Author: tfwee
SingPost – DBS
Sweet dividend surprise!
• Core net profit exceeded expectation due to higher rental income from the optimization of leasing space
• Final 2.5 cents DPS doubled our 1.25 cents forecast, and implies 8.2% annual dividend yield
• Raised FY10F earnings by 3% due to decent rental income. Upgrade to BUY with higher target price of S$0.94
Rental income boosted results. Core net profit of S$32.6m (-3% yoy, -11% qoq) was better than our S$31m estimate. Although the impact of the current recession was visible in its business mail and logistics segments, rental income surged to S$9.7m (+17% qoq, +50% yoy) due to optimization of leasing space and lease renewals. Management highlighted that rentals are still higher than three years ago, and given its average 3-year lease tenure for lettable space, lease renewals led to higher income for Singpost.
Machine capex will be lower than expected, so no dividend cut. Management indicated that capex for the replacement or upgrade of its mail-sorting machine in 2013-2014 would be S$70m-S$100m, lower than our previous S$150m estimate. Going forward, Singpost should be able to payout S$120m cash (6.25 cent DPS) and retain S$30m cash each year, sufficient for funding capex of S$100m in 2013-14.
Raised stake in associate, secures earnings growth for the medium term. Singpost raised its stake in G3 Asia Pac from 50% to 100% recently by paying under 4x PER. This is an attractive deal, as Singpost paid only S$15m, to increase its annual net profit by S$4m on a recurring basis.
Upgrade to BUY, target price of S$0.94. Our target price is based on normalized early cycle PER of 12x (historical average is 15x). But the key attraction is the r 8.3% yield and earnings enhancement from expansion and cost cuts.
SPH – CIMB
Steady for now
Update
Page count has stabilised. The Straits Times newspaper has grown thicker since the start of the year. Our Saturday-edition page count indicates a steady 200-odd pages in April, above January’s low of 169 pages.
Pandemic impact. During the SARS period (1Q03), adex declined 16% yoy and 1% qoq, with all industries cutting their spending. Geographically, however, SARS-related infections and deaths were concentrated in Hong Kong, China, Taiwan, Vietnam and Singapore. This time round, we expect the impact of swine flu to be less severe than SARS as Asia is not the epicentre.
1Q09 adex fell by 19% yoy. AC Nielsen Media’s latest figures show newspaper advertising expenditure (adex) in 1Q09 declining by 19% yoy and 14% qoq. Extrapolating from this and recent data, SPH’s print ad revenue slid 8% yoy over Sep 08-Apr 09. April figures will be released in mid-May and we continue to expect a yoy decline but mom stability.
Outlook. Although the April page count was steady, we do not expect ad demand to rebound strongly anytime soon. However, we believe that the market has priced in recession-level ad demand, and any better-than-expected performance could catalyse its stock price, we believe. Also, SPH is likely to benefit from lower staff-related costs, thanks to pay cuts. Although management has guided for high newsprint charge-out rates in FY09, newsprint costs are likely to fall from FY10.
No change in earnings estimates. We continue to use past recessions’ print ad revenue declines (of 20%) as a benchmark to forecast FY09 earnings.
SingPost – CIMB
Still stable
• In line. 4Q09 earnings of S$35.3m (+2.5% yoy) are in line with consensus and our estimates, accounting for 24% of our full-year estimate. Revenue fell 2.9% yoy to S$115.6m. 4Q09 dividend of 2.5cts/share beat our forecast of 1.8cts/share. FY09 earnings dipped 0.3% yoy to S$148.8m on the back of revenue growth of 1.8% yoy to S$481.1m. Full-year dividend was 6.25cts/share.
• Weaker revenue because of business mail. As expected, revenue growth in 4Q was weak due to the poor economic environment. Mail revenue declined 2.1% yoy on lower international mail contributions while logistics revenue was flat. Retail revenue slipped 7.7% on lower product sales. Operating expenses fell, thanks to lower labour-related expenses as there were benefits from the Jobs Credit Scheme, and lower volume-related expenses, in line with the decline in business.
• Outlook. Management continues to guide for a challenging environment and will continue to give priority to cost management. In view of the downturn, the group is unlikely to sell Singapore Post Centre in the near future.
