Author: tfwee
MPS – BT
MacarthurCook Fund H1 distribution falls
DPU for quarter ended Dec 31 was cut as warned by the fund
MACARTHURCOOK Property Securities Fund yesterday reported a distribution income of A$6.68 million (S$6.64 million) for the half year ended Dec 31, 2008 – 46 per cent less than a year ago.
And as the fund had warned last year, distribution per unit for the quarter ended Dec 31 was cut to one Australian cent, down from 2.625 Australian cents for the same period last year. This is part of measures to ‘strengthen the fund’s balance sheet’ amid challenging economic conditions.
‘Increasing numbers of listed and unlisted property trusts have been reducing distributions as sustainable operating cash flows come under pressure,’ the fund said. ‘This is predominantly from a decrease in asset values and/or adverse currency movements.’
The fund also announced a deeper net loss of A$30.35 million caused by unrealised investment losses as the value of listed and unlisted property securities fell. It had incurred a smaller net loss of A$3.25 million a year ago.
As at Dec 31, the fund’s assets were worth A$152 million and around 85 per cent were in unlisted property securities. Some 11 per cent were in listed property securities. Total asset value had plunged 41 per cent since end-2007. Not only does the fund have to contend with falling asset values and a shrinking distribution income, it also has to refinance a A$45.5 million debt facility by May 15 this year. It said that the lender, OCBC Bank, has indicated that it would not roll over this facility.
But the fund reassured investors that it is ‘in negotiations with several alternative financiers and has reason to believe that a new financing arrangement will be established prior to the termination date’.
‘Once the debt is refinanced, monies redeemed from unlisted (funds) may be further directed to real estate investment trusts due to better relative value,’ it said.
The fund’s loan-to-value ratio stood at 29.9 per cent as at Dec 31. There were no trades in the fund’s units yesterday. The counter last registered a closing price of 10 Singapore cents on Tuesday.
TELCOs – BT
SingTel, M1 square off with new mobile plans
TO SUSTAIN customers’ insatiable appetite for mobile phones during the downturn, Singapore Telecom is dishing out three new subscription packages with all-you-can-eat data buffets. And rival MobileOne is giving free phones and will let you swap your handset for a new model after just nine months.
SingTel’s new plans – 3G Flexi Lite, 3G Flexi and 3G Flexi Plus – aim to get handset users to gobble up more data on the go through Web surfing and e-mailing.
By paying $39-$95 a month you can surf to your heart’s content as the packages come with an unlimited six-month data bundle on top of the usual outgoing voice minutes and SMS combo.
However, the data buffet is only available if you take up the new HTC Dream – the handset dubbed the Google phone because it is powered by the search giant’s mobile operating system.
You will have to fork out $38-$238 for a Dream if you opt for one of the new 3G Flexi plans – provided you trade in a phone with a value of $200.
As previously reported by BT, SingTel has signed an exclusive deal with Taiwanese phonemaker HTC to retail the Dream, much like its agreement with Apple for the iPhone.
But SingTel’s rivals aim to make sure it does not have the edge for too long. StarHub and M1 are already in talks with HTC to bring in newer versions of the Google device.
The data bundle offered with the Dream is more generous than that offered with SingTel’s iPhone when it was launched last August. At that time the company only threw in a time-limited 1GB (gigabyte) mobile data bundle with the touch-screen handset, which is said to be its best-selling phone ever.
Not to be outdone, rival M1 took the wraps off a new mobile plan yesterday that allows you to exchange your phone much earlier than usual.
Usually you are locked into a 24-month contract and can only upgrade your phone or get a new one free at the tail end of the contract.
Under M1’s new Take3 programme – extended to all its subscription packages that cost more than $19.26 a month – you can choose from a range of free handsets to go with your plan. And instead of having to see out your contract, you can swap your phone from the ninth month on.
The tit-for-tat battle between SingTel and M1 is a further sign of Singapore’s increasingly cutthroat mobile market. Since the start of mobile number portability (MNP) last year, operators have been using exclusive handset deals and creative subscription bundles to entice people to defect, now that they are free to carry over their phone number.
According to the Infocomm Development Authority of Singapore, about 6,000 subscribers a month are making use of MNP to port their mobile numbers between operators.
Transport – BT
Fare cut to cost SBST $42.7m, SMRT $37.3m
THE 4.6 per cent cut in bus and train fares will cost SBS Transit $42.7 million over 15 months, while the corresponding figure for SMRT Corp is $37.3 million, the two companies said yesterday.
On Thursday, the Public Transport Council announced that the fare reduction package would cost the two public transport operators about $80 million from April 1, 2009, to June 30, 2010. But both SBST, the dominant bus operator, and SMRT, which runs Singapore’s biggest rail network, said that they would only reveal the impact to their fare revenues the following day.
The fare rebate, starting on April 1, 2009, will allow adult commuters to save from two to 14 cents for a direct journey or a journey with one transfer.
