Author: tfwee
SFI – BT
SFI receives UK trade award
MAINBOARD-LISTED Singapore Food Industries (SFI) aims to expand in the UK before eventually setting up in Europe.
SFI’s United Kingdom/ European operations accounted for $199.8 million or 60.3 per cent of the group’s turnover of $331.4 million in the first half of 2007.
‘We see our position in the United Kingdom as being increasingly attractive,’ said SFI chief executive Roger Yeo.
‘We were very small. But through acquisition and organic growth, we’ve become larger. Once we get to a reasonable size within the UK itself, Europe is not a bridge too far.’
SFI’s core areas of business are food distribution, preparation, manufacturing and processing; and abattoir and hog auction services.
Its Singapore businesses employ just over 1,200 people and its UK operation has more than 1,400 employees at three wholly owned subsidiaries – Daniels Chilled Foods, International Cuisine and Farmhouse Fare.
The UK’s chilled convenience food sector is a £12 billion (S$35.8 billion) market – a key factor behind SFI’s choice of the UK as the springboard for its global growth. This promising market was also an influencing factor when SFI chose the UK as a base for international growth 16 years ago.
SFI also has operations in other markets such as China, Australia and Ireland. But Mr Yeo said that plans for venturing into European markets are still in the gestation stage.
SFI will receive the 2007 UK Trade & Investment International Business Award in recognition of its significant strategic and long-term investment in the UK at the British Chamber of Commerce’s Annual Awards Gala Dinner today.
‘In recent years, Singapore companies have been getting more adventurous and looking beyond the region,’ said British High Commissioner to Singapore, Paul Madden. Singapore, which is the UK’s biggest trading partner in South-east Asia, invested about $7.1 billion in the UK in 2005.
‘The SFI success story, with such remarkable growth in a relatively short time span, exemplifies the business growth opportunities that Singapore companies find in the UK,’ said Mr Madden. ‘Such opportunities are not restricted to large companies only but extended to small and medium enterprises as well.’
The UK provides good opportunities to grow business, he said, pointing out that SFI chose it because of a common language, similar legal and business structures and the UK’s reputation as an open economy with pro-business government policies and regulations.
SingTel – BT
SingTel plans to bid for Ghana Telecom: report
Ghana telco valued at US$1b; up to 66% stake up for grabs
SINGAPORE Telecommunications, South-east Asia’s largest telecommunications firm, plans to bid for a majority stake in state-owned Ghana Telecom, in a deal likely to be over US$500 million, banking sources told Reuters.
An acquisition in Africa would take SingTel beyond its traditional footprint in Asia-Pacific where it has spent S$18 billion in recent years, buying operators in high-growth Asian nations, and in the bigger Australian market.
According to Ghana Telecom’s website, strategic investors are undertaking due diligence of the company for taking part in a privatisation auction for the majority stake.
One source said the auction would be for at least a 51 per cent stake or as much as 66 per cent in the company valued at around US$1 billion.
Sources close to the deal said Merrill Lynch was advising SingTel. Both SingTel and Merrill declined to comment.
‘We do not comment on market rumours,’ said a SingTel spokesperson.
The sources said SingTel would be competing for the stake with French telecom giant France Telecom and Portugal Telecom.
Local telecom companies in Ghana include payphone operator Westel, and mobile operators Scancom Ltd, Mobitel and Kasapa.
Ghana Telecom’s mobile phone services arm, Onetouch, is the country’s second-largest after Scancom.
Ghana is considered to be one of the fastest growing sub-Saharan economies with its gross domestic product growing at about 6 per cent in 2006 and the government aiming for 6.5 per cent growth in 2007.
The country of 20 million people at the end of June 2007 had a total of 6.7 million telephone subscribers.
Faced with a saturated home market, SingTel has been tapping into the fast growth in low-penetration countries across Asia and now derives about 75 per cent of sales from operations outside Singapore.
