Author: kktan
SATS – Lim & Tan
- Notwithstanding the one-off impairment charge for sale of Daniels Group which was completed in October 2011 for S$16.8 million and other small exceptional items, SAT’s 4Q ’13 underlying net profit from continuing operations rose 32.4% y-o-y, buoyed by increased flights and higher meal volumes.
- SATS also proposed a final dividend of 6 cents per share, and cut its special dividend to 4 cents per share from last year’s 15 cents per share. The full financial year 2013 dividend yield amounts to 4.7%.
- Management guided that demand for the Group’s gateway and food business could continue to be underpinned by strong growth of passenger traffic at Changi Airport and within the Asian region. But air freight demand could remain weak. Similar to other Singapore corporates with domestic operations, the company could see rising wage costs due to the Singapore government’s manpower policies going forward.
ComfortDelgro – OCBC
Decent start to the year
- Group did well in 1Q13
- Fuel savings for FY13
- Still hopeful for fare increase
1Q13 results show YoY improvement
ComfortDelGro’s 1Q13 results saw revenue increasing slightly by 1.8% YoY to S$870.8m on the back of broad–based growth across its segments while operating profit improved 2.8% to S$95.9m as higher staff (+5.1% to S$276.5m) and repairs and maintenance expenses (+1.7% to S$42.9m) were offset by a reduction in fuel and electricity expenditure (-9.7% to S$64.9m). As a result, PATMI rose 7.9% to S$57.7m.
Group to benefit from lower fuel costs
The group has benefited from proactive fuel hedges put in place during the lull in fuel prices, and this has helped to mitigate cost pressures in other areas (i.e. increase in hiring related to the Downtown Line) as well as take the sting out of sustained weakness in its SG core bus operations, which saw a wider operating loss of S$5.4m (1Q12: -S$3.7m). With 60-70% of its diesel and 70% of its electricity requirements hedged for FY13, we expect this trend to continue in the coming quarters.
No word on possible fare increase but other catalysts remain
We had previously expected the fare review committee to announce a fare increase by the middle of 2Q13. With that time-frame now unrealistic, we temper our projections for ComfortDelgro’s Singapore operations for the remainder of FY13 but still expect to see an implementation this year. Nonetheless, the group’s other segments (i.e. Viacom, taxi etc) and overseas ventures remain attractive. For instance, it is in the tendering process for additional bus routes in NSW, Australia, and if successful, will benefit the group beyond FY13.
ComfortDelgro – OCBC
Decent start to the year
- Group did well in 1Q13
- Fuel savings for FY13
- Still hopeful for fare increase
1Q13 results show YoY improvement
ComfortDelGro’s 1Q13 results saw revenue increasing slightly by 1.8% YoY to S$870.8m on the back of broad–based growth across its segments while operating profit improved 2.8% to S$95.9m as higher staff (+5.1% to S$276.5m) and repairs and maintenance expenses (+1.7% to S$42.9m) were offset by a reduction in fuel and electricity expenditure (-9.7% to S$64.9m). As a result, PATMI rose 7.9% to S$57.7m.
Group to benefit from lower fuel costs
The group has benefited from proactive fuel hedges put in place during the lull in fuel prices, and this has helped to mitigate cost pressures in other areas (i.e. increase in hiring related to the Downtown Line) as well as take the sting out of sustained weakness in its SG core bus operations, which saw a wider operating loss of S$5.4m (1Q12: -S$3.7m). With 60-70% of its diesel and 70% of its electricity requirements hedged for FY13, we expect this trend to continue in the coming quarters.
No word on possible fare increase but other catalysts remain
We had previously expected the fare review committee to announce a fare increase by the middle of 2Q13. With that time-frame now unrealistic, we temper our projections for ComfortDelgro’s Singapore operations for the remainder of FY13 but still expect to see an implementation this year. Nonetheless, the group’s other segments (i.e. Viacom, taxi etc) and overseas ventures remain attractive. For instance, it is in the tendering process for additional bus routes in NSW, Australia, and if successful, will benefit the group beyond FY13.
