Author: tfwee
SMRT – DMG
Gateway to paradise
1QFY10 results in-line with expectations. 1QFY10 registered net profit of SGD48.2m, up 19.6% YoY (+24.7% QoQ), or 28.7% of our full year forecast of S$168.1m. The variance was due to the lower-than-expected increase in staff costs which rose 3.3% compared to our forecast of 10.4% as well as unexpected income gains from maintenance projects which amounted to S$7.5m. Operating profit rose 19.9% boosted by MRT (+8%), bus (+136%) and retail rental (+13%). We upgrade SMRT to BUY with a revised target price of S$2.00 from NEUTRAL (S$1.65 previously) as we expect the twin opening of the Integrated Resorts as well as the government’s broader initiatives to encourage public transport usage, to materially improve SMRT’s ridership prospects, hence justifying our stronger terminal growth assumption of 2.5% (2.1% previously).
Rolling along with the high rollers. Between Jan-May, SMRT’s daily rail ridership rose a mere 3.6% YoY to 1.39m, dragged by the recessionary environment. We are, however, upbeat that ridership figures could be stronger next year on the back of stronger economic and tourism growth. The Circle Line will be fully operational in 2010, which will be the gateway to the two Integrated Resorts. We forecast rail ridership growth of 4% in FY10 and a stronger 10% in FY11, in anticipation of positive spin offs from these resorts which will radiate tourists and locals alike towards these locations.
Play the defensive game – Upgrade to BUY. The recent market surge has brought the STI to 3% below our 2,750 target, leaving little upside returns. We view SMRT as an ideal switch play for investors with a defensive mandate. SMRT has a low beta of 0.45x and strong earnings resilience underpinned by positive growth prospects. Since March, SMRT’s stock price has risen by a mere 8% vis-à-vis the STI’s 83%. In terms of dividends, we believe management will continue to reward investors with at least 70% payout. Its strong free cash-flows of S$113m in FY10 and S$127m in FY11 will support future dividend payments. SMRT currently trades at 15.8x FY10 P/E multiple which is at the lower range of its 15-20x trading band. At our target price of S$2.00, SMRT will trade at an FY10 P/E multiple of 18x.
MREIT Blog
Dear All,
Some of you may have noticed that one of our blogs, http://mreit.blogspot.com/ (on Malaysia REITs) had been removed by blogger (the service provider) as of yesterday. We do not know the reasons behind this and have appealed to them. We have yet to receive any reply.
In the meantime, we have created a temporary replacement at http://m-reit.blogspot.com/ but currently, there’s only one entry (July 2009).
This sudden action by blogger has made us realized how vulnerable we are, of losing all our data. We will be considering the possibilities of creating a mirror site with another blog service provider or to start our own website (so that we won’t be at the mercy of any provider). So, watch this space as we will keep you updated of our alternative actions.
Thank You!
SingTel
SingTel’s Optus launches 2b euro note programme
SINGAPORE Telecommunications yesterday said that wholly owned Optus Finance Pty has set up a two billion euro (S$4.1 billion) medium-term note programme.
Under the programme, which is guaranteed by SingTel Optus Pty and certain of its subsidiaries, the issuer may from time to time issue notes in series or tranches, in various amounts and tenors, and denominated in any currency agreed. They may bear fixed, floating or variable rates of interest or not at all. The notes will constitute unsecured obligations of Optus Finance.
The notes programme has been rated Aa3 by Moody’s Investors Service and A+ by Standard & Poor’s.
SingTel Optus, the Australian unit of the homegrown telco, recently clinched a A$186.5 million (S$223.4 million) contract from the Australian Taxation Office, its largest federal government deal from Down Under. SingTel Optus accounted for 29 per cent of the group’s earnings before interest, taxes, depreciation and amortisation (Ebitda) for the fourth quarter ended March. In the same quarter, the unit saw net profit rise 17 per cent to A$193 million. SingTel posted a 17.3 per cent drop in Q4 net income to $903 million. Full-year earnings fell 12.9 per cent to $3.45 billion, on a 0.6 per cent increase in revenue to $14.9 billion.