SingTel owns Australia’s No 2 phone operator Optus and large stakes in five Asian mobile operators: Thailand’s Advanced Info Service plc, India’s Bharti Group, Globe Telecom Inc in the Philippines, Indonesia’s PT Telkomsel and Pacific Bangladesh Telecom Ltd.
It recently bought a 30 per cent stake in Pakistan’s No 3 mobile phone operator Warid Telecom. — Reuters
SPH – JPMorgan
Core publishing continues to show improvement
• FY07 results in line with our expectations: FY07 net profit rose 18.1% Y/Y due to strong revenue growth of 13.7% Y/Y, helped by maiden profit of S$47.8 million from the sale of Sky@eleven condominium and strong investment income gain, which was up 79% Y/Y to S$146.2 million (sale of investments and profits from capital reduction exercises by Starhub and M1). FY07 EPS of S$0.32 was roughly in line with our estimate of S$0.31 and above
consensus of S$0.29 by 9.1%.
• Newspaper ad revenue continues to post strong growth figures: SPH saw strong revenue and earnings growth for its core newspaper and magazine division: revenue grew 5.9% Y/Y and PBT grew 8.2% Y/Y. Display and classified ad revenue continues to post strong growth in the 4Q, up 8.4% and 13.8% respectively. Overall, display and classified ad revenue grew by 5.6% and 8.5%, respectively, in FY07.
• Positive catalysts for SPH in the next few quarters: We expect positive catalysts from: (1) stronger-than-expected ad revenue growth in the coming quarters; (2) maiden earnings recognition from its property development project—Sky@eleven; and (3) higher revaluation and rental revisions at Paragon.
• Valuation and risks: We maintain our Overweight rating on SPH with our June-08 price target of S$5.50, based on sum-of-the-parts valuation. The key risks to our price target are: (1) ad revenue growth; (2) increase in global newsprint prices; (3) rising cost of wages and operating costs for the company.
SPH – CIMB
Taking flight with adex growth
• Above expectations. This was a strong set of results with FY07 S$506m (+40% yoy) core earnings beating our estimate by 20% and consensus’s by 9%. Key reasons for the surprise were higher investment income (+79% yoy) and a lower tax rate due to adjustments for overprovision. A final DPS of 19cts was announced, bringing full-year DPS to 26cts, ahead of our 25ct expectation.
• FY07 operating revenue jumped 13.6% yoy to S$1.2bn. Core print media revenue grew 5.8% yoy to S$959m in FY07, underpinned by strength in classifieds (S$277m, +9% yoy) and display (S$395m, +6% yoy). Printed ad revenue growth accelerated in 2H07 (+11% yoy vs. 1H07’s 3.5% yoy) on the back of a robust domestic economy. Property revenue grew 80% yoy with the help of Sky@eleven’s maiden contribution of S$71.3m (slightly higher than our estimated 10% revenue recognition for FY07) and Paragon’s S$7.8m revenue growth.
• Operating margins climbed to 37% (+200bp yoy) on higher contributions from the property segment. Core media operating margins remained stable at 35% as strong topline growth and flattish newsprint costs offset a 12.5% yoy rise in staff costs. Newsprint cost benefited from a weaker US$ and lower newsprint prices. Staff costs were higher on headcount growth and higher variable bonuses.
• Raising earnings estimates on positive outlook. Print adex growth is firmly picking up on the back of Singapore’s economic growth. SPH is also benefiting from Sky@eleven contributions and robust rental growth at Paragon. This prompts us to raise our earnings estimates by 9-19% for FY08-09. We also introduce FY10 estimates. DPS estimates have been raised by 3-14% for FY08-09.
• Reiterate Outperform, albeit with reduced target price of S$5.10 (S$5.22 previously). Our sum-of-the-parts valuation has been reduced slightly as we switch our valuation methodology for core media operations to DCF (WACC 7.5%, terminal growth 1%) from 16x CY07 P/E. As a laggard consumer stock profiting from Singapore’s economic upcycle, we believe SPH is poised to deliver strong earnings growth over the next few quarters. We like it as the best-in-class proxy for adex growth in Singapore and yields of 6-8% for FY08-10.