• Maintain Neutral; unchanged DDM-derived target price (discount rate: 8.5%) of S$0.80. Our earnings estimates are intact. Although dividend yields are attractive at 7%, we remain Neutral on the stock given limited share-price upside. We also introduce FY12 forecasts. Key risks to our rating include a change in its dividend policy and higher-than expected costs.
April 2009
Result Annoucement:
- 13 Apr 09 : SPH (Q209) – EPS 5ct (todate 10ct) ; Div 7ct
- 16 Apr 09 : M1 (Q109) – EPS 4.7ct
- 24 Apr 09 : SMRT (Q409) – EPS 2.5ct (todate 10.7ct) ; Div 6ct (todate 7.75ct)
- 30 Apr 09 : SingPost (Q409) – EPS 1.834ct (todate 7.726ct) ; Div 2.5ct (todate 6.25ct)
- 7 May 09 : StarHub
- 13 May 09 (AM) : MIIF
- 13 May 09 : SBSTransit
- 14 May 09 (AM) : SingTel
- 14 May 09 : ComfortDelgro
|
Stock |
Period |
DPS ct |
Price |
Yield |
PE |
Div Breakdown |
|---|---|---|---|---|---|---|
|
SPH |
FY08 : Aug |
27.0 |
S$2.90 |
9.310% |
10.74 |
Interim 8ct ; Final 9ct + 10ct (Special) |
|
SingPost |
FY09 : Mar |
6.25 |
S$0.76 |
8.224% |
9.84 |
Q1 1.25ct ; Q2 1.25ct ; Q3 1.25ct ; Q4 2.5ct |
|
STI ETF |
Dec-08 |
5.0 |
S$1.93 |
5.181% |
— |
Dec-08 5ct ; Jun-08 6ct |
|
STEng |
FY08 : Dec |
15.8 |
S$2.57 |
6.148% |
16.25 |
Final 4ct + 8.8ct (Special) ; Interim 3ct |
|
Stock |
Period |
DPS ct |
Price |
Yield |
PE |
Div Breakdown |
|---|---|---|---|---|---|---|
|
SBSTransit |
FY08 : Dec |
6.6 |
S$1.59 |
4.151% |
12.05 |
Interim 3ct ; Final 3.6ct |
|
ComfortDelgro |
FY08 : Dec |
5.0 |
S$1.42 |
3.521% |
14.81 |
Interim 2.6ct ; Final 2.4ct |
|
SMRT |
FY09 : Mar |
7.75 |
S$1.55 |
5.000% |
14.49 |
Interim 1.75ct ; Final 6.0ct |
|
Stock |
Period |
DPS ct |
Price |
Yield |
PE |
Div Breakdown |
|---|---|---|---|---|---|---|
|
SingTel |
FY08 : Mar |
12.5 |
S$2.56 |
4.883% |
10.28 |
Interim 5.6ct ; Final 6.9ct |
|
M1 |
FY08 : Dec |
13.4 |
S$1.47 |
9.116% |
8.75 |
Interim 6.2ct ; Final 7.2ct |
|
StarHub |
FY08 : Dec |
18.0 |
S$1.83 |
9.836% |
10.01 |
Q1 4.5ct ; Q2 4.5ct ; Q3 4.5ct ; Q4 4.5ct |
|
Stock |
Period |
DPS ct |
Price |
Yield |
NAV |
Div Breakdown |
|---|---|---|---|---|---|---|
|
SPAus |
1H : Sep-08 |
A5.7431 |
S$1.07 |
11.610% |
A$1.00 (NTA) |
1H A5.7431ct |
|
MIIF |
2H : Dec-08 |
3.0 |
S$0.34 |
17.647% |
$0.98 |
2H 3.0ct ; 1H 4.25ct |
|
MacCookPSF |
Q2 : Dec-08 |
A1.0 (Gross) |
S$0.095 |
45.537% |
A$0.56 (NTA) |
Q209 A1.0ct ; Q109 A1.75ct |
* SPAus and MacCookPSF DPU in A$. Yield is Calculated Using Latest Exchange Rate (1.0815) fm Yahoo
NOTES :
- Mkt Price is as on 30-Apr-09
- SingPost : Q409 (Mar09) – 2.5ct ; Q309 (Dec08) – 1.25ct ; Q209 (Sep08) – 1.25ct ; Q109 (Jun08) – 1.25ct
- SMRT : Q409 (Mar09) – Final 6ct ; Q209 (Sep08) – Interim 1.75ct
- SPH : 1H09 (Feb) – 7ct
- ST Engg : Q408 (Dec) – 4ct (Final) + 8.8ct (Special) ; Q208 (Jun) – 3ct
- ComfortDelgro : Q408 (Dec) – 2.4ct ; Q208 (Jun) – 2.6ct
- Sing Food : Q408 (Dec) – 3.2ct ; Q208 (Jun) – 1.8ct
- SBSTransit : Q408 (Dec) – 3.6ct ; Q208 (Jun) – 3ct
- StarHub : FY09 Div Policy 18ct ie 4.5ct/Q
- StarHub : Q408 (Dec) – 4.5ct ; Q308 (Sep) – 4.5ct ; Q208 (Jun) – 4.5ct ; Q108 (Mar) – 4.5ct
- M1 : 2H08 (Dec) – Final 7.2ct ; 1H08 (Jun) – Interim 6.2ct
- MacCookPSF : Q209 (Dec08) – A1.0ct (Gross ie. before with-holding tax) / Quarter ; Source : SGX
