct)
- 16 Jul 13 : M1 (Q213) – EPS = 4.3ct (todate 8.7ct) ; Div = 6.8ct
- 22 Jul 13 : SIAEC (Q114) – EPS 6.22ct
- 25 Jul 13 : SATS (Q114) – EPS 4.1ct
- 30 Jul 13 : SMRT (Q114) – EPS 1.1ct
- 2 Aug 13 : SingPost (Q114)
- 6 Aug 13 : HLFin (Q213)
- 13 Aug 13 : SBSTransit (Q114)
- 13 Aug 13 : STEng (Q213)
- 14 Aug 13 : ComfortDelgro (Q114)
STI = 3221.93 (+8.48)
|
Stock |
Period |
EPS cts |
DPS cts |
Mkt |
Yield |
PE |
Div Breakdown |
|
HL Fin |
FY12 (Dec) |
17.60 |
12.00 |
$2.680 |
4.478% |
15.23 |
Interim 4ct ; Final 8ct |
|
SingPost |
FY13 (Mar) |
6.435 |
6.25 |
$1.315 |
4.753% |
20.44 |
Q1, Q2, Q3 1.25ct ; Q4 2.5ct |
|
SPH |
FY12 (Aug) |
23 |
24.0 |
$4.390 |
5.467% |
19.09 |
Interim 7ct ; Final 9ct + Special 8ct |
Aviation Services
|
Stock |
Period |
EPS cts |
DPS cts |
Mkt |
Yield |
PE |
Div Breakdown |
|
SATS |
FY13 (Mar) |
16.60 |
15.0 |
$3.320 |
4.518% |
20.00 |
Interim 5ct ; Final 6ct + Special 4ct |
|
SIA Engg |
FY13 (Mar) |
24.51 |
22.0 |
$4.870 |
4.517% |
19.87 |
Interim 7ct ; Final 15ct |
|
ST Engg |
FY12 (Dec) |
18.76 |
16.8 |
$4.280 |
3.925% |
22.81 |
Interim 3ct ; Final 4ct + Special 9.8ct |
Note : SATS Special Div is Observed to be Non-Recurring
Transport
|
Stock |
Period |
EPS cts |
DPS cts |
Mkt |
Yield |
PE |
Div Breakdown |
|
SBSTransit |
FY12 (Dec) |
6.01 |
3.00 |
$1.390 |
2.158% |
23.13 |
Interim 1.35ct ; Final 1.65ct |
|
ComfortDelGro |
FY12 (Dec) |
11.89 |
6.40 |
$2.000 |
3.200% |
16.82 |
Interim 2.9ct ; Final 3.5ct |
|
SMRT |
FY13 (Mar) |
5.5 |
2.50 |
$1.415 |
1.767% |
25.73 |
Interim 1.5ct ; Final 1.0ct |
TELCO
|
Stock |
Period |
EPS cts |
DPS cts |
Mkt |
Yield |
PE |
Div Breakdown |
|
SingTel |
FY13 (Mar) |
22.02 |
16.8 |
$3.930 |
4.275% |
17.85 |
Interim 6.8ct ; Final 10ct |
|
M1 |
FY12 (Dec) |
16.1 |
14.6 |
$3.230 |
4.520% |
20.06 |
Interim 6.6ct ; Final 6.3ct + Special 1.7ct |
|
StarHub |
FY12 (Dec) |
20.93 |
20 |
$4.400 |
4.545% |
21.02 |
Q1 5ct ; Q2 5ct ; Q3 5ct ; Q4 5ct |
Funds / Infrastructure
|
Stock |
Period |
DPS cts |
Mkt |
Yield |
NAV |
Div Breakdown |
|
SPAus |
2H – Mar13 |
A4.1 (Gross) |
$1.390 |
6.741% |
A$0.91 |
1H13 A4.1ct ; 2H13 A4.1ct |
|
MIIF |
FY13 – Guidance |
1.90 |
$0.163 |
11.656% |
? |
1H12 2.75ct ; 2H12 2.75ct + 3ct (Special) |
* SPAus DPU in A$. Yield is Calculated Using Latest Exchange Rate (1.1427) fm Yahoo
NOTES :
- Mkt Price is as on 31-Jul-13
- M1 : 1H13 (Jun) – Interim 6.8ct
- MIIF : FY13 Guidance 1H13 (Jun) –0.7ct ; 2H13 (Dec) – 1.2ct (Final) ; APTT IPO Entitlement / 1000 MIIF Shares (Estimate) = 457 APTT Shares or $443.29