In a statement, SBST said that the temporary relief measures will cost it ‘$42.7 million for the 15-month period’ – more than the $21.5 million it is expected to receive from last month’s Budget.
SBST chief operating officer Gan Juay Kiat said: ‘We hope that by reducing fares by an average of 5.1 per cent during these tough times, commuters will be able to get some relief from cost pressures.’
The 5.1 per cent figure is obtained after averaging the reductions in fares for SBST’s basic bus and train services, as well as its non-basic or premium bus services.
SMRT also said that it would give commuters further rebates on its premium and express bus services. It said that together with the discounts on these non-basic bus services and a $300,000 donation announced in January to help needy commuters, ‘these measures by SMRT to help commuters reduce their transport costs and cope with the economic downturn amount to $37.3 million in the next 15 months’.
‘This amount exceeds the savings SMRT will receive from the government budget,’ said SMRT in a statement.
‘We have reduced train and bus fares to help commuters of basic services cope with the downturn,’ said SMRT Corp president and CEO Saw Phaik Hwa.
SFI – BT
SFI directors urge shareholders to accept SATS offer
DIRECTORS of Singapore Food Industries (SFI) have urged shareholders to accept the takeover offer by Singapore Airport Terminal Services (SATS), based on the advice given by independent financial adviser ANZ Singapore.
As an alternative offer is unlikely, ‘the offer appears to be fair and reasonable to SFI shareholders’, ANZ said in a letter dated Feb 19 to the directors.
SATS, a Singapore Airlines subsidiary, had made a pitch for a 100 per cent takeover of SFI after buying 69.61 per cent of the food company from Singapore investment company Temasek Holdings for $334.5 million. It offered to pay 93 cents per share, the same price it paid Temasek.
According to ANZ, SATS’ offer price represents a 4.5 per cent premium over the last traded price on Dec 1, 2008, being the date of the last full trading day prior to the announcement date and a 24.8 per cent premium over the last traded price on the reference date.
It also represents a premium to the volume-weighted average price (VWAP) over the 30-day, 60-day, 90-day and 180-day periods up to the reference date.
ANZ said it has also considered the possibility of an alternative offer from a third party at a significantly higher price, but as at the latest practicable date, there is no publicly available evidence of such an alternative offer. SFI management also advised that there have been no pre-emptive competing offers or proposals.
‘Accordingly, the directors recommend that shareholders accept the offer,’ SFI directors said in a circular despatched yesterday.
‘In addition, based on the advice of ANZ, the directors wish to remind shareholders that as an alternative to accepting the offer and in the absence of a competing offer, they may wish to consider disposing of their shares in the open market or otherwise, realising their shares at a higher value than the offer price (after deducting all related expenses) if there is an opportunity to do so,’ they said.
As at Feb 17, SATS received valid acceptances representing some 11.845 per cent of all SFI shares, bringing its total stake to 81.453 per cent.
The offer is unconditional in all respects and will close on March 9. SATS intends to make SFI a wholly owned subsidiary and not preserve its listing status.
SATS is entitled to make a compulsory acquisition of the remaining shares it does not own if it receives valid acceptances of the offer in respect of not less than 90 per cent of the offer shares (other than those already held by the offeror, its related corporations or their respective nominees as at the offer date).
SATS had said the purchase of the region’s largest integrated food supplier will help it achieve sustainable growth powered by the twin engines of airport operations and food services.
TELCOs – DMG
4Q08 in a nutshell
Hits & Misses. The Oct-Dec 08 period presented a mixed bag of results, with StarHub outperforming, SingTel coming in line, and M1 disappointing. All three showed improvements in the Singapore business and benefited from a moderating competitive landscape.
Balance sheet strong. Gearing appears high for the industry but should be no concern as it is a result of sound capital management over the past few years. Net debt/EBITDA (0.7-1.2x) and EBITDA/Interest (19-42x) are at healthy levels.
Mobile margins improve. EBITDA margins have improved 2.0 ppt QoQ as the telcos toned down on subsidies and advertising & promotions expenses. Prior to which, the mobile business was on a declining trend, no thanks to the red-hot competition as the telcos fought hard to gain market share with the introduction of Mobile Number Portability (MNP).
ARPU lower for broadband, but higher for Pay TV. SingTel and StarHub have been slashing prices (and upping the goodies) to lock in customers before the roll-out of the NBN, upping the ante for M1. Meanwhile, StarHub’s Pay TV ARPU rose 4% to S$57 per month despite competition from mio TV.
What to look out for in the coming months? The OpCo results will be out by the end of 1Q09, and we expect the contest to be close. The impact of NBN as well as retrenchments should also be felt by telcos this year.
Still stellar yields. Telcos still offer one of the best yields in the market. Among the three, only StarHub has given an explicit guidance on its dividend payout for the current year (S$0.18 per share). Both SingTel and M1 have instead stuck to a range. On average, the industry is yielding 6.9%, attractive compared to the market average of 5.5%. We maintain our OVERWEIGHT call on the sector, with StarHub as our top pick.