- SPAus : 1H09 (Sep08) – A5.927ct (before tax) / A5.7431ct (after tax)
- SingTel : Q209 (Sep08) – Interim 5.6ct
- MIIF : 1H08 (Jun) – 4.25ct
- MacCookPSF : Q408 (Jun08) A2.31ct @ 1.3092 ; Q308 (Mar08) A2.31ct @ 1.2525 ; Q208 (Dec07) A2.31ct @ 1.2485 ; Q108 (Sep07) – A2.625ct (Gross) / A2.31ct (After With-hldg Tax)
SMRT – Phillip
Results largely in line
Reiterate BUY rating at fair value estimate of S$1.92. The full year results for FY2009 announced recently were largely inline with our estimates. The Group produced relatively good results as well as a final dividend proposal of 6 cents per share. We have adjusted our operating expenses slightly thus our discounted free cash flow to equity model eased our fair value estimate to S$1.92 (previously S$1.97).
Growth delivered in earnings for FY2009. The Group announced growth in revenue of 9.6%, from S$808.12 million in FY2008 to S$878.95 million in FY2009; and registering growth in net profit after income tax of 8.5%, from S$149.94 million in FY2008 to S$162.73 million in FY2009 on the back of higher operating profits coupled with government budget measures. The Group attributes the growth in revenue to mainly higher train and bus ridership, higher rental and advertising revenue, increased consultancy revenue and higher project management fees. MRT ridership increased 8.7% to 510.2 million together with a full year ridership growth of 3.9% to 288 million for buses. The taxis segment however, suffered a full year operating loss due mainly to higher loss on disposal of taxis.
The rental segment achieved a growth of 37.0% from S$41.98 million in FY2008 to S$57.53 million in FY2009 due mainly to better yield and increased space following the redevelopment of commercial spaces at various MRT stations. Advertising revenue increased 13.8% from S$19.81 million in FY2008 to S$22.54 million in FY2009, mainly due to increased advertising on buses, taxis, trains and at MRT stations. Revenue from Engineering and Other Services increased as well. From S$23.54 million in FY2008 to S$36.46 million in FY2009 due mainly to increased consultancy revenue, higher diesel sales and higher project management fees from the Palm Jumeirah Project in Dubai.
Rise in operating expenses. The Group’s expenses increased by 11.2% from S$644.95 million to S$716.94 million. This was due to a rise in staff and related costs of S$13.9 million (5.3%) in FY2009, increase in depreciation by S$4.3 million (4.0%), higher repair and maintenances costs by S$3.1 million (5.0%), electricity and diesel costs increasing by S$29.1 million (32.4%) and an increase in other operating expenses by S$21.6 million (17.6%) in FY2009.
Circle Line Stage 3 commencing in May 2009. The rolling out of the circle line in May this year should seek to increase ridership further although we do also believe that this should lead to higher expenses in the coming first quarter 2010 due mainly to higher staff and related costs, as headcount is expected to increase for the circle line launch.
Final dividend proposed. The Board of Directors proposed a final ordinary dividend of 6.00 cent per share, totaling S$91.0 million. The final dividend, if approved, will bring the total dividend per share to 7.75 cents for the year.