Author: tfwee

SBSTransit – BT

SBS Transit Q3 profit rises 27% to $10.6m

LOWER energy costs and government measures helped SBS Transit to offset the temporary fare reduction and post a 27.2 per cent increase in net profit to $10.58 million for the third quarter ended Sept 30, 2009.

But third-quarter revenue fell by 7.6 per cent to $174.33 million mainly because of the lower bus fare revenue.

Singapore’s biggest public transport operator said that Q3 operating expenses fell by 9.2 per cent, or $16.4 million, from $178.8 million in the same quarter the previous year, thanks to substantially lower fuel and electricity costs, as well as savings from the Singapore Government Budget 2009. But these were partially offset by higher depreciation, and repair and maintenance expenses.

Revenue from bus operations in Q3 fell 9.6 per cent to $136.3 million because of the fare reduction package, which began on April 1 this year, as well as the increase in transfer rebate. It was also affected by lower ridership, which was down 2.9 per cent in the third quarter.

But Q3 operating profit for bus operations rose 82.1 per cent to $1.6 million on lower fuel cost, which was partially offset by lower bus fare revenue, lower other operating income, higher depreciation expense and higher staff costs.

Rail operations saw revenue inch up 0.5 per cent in Q3 to $27.4 million on a 3.9 per cent increase in ridership for the North-East Line, and a 3.1 per cent rise for the two light rail transit systems. Together with lower electricity cost, they helped to push Q3 operating profit up 66.9 per cent to $3.6 million.

Earnings per share in the third quarter rose to 3.44 cents from 2.70 cents in the previous corresponding quarter.

For the first three quarters, SBS Transit saw a 43.0 per cent rise in net profit to $42.9 million, but year-to-date revenue slipped 4.3 per cent to $522.85 million. For the first nine months, earnings per share were 13.94 cents, up from 9.76 cents.

No dividend has been proposed.

Another unit of land transport giant ComfortDelGro also announced its Q3 results yesterday. Vicom said that growth in vehicle inspection, and test and inspection services boosted its net profit by 23.6 per cent to $5.07 million for the third quarter ended Sept 30, 2009.

But Q3 revenue was slowed down by the lower revenue from vehicle inspection and type approval services, as well as vehicle assessment services; it slipped 0.7 per cent to $19.52 million.

Group operating expenses dropped 7.7 per cent to $13.3 million in the third quarter due mainly to lower material and subcontractor costs, as well as the Jobs Credit grant, property tax and rental rebates.

Vicom’s Q3 earnings per share was 5.93 cents, up from 4.81 cents in the same quarter last year.

For the first three quarters, the vehicle inspection unit posted an 18.8 per cent rise in net profit to $15.06 million. Year-to-date revenue was also higher, up 5.4 per cent to $58.09 million.

Earnings per share for the first nine months rose to 17.59 cents from 14.94 cents in the same period a year ago. No dividend has been proposed.

SBS Transit shares fell two cents to $1.73 and Vicom shares fell one cent to $2.10 yesterday.

tfwee November 12, 2009 SBSTransit No Comments »

SPH – DBS

Overpaying for the mall

• SPH’s JV put in a bid of S$542m for Clementi Mall, 42% above second bidder
• Costly at c. S$3,055 psf NLA, vs other bids and latest valuation of other suburban retail malls
• Downgrade to Hold; lower TP: S$4.00

S$542m bid for Clementi Mall. SPH, in a JV with NTUC, submitted the highest bid of S$541.9m (amongst 6 bidders) for a 25,000 sqm GFA shopping mall at Clementi, in a tender that closed last evening (10 Nov). The bid of S$541.9m was above-market-expectations and is c.42% higher than the second bid of S$382m. The bid works out to S$2,014 psf GFA.

Low net yield est at 4.5% – 5%, vs current retail cap rates of 5.5% to 6%. The mall, which is part of a larger 40-storey development that includes two blocks of HDB flats and a bus interchange, comprises two basement levels and five levels above ground with a maximum net floor area of 193,752 sf. HDB will build the core structure and façade, and will hand over to the winning bidder around Aug 2010. The estimated cost of fit-out is around S$50m. This raises the cost further and works out to S$3,055 psf NLA, which is high compared to valuations of other suburban retail malls, ranging from c.S$1,700 to S$2,350 psf. Assuming an estimated gross monthly rental of S$15-16 psf pm, the net yield works out to about 4.5% – 5%, versus current retail cap rates of 5.5% -6%.

Attracted by the potential and revenue sources. Notwithstanding the price, we believe the mall is well located within the town centre, connected to bus interchanges/MRT station and has a good catchment area with 91k residents and 65k students in the vicinity. Furthermore, we believe SPH has been aggressive in looking for additional sources of revenue as Sky@Eleven contribution ceases in 2010. Funding, in our view, could be via its internal resources.

Downgrade to Hold, TP: S$4.00. We believe share price could be affected in the near term as the market will view this piece of news negatively given that: (i) SPH seems to have been overly aggressive; (ii) there will be a higher risk profile attached on its foray into a higher risk project vis-à-vis the stable print business; and (iii) lower prospects of special dividends in FY10 when Sky@Eleven is completed, a catalyst the market was looking for previously. Our revised TP of S$4.00 is based on a 5% discount to our sum-of-parts RNAV.

tfwee November 11, 2009 SPH No Comments »

StarHub – Phillip

3Q09 results

3Q09 results. StarHub reported 3Q09 operating revenue of S$537.1m (+2.4% yoy) and net profit of S$85.2m (+7.1% yoy). Net profit rose because of higher revenue, lower staff costs and marketing and promotion expenses as well as decrease in tax provisions. It also announced an interim dividend of S$0.05 per ordinary share for 3Q09, which was higher than S$0.045 for 3Q08.