SMRT – BT
SMRT Q1 net rises 19.6%
BOLSTERED by higher operating profits, SMRT Corp posted a 19.6 per cent year-on-year jump in net profit to $48.2 million for the first quarter of FY2010 ended June 30, 2009.
Group revenue was generally flat compared with the previous corresponding quarter, dipping $0.1 million to $215.8 million due to a smaller average hired-out taxi fleet and the fare reduction package which started on April 1.
Earnings per share for the quarter were 3.2 cents, up from 2.7 cents.
Revenue from train operations decreased by 0.02 per cent to $115.6 million due to a lower average fare, although this was partially offset by higher average daily ridership.
LRT revenue was 0.3 per cent lower at $2.2 million and taxi rental revenue fell 6.6 per cent to $17.7 million because of a smaller average hired-out fleet.
While revenue from bus operations decreased by 3.7 per cent to $49 million as a result of both lower average fare and average daily ridership, operating profit came to $1.2 million, thanks to lower diesel costs, against a loss of $3.5 million a year ago.
Rental revenue rose 11.9 per cent to $15.5 million on the back of better yield and increased space, though advertising revenue fell by 4.5 per cent to $5.4 million because of the weak economic climate.
Meanwhile, revenue from engineering and other services was 18.9 per cent higher at $10.6 million.
The transaction to acquire a 49 per cent stake in Shenzhen Zona Transportation Group is expected to be closed in a few months though it is subject to certain conditions.
‘For the next 12 months, the profitability of the group will be impacted by the continuing volatility in diesel prices, fare reduction package and the ramp-up costs for the progressive opening of the remaining Circle Line stations,’ Lim Cheng Cheng, SMRT’s executive vice-president and chief financial officer, said.
SMRT expects revenue from train, bus and taxi operations as well as from advertising to be lower year-on-year in Q2 FY2010, although it reckons that increased lettable space will push up rental revenue.
Group operating expenses are expected to rise on the back of more repairs and maintenance and higher staff and related costs.
SMRT closed one cent higher at $1.70 yesterday.
SingPost – BT
SingPost Q1 net profit dips
Total revenue climbs a marginal 0.7% to $121.8m; mail revenue down 7.2%
SINGAPORE Post (SingPost) has posted a marginal 0.1 per cent dip in its fiscal first-quarter net profit to $39.4 million, as the group coped with lower mail revenue and higher operating expenses during the period.
For the three months ended June, mail revenue – which accounted for the lion’s share of its total revenue – fell 7.2 per cent to $85.9 million. Despite increases in its logistics and retail businesses, total revenue climbed only a marginal 0.7 per cent to $121.8 million.
‘The operating environment remains challenging and difficult,’ said SingPost CEO Wilson Tan. ‘The performance of our business segments in the first quarter clearly reflects the continued weak economy and lower demand.’
Total expenses increased 5.5 per cent to $84.7 million, mainly attributed to the consolidation of G3 Worldwide Aspac Pte Ltd (G3AP), a provider of cross-border mail services. Labour and related costs rose 2.5 per cent to $33.6 million, even as the group gained some $2 million from the Jobs Credit Scheme.
SingPost does not have any short-term debt as at end-June. But it owed $301.8 million as a result of a $300 million bond issue that will mature in 2013. The bonds have a fixed interest rate of 3.13 per cent per annum.
Cash and cash equivalents stood at $184.9 million. Earnings per share slipped to 2.045 cents, from 2.051 cents. The group has proposed an interim dividend of 1.25 cents per share. Net asset value fell to 12.67 cents, from 13.30 cents as at end-March.
The group is banking on two recent acquisitions to expand into new markets. It recently bought the remaining 50 per cent that it did not own in G3AP and acquired a 30 per cent stake in US-based postal technology firm Postea.
With G3AP, SingPost will focus on opportunities to expand beyond cross-border mail business and extend its services to the rest of Asia-Pacific. As for Postea, it is looking at joint development and marketing of postal and logistics technologies.
SingPost shares ended up half a cent at 89 cents yesterday.