- SPAus : 2H13 (Mar13) – A4.1ct = A1.367ct (Franked) + A2.649ct (Interest) + A0.084ct (Capital Returns) ; 1H13 (Sep12) – A4.1ct = A1.367ct (Franked) + A2.467ct (Interest) + A0.266ct (Capital Returns)
- SPAus : FY14 Guidance = A8.36ct
- SATSvcs : 2H13 (Mar13) – Final 6ct + Special 4ct ; 1H13 (Sep12) – Interim 5ct
- SingTel : 2H13 (Mar) – Final 10ct ; 1H13 (Sep12) – Interim 6.8ct ; Div Policy – 60% to 75% of Underlying Net Profit
- SIAEC : Q413 (Mar13) – Final 15ct ; Q213 (Sep12) – Interim 7ct
- StarHub : Q113 (Mar) – 5ct
- SingPost : Q413 (Mar13) – 2.5ct ; Q313 (Dec12) – 1.25ct ; Q213 (Sep12) – 1.25ct ; Q113 (Jun12) – 1.25ct
- SMRT : Q413 (Mar13) – Final 1.0ct ; Q213 (Sep12) – Interim 1.5ct
- SPH : 1H13 (Feb) – Interim = 7ct
- HLFin : 1H12 (Jun) – 4ct ; 2H12 (Dec) – 8ct (Final)
- ST Engg : 1H12 (Jun) – 3ct ; 2H12 (Dec) – 4ct (Final) + 9.8ct (Special)
- ComfortDelgro : Q412 (Dec) – 3.5ct ; Q212 (Jun) – 2.9ct
- StarHub : FY13 Div Guidance – 5ct/Q
- SBSTransit : Q212 (Jun) – 1.35ct ; Q412 (Dec) – 1.65ct
July 2013
Results Announcement
- 15 Jul 13 : SPH (Q313) – EPS = 12ct (todate 22ct)
- 16 Jul 13 : M1 (Q213) – EPS = 4.3ct (todate 8.7ct) ; Div = 6.8ct
- 22 Jul 13 : SIAEC (Q114) – EPS 6.22ct
- 25 Jul 13 : SATS (Q114) – EPS 4.1ct
- 30 Jul 13 : SMRT (Q114) – EPS 1.1ct
- 2 Aug 13 : SingPost (Q114)
- 6 Aug 13 : HLFin (Q213)
- 13 Aug 13 : SBSTransit (Q114)
- 13 Aug 13 : STEng (Q213)
- 14 Aug 13 : ComfortDelgro (Q114)
STI = 3221.93 (+8.48)
|
Stock |
Period |
EPS cts |
DPS cts |
Mkt |
Yield |
PE |
Div Breakdown |
|
HL Fin |
FY12 (Dec) |
17.60 |
12.00 |
$2.680 |
4.478% |
15.23 |
Interim 4ct ; Final 8ct |
|
SingPost |
FY13 (Mar) |
6.435 |
6.25 |
$1.315 |
4.753% |
20.44 |
Q1, Q2, Q3 1.25ct ; Q4 2.5ct |
|
SPH |
FY12 (Aug) |
23 |
24.0 |
$4.390 |
5.467% |
19.09 |
Interim 7ct ; Final 9ct + Special 8ct |
Aviation Services
|
Stock |
Period |
EPS cts |
DPS cts |
Mkt |
Yield |
PE |
Div Breakdown |
|
SATS |
FY13 (Mar) |
16.60 |
15.0 |
$3.320 |
4.518% |
20.00 |
Interim 5ct ; Final 6ct + Special 4ct |
|
SIA Engg |
FY13 (Mar) |
24.51 |
22.0 |
$4.870 |
4.517% |
19.87 |
Interim 7ct ; Final 15ct |
|
ST Engg |
FY12 (Dec) |
18.76 |
16.8 |
$4.280 |
3.925% |
22.81 |
Interim 3ct ; Final 4ct + Special 9.8ct |
Note : SATS Special Div is Observed to be Non-Recurring
Transport
|
Stock |
Period |
EPS cts |
DPS cts |
Mkt |
Yield |
PE |
Div Breakdown |
|
SBSTransit |
FY12 (Dec) |
6.01 |
3.00 |
$1.390 |
2.158% |
23.13 |
Interim 1.35ct ; Final 1.65ct |
|
ComfortDelGro |
FY12 (Dec) |
11.89 |
6.40 |
$2.000 |
3.200% |
16.82 |
Interim 2.9ct ; Final 3.5ct |
|
SMRT |
FY13 (Mar) |
5.5 |
2.50 |
$1.415 |
1.767% |
25.73 |
