SingTel – OCBC
STABLE 3QFY13 RESULTS
- 9MFY13 results in line
- No change to guidance
- Higher S$3.68 FV
Stable 3QFY13 results
SingTel saw its 3QFY13 group revenue dipping 4.8% YoY to S$4597m, and while EBITDA rose 0.5% to S$1262m, net profit fell 8.3% to S$827m (mainly due to exceptional loss of S$67m). However, excluding exceptional items, underlying net profit was down 2.3% at S$874m. 9MFY13 revenue fell 2.4% to S$13702m, meeting 73% of our FY13 forecast, while net profit slipped 2.2% to S$2640m; core earnings was down 1.6% at S$2610m, or 69% of full-year estimate.
FY13 guidance unchanged
Going forward, SingTel has kept its previously revised guidance unchanged for FY13 i.e. consolidated revenue to see single-digit decline, although EBITDA will remain stable. Free cashflow (FCF) is expected to remain around S$2.6b (its 9MFY13 FCF hit S$2.49b); capex for Singapore still around S$950m and Australia about A$1.1b (excluding spectrum payments). SingTel adds that consolidated revenue and EBITDA would be impacted by material exchange rate movements in A$ and regional currencies.
Myanmar is a potential market
While SingTel will continue to focus on its transformation plan to grow in the new digital era, it can also grow its regional business. We understand that the telco is understandably keen on getting into a new and untapped market in Myanmar. However, management notes that it is still early days as the government there has just called for an expression of interest. It adds that many global telco players are also keen on securing one of the two licenses potentially on offer.
Maintain BUY with new S$3.68 FV
As results were in line with our expectations, we opt to leave our forecasts unchanged for now. However, in line of the recent recovery in the price of its listed associates, our SOTP-based fair value improves from S$3.53 to S$3.68. We also maintain our BUY rating on the stock.
SingTel – Lim & Tan
- Results for Q3 ended Dec ’12 tell the same story as in recent quarters – underlying profit (excluding exceptionals) fell 2.3% to $874 mln.
- Singapore was resilient while Optus Australia was marginally better with underlying profit 2.7% higher even as revenue fell 6%.
- Improved contributions from Telkomsel (Indonesia) and AIS (Thailand) were largely offset by India’s Airtel.
- Free cash flow rose 5% to $666 mln.
- Assuming unchanged final dividend of 9 cents as has been the case at the interim stage of 6.8 cents, yield is 4.4%.
- We are downgrading stock to HOLD following the 9.4% price gain in the year to date (on talk of entry into the Myanmar market), outperforming STI ‘s 4.2% rise.
SingTel – Lim & Tan
- Results for Q3 ended Dec ’12 tell the same story as in recent quarters – underlying profit (excluding exceptionals) fell 2.3% to $874 mln.
- Singapore was resilient while Optus Australia was marginally better with underlying profit 2.7% higher even as revenue fell 6%.
- Improved contributions from Telkomsel (Indonesia) and AIS (Thailand) were largely offset by India’s Airtel.
- Free cash flow rose 5% to $666 mln.
- Assuming unchanged final dividend of 9 cents as has been the case at the interim stage of 6.8 cents, yield is 4.4%.
- We are downgrading stock to HOLD following the 9.4% price gain in the year to date (on talk of entry into the Myanmar market), outperforming STI ‘s 4.2% rise.
ComfortDelgro – DBSV
Another record year
- 4Q within expectations; FY12 a record year
- Final DPS of 3.5 Scts, equating to payout of 54% for FY12
- Balance sheet remains strong to pursue inorganic growth
- Trading at lower valuations compared with SMRT despite geographical exposure, stable growth. BUY, TP: S$2.05
Highlights
4Q within expectations. 4Q12 net profit increased by 2% y-o-y to S$57.6m, ending FY12 at a record profit of S$248.9m (+6% y-o-y), within our forecasts (S$248m). 4Q revenue rose by 2%, driven by all business segments, except bus station and automotive engineering in China. EBIT margins dipped marginally to 10.6% (4Q11: 10.8%) as operating expenses rose by 2% mainly from higher staff costs (+6% to S$284.3m) and contract services (+12% to S$121.4m), offset partially by lower materials and consumables (-11% to S$79.8m) and fuel and electricity costs (-13% to S$64.3m).
Hedging energy/fuel as in 2012. Management indicated that they have hedged 60% and 40% of its fuel requirements in Singapore and the UK, respectively. This should continue to provide visibility and stability to its earnings in 2013, as in 2012.
DTL incurred a loss of S$6.1m. Staff recruitment is expected to continue towards the operation of Downtown MRT Stage 1 (DTL1) in 2013 with about 400 staff, up from 210 currently. While we expect losses to continue as operations ramp up, this should not pose a huge impact to the group given its larger size and geographical/ business diversification, in our view.
Our View
Dividend per share of 3.5 Scts. Final dividend of 3.5 Scts was proposed (FY12: 3.3 Scts). Coupled with the interim dividend of 2.9 Scts, this equates to a total payout of 6.4 Scts (54% payout ratio). Capex requirements are projected to taper off in FY14F, and we remain hopeful that dividend payout could increase.
Preferred land transport play, strong balance sheet. CD remains as our preferred land transport play given its stable growth profile, geographical diversification and strong balance sheet to pursue inorganic growth. Net debt to equity stands at 0.3%, down from 2.2% in FY11.
Recommendation
Maintain BUY, TP at S$2.05. Our TP is based on DCF (WACC: 10%, t=1%) and 15x average FY13F/14F PE. This implies 16.3x /15.8x PE on FY13F/14F, slightly above its historical average of 15x, but significantly below SMRT’s 22x FYE Mar14F PE.
SingTel – CIMB
Bharti’s the static on the line
9MFY13 core net profit met our forecast but missed that of consensus by 5%. Strength at Optus, Telkomsel, AIS and Globe was offset by disappointment at Bharti. SingTel Singapore was in line with expectations. SingTel maintained its FY13 guidance.
We maintain our forecast, our Underperform recommendation and SOP-based target price of S$3.23. Likely derating catalysts are the poor results, regulatory risks in India and competition flaring up again in Australia.
Singapore
SingTel Singapore’s operational performance was in line with expectations. 3Q revenue rose 1.5% qoq and 1.3% yoy, driven by mobile earnings, which rose 4.1% qoq and 3.2% yoy. Revenue, EBITDA and core net profit were in line with forecasts. Core net profit rose 15% qoq due to lower tax expense on the back of lower deferred tax credit relating to inter-company interest expense.
Optus
Revenue was in line but EBITDA was 6% ahead of expectations, largely as a result of higher cost savingsand lower mobile net adds in the period in our view. Its operational performance was not impressive. Mobile performance was weak with poor net adds and higher churn while wholesale continues to be a revenue driver. On-net fixed broadband and telephony subscribers declined for the first time.
Mobile service revenue fell 3.8% yoy, marginally lower than our forecast as it was affected by lower termination rates and reduced roaming revenue. Mobile net adds of 22k were weaker than expected. Postpaid net adds came in at 58k but this was offset by higher churn in prepaid, which lost 36k subscribers.
Bharti disappointed
Except for Bharti, SingTel’s associates turned in results that were above our forecasts. Bharti’s core net profit contribution fell 60% qoq and 75% yoy on the back of higher D&A and tax.