Performances of the various business units. The revenue of the various business units was as follows: mobile revenue was S$276.8m (+4.7% yoy), Pay TV revenue was S$100.3m (+1.9% yoy), broadband revenue was S$58.8m (-6.1% yoy), fixed network services revenue was S$79.8m (+6.2% yoy) and sale of equipment was S$21.4m (-11.3% yoy).

Mobile revenue was higher due to an increase in the number of post-paid and prepaid customers to 923,000 (+5.1% yoy) and 961,000 (+11.2% yoy) in 3Q09. Pay TV revenue increased because the number of customers gained by 2.9% to 535,000. Broadband revenue dropped as customers selected lower speed and discount plans. Fixed network services revenue rose as revenue from data and internet services increased more than the decline in voice services revenue. Sale of equipment fell as customers bought cheaper mobile phones.

Greater competition in Pay TV. We expect more competition for StarHub in Pay TV. StarHub had lost the bid to SingTel for the rights to BPL matches for a period of three years beginning August 2010. We expect football fans to switch from StarHub’s Cable TV to SingTel’s mioTV and this will affect StarHub’s revenue and profit.

iPhone this year. StarHub announced that it has reached an agreement to offer iPhone to its customers later this year. We believe that this will boost its number of mobile customers and help it to compete against SingTel and M1, which also offer iPhones. We expect StarHub to market its iPhone through promotions and providing discounts to customers.

FY2009F Outlook. StarHub expects the service revenue for 2009 to be maintained at 2008 level. It expects to pay dividend of S$0.05 per ordinary share per quarter from 3Q09. This brings the total dividend for FY2009F to S$0.19.

Maintain HOLD recommendation and target price at S$2.05. Based on the valuation using the discounted cash flow (DCF) model, we obtain a fair value of S$2.05. We maintain our hold recommendation, as StarHub is likely to face greater competition in the telecommunications market to maintain its market share. Investors can hold the stock for dividends; the dividend yield is expected to be 9.8% in FY2009F.

tfwee November 11, 2009 StarHub No Comments »

SingTel – DBS

Remarkable pay TV subscriber growth

At a Glance

• Underlying profit of S$952m inline with ours and consensus expectations of S$937-S$970m.
• Interim dividend of 6.2 cents inline with expectations
• Revised guidance for Singapore EBITDA to register lowsingle digit growth (from stable earlier), inline with our expectations.
• We would be buyers below S$2.85. Maintain HOLD.

Comment on Results
Singapore profit inline and market share gains. Singapore net profit of S$318m ( +11% yoy, -5% qoq) was inline. SingTel increased its mobile market share to 46.2% from 45.9% in 1Q10. Pay TV subscriber base increased by 25K (versus StarHub’s 5K) from strong take up of bundled mio Home plans. This implies SingTel’s pay TV market share increased to 18.9% from 15.8% in 1Q10.

Australia profit slightly higher due to lower interest expense. Net profit of A$152m (+21% yoy, +9% qoq) was helped by A$15m sequential reduction in interest expense due to lower interest rates. Optus continued to add mobile subscribers, where higher revenue growth, despite lower margins, resulted in higher EBITDA (7% yoy, 3% qoq). Strong A$ (up 7% sequentially) continues to lend support

Associate results inline. Post-tax contribution of S$472m (+19% yoy, -5% qoq) was helped by strong performance of Telkomsel. It was lower sequentially as 1Q10 included forex gains of s$23m at Bharti.

Recommendation

Bharti weakness should be offset to some extent by strong Telkomsel and strong AUD and IDR. Maintain HOLD with unchanged target price of S$3.15

tfwee November 11, 2009 SingTel No Comments »

StarHub – DBS

Higher dividends amid rising competition?

At a Glance

• Excluding S$3m forex gains, net profit of S$82m inline with consensus and our expectations.
• Raised dividend guidance, surprisingly, to 5 cents each quarter (4.5 cents earlier). The dividends may not be sustainable in the long term, in our view, and leave limited flexibility for the new CEO, joining in Jan 2010.
• Management mentioned that EPL loss should not be EBITDA and FCF negative, bit too optimistic in our view.
• Maintain FULLY VALUED in view of regulatory changes due to National Broadband Network and rising competition in the pay TV business, potentially spilling over to mobile business.

Comment on Results

3Q09 revenue of S$537m (+2%yoy, +1% qoq) and underlying profit of S$82m (unch. yoy, +5% qoq) after excluding forex gains were in line with our expectations. StarHub has achieved 77% of our FY09F forecast. 4Q is typically weak due to festive promotions.

Service EBITDA margins improved to 33.4% versus 31.5% in 2Q09. Mobile margins improved to 37.8% versus 36.8% in 2Q09, as StarHub was not overly aggressive in customer acquisition, as mobile market share declined slightly to 28.1% versus 28.4% in 2Q09. Pay TV margins improved to 21.4% versus 19% in 2Q09, which was impacted by one-off content costs in 2Q09. Fixed lines margins improved to 41.9% versus 38.3% in 2Q09 as StarHub benefited from higher contribution from corporate data business.