Interim 1.5ct ; Final 1.0ct |
TELCO
|
Stock |
Period |
EPS cts |
DPS cts |
Mkt |
Yield |
PE |
Div Breakdown |
|
SingTel |
FY13 (Mar) |
22.02 |
16.8 |
$3.930 |
4.275% |
17.85 |
Interim 6.8ct ; Final 10ct |
|
M1 |
FY12 (Dec) |
16.1 |
14.6 |
$3.230 |
4.520% |
20.06 |
Interim 6.6ct ; Final 6.3ct + Special 1.7ct |
|
StarHub |
FY12 (Dec) |
20.93 |
20 |
$4.400 |
4.545% |
21.02 |
Q1 5ct ; Q2 5ct ; Q3 5ct ; Q4 5ct |
Funds / Infrastructure
|
Stock |
Period |
DPS cts |
Mkt |
Yield |
NAV |
Div Breakdown |
|
SPAus |
2H – Mar13 |
A4.1 (Gross) |
$1.390 |
6.741% |
A$0.91 |
1H13 A4.1ct ; 2H13 A4.1ct |
|
MIIF |
FY13 – Guidance |
1.90 |
$0.163 |
11.656% |
? |
1H12 2.75ct ; 2H12 2.75ct + 3ct (Special) |
* SPAus DPU in A$. Yield is Calculated Using Latest Exchange Rate (1.1427) fm Yahoo
NOTES :
- Mkt Price is as on 31-Jul-13
- M1 : 1H13 (Jun) – Interim 6.8ct
- MIIF : FY13 Guidance 1H13 (Jun) –0.7ct ; 2H13 (Dec) – 1.2ct (Final) ; APTT IPO Entitlement / 1000 MIIF Shares (Estimate) = 457 APTT Shares or $443.29
- SPAus : 2H13 (Mar13) – A4.1ct = A1.367ct (Franked) + A2.649ct (Interest) + A0.084ct (Capital Returns) ; 1H13 (Sep12) – A4.1ct = A1.367ct (Franked) + A2.467ct (Interest) + A0.266ct (Capital Returns)
- SPAus : FY14 Guidance = A8.36ct
- SATSvcs : 2H13 (Mar13) – Final 6ct + Special 4ct ; 1H13 (Sep12) – Interim 5ct
- SingTel : 2H13 (Mar) – Final 10ct ; 1H13 (Sep12) – Interim 6.8ct ; Div Policy – 60% to 75% of Underlying Net Profit
- SIAEC : Q413 (Mar13) – Final 15ct ; Q213 (Sep12) – Interim 7ct
- StarHub : Q113 (Mar) – 5ct
- SingPost : Q413 (Mar13) – 2.5ct ; Q313 (Dec12) – 1.25ct ; Q213 (Sep12) – 1.25ct ; Q113 (Jun12) – 1.25ct
- SMRT : Q413 (Mar13) – Final 1.0ct ; Q213 (Sep12) – Interim 1.5ct
- SPH : 1H13 (Feb) – Interim = 7ct
- HLFin : 1H12 (Jun) – 4ct ; 2H12 (Dec) – 8ct (Final)
- ST Engg : 1H12 (Jun) – 3ct ; 2H12 (Dec) – 4ct (Final) + 9.8ct (Special)
- ComfortDelgro : Q412 (Dec) – 3.5ct ; Q212 (Jun) – 2.9ct
- StarHub : FY13 Div Guidance – 5ct/Q
- SBSTransit : Q212 (Jun) – 1.35ct ; Q412 (Dec) – 1.65ct
StarHub – OCBC
Downgrade to SELL; BPL likely non-event
- Likely no major BPL boost
- More downside risk ahead
- Downgrade to SELL
BPL cross-carriage likely non-event
StarHub Ltd will be able to cross carry the widely-followed BPL (Barclays Premier League) live matches for the upcoming 2013 to 2016 seasons; this after rival SingTel’s appeal against the MDA’s (Media Development Authority) direction was rejected. However, with a seemingly steep price point of S$59.90/month (before GST) for new subscribers (while existing mioTV subscribers continue to pay the current S$34.90 (before GST)), we suspect that any migration of subscribers from mioTV to StarHub’s cable TV platform would be quite muted. And even if there are migrations, StarHub subscribers will be paying the fees directly to SingTel.
