Author: tfwee
SingPost – DBS
Downgrade on valuation grounds
• Singpost’s CEO, Mr, Wilson Tan has stepped down to pursue other opportunities.
• With Dy CEO, Mr Ng Hin Lee taking care of Singpost in the interim, we don’t see any
discontinuity.
• The stock has done reasonably well in the last two months. Downgrade to HOLD for limited
upside.
The departing CEO has achieved what was expected of him. Mr. Wilson Tan joined Singpost in Oct 07 and was expected to focus on regionalization of Singpost’s business. In his 15 months tenure, he is credited with two good acquisitions, which have helped Singpost to expand its business in the region and monetize its intangible assets.
We don’t see any operational discontinuity. Singpost’s board would be actively pursuing the search for a new CEO, while CFO Mr Ng Hin Lee, who was promoted to Dy. CEO role last week, would take care of the company in the interim. We think that Singpost can continue to deliver as many of the strategic initiatives are already in place and execution should not be a problem with an experienced management team at each segment level.
Downgrade to HOLD on valuation grounds. Based on 6% yield (average historical yield), our target price remains unchanged at S$1.05, which translates to 13.5x FY10F PER, still at 10% discount to its average historical PER of 15x. We see potential upside of 3% with 6.5% dividend yield. The stock could be re-rated if (i) Singpost is able to grow its regional business through acquisitions further, or (ii) Singpost can monetize its HQ building.
StarHub – DBS
Expectations too high!
• We estimate an adverse impact of 5%/10% and 2%/3% on FY10F/11F earnings due to EPL loss
and expiry of job credit scheme respectively.
• Our FY10F/11F earnings are 8/11% below consensus
• We doubt if free cash flow can sustain 20 cents DPS in FY11F. Maintain FV with revised TP of
S$2.06
Why we differ? Contrary to the street’s expectations of EPL loss being EBITDA neutral, we estimate negative impact of at least S$17m/S$34m on FY10F/11F earnings. Our estimate of households leaving StarHub broadband is higher than street expectations. We estimate 14% of StarHub broadband subscribers may leave StarHub for SingTel and M1 within a year. Secondly, street may not have captured potential loss of mobile subscribers due to the “hubbing” proposition, which we think cannot be ignored. We estimate over 3% of post-paid mobile subscribers may leave StarHub in a year. We look forward to FY10F guidance from the incoming CEO Mr. Neil Montefiore on 4th Feb with 4Q09F results briefing.
Can free cash flow sustain 20 Scts DPS beyond 2010? Management has guided for annual 20 Scts DPS, which exceeds its est. FY09F EPS, as StarHub does not have to pay cash tax till late 2010. However beyond 2010, in our view, 20 Scts DPS could be sustained only by raising debt.
Our FY10F/11F earnings are 8%/11% below consensus. We are mindful of higher depreciating charges due to OpCo related capex in FY10F. We would value the company on 12x FY10F PER, at 10% discount to M1’s 13x target PER, due to (i) M1’s lower net debt to EBITDA of 0.7x compared to 1.0x for StarHub, and (ii) M1’s stable earnings prospects compared to declining earnings for StarHub.
SingPost – BT
SingPost looking for new group CEO
SINGAPORE Post Ltd (SingPost) is on the lookout for a new group chief executive officer (GCEO) as current GCEO Wilson Tan has resigned.
Mr Tan, who is leaving SingPost ‘to pursue other opportunities’, will also step down as director of the board. His last day at SingPost will be April 3.
Just last week, SingPost announced it was appointing its chief financial officer Ng Hin Lee as deputy group CEO. Mr Ng, who concurrently remains CFO, officially began his term as deputy group CEO yesterday.
If a suitable candidate is not selected by April 3, Mr Ng will assume the duties of group CEO until a replacement is found.
Mr Tan, who came on board in October 2007, has contributed towards SingPost’s transformation as it diversified from a postal services provider to a mail, logistics and retail solutions provider in the region, SingPost said in an announcement to the Singapore Exchange (SGX) yesterday.
It was also under his helm that SingPost acquired Quantium Solutions International (formerly known as G3 Worldwide Aspac) and US-based Postea Inc, which is expected to bolster SingPost’s regional growth and expansion.
Mr Tan said: ‘It is gratifying to see SingPost develop from strength to strength and indeed to be part of its exciting transformational journey. The postal and logistics landscape has been evolving in tandem with changes in customers’ lifestyles, and SingPost has been adapting and reinventing itself to stay relevant to its customers.’
SingPost chairman Lim Ho Kee added: ‘On behalf of the board, I wish to register our appreciation to Wilson for his invaluable contributions and leadership, especially under the difficult and challenging environment of the past year.’
For the second quarter ended Sept 30, 2009, SingPost chalked up a net profit of $40.5 million, up 8.3 per cent from the previous corresponding quarter. Without the amortisation of deferred gain (which relates to the collaboration with Postea), the government’s Job Credit Scheme and other one-off items, the group’s underlying profit fell 8.6 per cent to $35.4 million.
Group revenue – which was strengthened by the consolidation of revenue from Quantium Solutions Group – increased 7.9 per cent to $130.3 million.
SingPost – BT
SingPost appoints CFO as deputy CEO
SINGAPORE Post (SingPost) has announced the appointment of Ng Hin Lee, its chief financial officer (CFO), as deputy group chief executive officer with effect from Monday.
Mr Ng, who joined SingPost in 2006, will concurrently hold the functions and responsibilities of the CFO. The move comes as SingPost plans to boost its presence overseas.
The group said Mr Ng was responsible for the successful conclusion of the Postea deal in which SingPost took a 30 per cent stake in the US-based postal and logistics technology solutions company. He also played a major role in the full acquisition of its then joint-venture G3 WorldWide Aspac which has since been renamed Quantium Solutions International.
Said Wilson Tan, group CEO of SingPost: ‘With Hin Lee’s more than 20 years of leadership experience, in particular in the area of corporate finance, he will play a key role in SingPost’s regional expansion plans.’
SingPost said since its listing in 2003, it has been strengthening its management bench through the infusion of new talent, succession planning and organisational changes to support the company’s growth and expansion plans.
SingPost’s mail business will continue to be headed by executive vice-president Woo Keng Leong, a veteran with 30 years of postal experience. Its retail and financial services is led by executive vice-president Loh Choo Beng while its logistics business is managed by vice-president Raymond Huang.
SingPost’s wholly-owned subsidiary, Quantium Solutions International, is helmed by executive vice-president Teo Yew Hwa.