SIAEC – CIMB
Yield compression
SIE’s share price has outperformed the index by 12% YTD due to investors’ preference for high yield plays. However, with its less-than-spectacular FY3/13 results and dividend yield compression to 4.4%,we see limited upside to the share price.Maintain Neutral.
FY13 net profit is below expectations, at 94% of our forecast and 97% of consensus, because of a revenue shortfall. 4Q net profit accounted for only 23% of our FY13. SIE increased its dividend payout from 85% to 90% with a final DPS of 15 Scts (total DPS: 22 Scts). We cut our FY13-15 EPS by 8% for lower revenue but raise our target price, still based on blended P/E (19x from 15x) and DCF, in view of increased appetite for yield stocks.
Lower revenue, higher staff costs
4Q revenue fell 10% yoy but was stable qoq, taking FY13 revenue to S$1.15bn. FY13 revenue from repair and overhaul fell 5% yoy to S$725m due to lower volume of FMP and project revenue (cabin interior reconfiguration of aircraft). Revenue from line maintenance improved 5% yoy to S$421m, backed by a higher number of flights handled/day (+1% qoq, +5% yoy) in Changi Airport. EBITDA margin dipped 30bp to 14.3% due to higher staff cost, which accounted for 43% of operating costs (previously 40%). EBITDA margin would have been 11.6%, if not for the S$3.6m write-back of debt provisions and S$3.3m forex gain.
Weaker associates
Associates’ profit fell 30% yoy to S$63m while JV profit rose 22% yoy to S$96.2m. This could due to a weaker showing by Eagle Services (services P&W engines) compared to SAESL which services Rolls Royce engines.
Zero growth in earnings
Despite steady growth in flights handled in Changi airport in FY13 with no major capacity cuts among airlines, SIE achieved zero profit growth vs. its historical c.4% p.a. Management expects its performance to be stable in the near term but emphasised that the operating environment remains challenging due to uncertainties in the global economy.
SIAEC – CIMB
Yield compression
SIE’s share price has outperformed the index by 12% YTD due to investors’ preference for high yield plays. However, with its less-than-spectacular FY3/13 results and dividend yield compression to 4.4%,we see limited upside to the share price.Maintain Neutral.
FY13 net profit is below expectations, at 94% of our forecast and 97% of consensus, because of a revenue shortfall. 4Q net profit accounted for only 23% of our FY13. SIE increased its dividend payout from 85% to 90% with a final DPS of 15 Scts (total DPS: 22 Scts). We cut our FY13-15 EPS by 8% for lower revenue but raise our target price, still based on blended P/E (19x from 15x) and DCF, in view of increased appetite for yield stocks.
Lower revenue, higher staff costs
4Q revenue fell 10% yoy but was stable qoq, taking FY13 revenue to S$1.15bn. FY13 revenue from repair and overhaul fell 5% yoy to S$725m due to lower volume of FMP and project revenue (cabin interior reconfiguration of aircraft). Revenue from line maintenance improved 5% yoy to S$421m, backed by a higher number of flights handled/day (+1% qoq, +5% yoy) in Changi Airport. EBITDA margin dipped 30bp to 14.3% due to higher staff cost, which accounted for 43% of operating costs (previously 40%). EBITDA margin would have been 11.6%, if not for the S$3.6m write-back of debt provisions and S$3.3m forex gain.
Weaker associates
Associates’ profit fell 30% yoy to S$63m while JV profit rose 22% yoy to S$96.2m. This could due to a weaker showing by Eagle Services (services P&W engines) compared to SAESL which services Rolls Royce engines.
Zero growth in earnings
Despite steady growth in flights handled in Changi airport in FY13 with no major capacity cuts among airlines, SIE achieved zero profit growth vs. its historical c.4% p.a. Management expects its performance to be stable in the near term but emphasised that the operating environment remains challenging due to uncertainties in the global economy.