Strong recovery after our upgrade
Meanwhile, StarHub has seen a strong recovery after we upgraded our rating from Sell to Hold on 3 Jun, with the stock rising some 9.5% to a recent S$4.39 high. Back then, we note that the dividend yield has risen back to around 5% (or 5.2% based on our fair value), but based on current price, the yield has fallen back to 4.7%, which is just decent. However, with 10-year SGS bond yields back to around 2.5%, we feel that further upside from here may be capped, especially with consensus siding towards further rate increases in the future.
Downgrade to SELL
In light of the likely muted boost from the BPL cross carriage and recent strong run-up in share price, we feel that the stock may have run ahead of its fundamentals. Recall previously that StarHub has guided for a lower single-digit revenue growth while maintaining its service EBITDA margin at 31%. As we are also keeping our DCF-based fair value unchanged at S$3.82 (already accounted for a higher risk-free rate), we foresee more downside risk from here. Hence, we downgrade our call back from Hold to SELL.
STEng – MayBank Kim Eng
Robust Outlook To Support Lofty Valuations
- Despite premium valuations, ST Engineering (STE)’s defence and commercial-driven record order book of SGD13b, along with a potential catalyst in the form of a major billion-dollar contract, continue to justify a BUY rating. As a heuristic gauge of the stock’s valuation, STE trades at an undemanding market capitalisation-to-order ratio of 1.0x, below its market cycle average of 1.2x. Our target price of SGD4.80 is based on 23x blended FY13/14 PER.
- STE is in the running for a major contract from the US Coast Guard (USCG), which could be worth c.USD10b. This could be announced as early as 3Q13. Closer to home, a recent Singapore Navy patrol vessel contract could be its biggest since 2008.
- ST Aerospace’s recent acquisition of a 35% stake in EADS EFW, a Centre of Excellence for freighter conversions, is meant to leverage on its years of experience in passenger-to-freighter (PTF) conversions. It plans to develop a conversion package for two versions of converted freighters – A330-200P2F and A330-300P2F – where there is a major market opportunity, as Airbus estimates that 847 mid-sized aircraft would be converted into freighters over the next 20 years.