RafflesMed – OCBC
SOFTENING OUR GROWTH ASSUMPTIONS
•Double-digit revenue and PATMI growth
•Still room for expansion
•Competition & cost pressures the key risks
1Q12 earnings slightly below expectations
Raffles Medical Group (RMG) reported 1Q12 revenue which was within our expectations but PATMI was slightly below. Revenue increased 13.2% YoY and 0.9% QoQ to S$72.9m, forming 23.2% of our fullyear estimates. EBIT improved 11.0% YoY but fell 20.6% QoQ to S$14.2m, while PATMI was up 10.9% YoY but declined 29.6% QoQ to S$11.6m, meeting 19.6% of our FY12 forecasts. 1Q is traditionally RMG’s weakest quarter, which explains the significant sequential drop in its earnings. We also expect the decanting of its existing hospital facilities to free-up ~15,000 sf of ‘new’ medical space to begin its contribution from 2Q12.
Hospital Services division to underpin its earnings momentum
Both its Hospital Services and Healthcare Services divisions contributed positively, with YoY revenue growth of 15.3% and 7.4%, respectively. The former was driven largely by a higher patient load and acuity. Moving forward, we see potential for further traction in the future, as the Singapore government is exploring the feasibility of engaging RMG in the treatment of subsidised patients, although details have yet to be worked out.
Growth trend still healthy, but easing our growth assumptions
We believe that RMG remains well-poised to capture the sturdy demand for high quality healthcare services from both local and foreign patients. This is buttressed by its strong track record and brand equity, coupled with increased depth of medical specialties on offer. Nevertheless, we soften our growth assumptions on the back of higher competitive and cost pressures. The latter is driven largely by an expected increase in staff costs, given the Singapore government’s decision to raise the wages of healthcare professionals. We lower our revenue and PATMI estimates for FY12/FY13 by 0.6%/1.9% and 3.0%/2.1%, respectively. Maintain BUY on RMG, albeit with a revised fair value estimate of S$2.58, versus S$2.66 previously (still based on 24x FY12F EPS).
April 2012
Results Announcement
- 13 Apr 12 : SPH (1H12) – EPS 5ct (todate 11ct) ; Div 7ct
- 16 Apr 12 : M1 (Q112) – EPS 4.4ct
- 26 Apr 12 : HLFin (Q112) – EPS 15.2ct Annualised
- 27 Apr 12 : SingPost (Q412) – EPS 1.553ct (todate 7.407ct) ; Div 2.5ct (todate 6.25ct)
- 30 Apr 12 : SMRT (Q411) – EPS 0.9ct (todate 7.9ct) ; Div 5.7ct (todate 7.45ct)
- 4 May 12 : StarHub (Q112)
- 9 May 12 : STEng (Q112)
- 10 May 12 (AM) : SingTel (Q412)
- 11 May 12 : SBSTransit (Q112)
- 14 May 12 (AM) : SATS (Q412)
STI = 2978.57 (-3.01)
|
Stock |
Period |
EPS cts |
DPS cts |
Mkt |
Yield |
PE |
Div Breakdown |
|
HL Fin |
FY11 (Dec) |
22.65 |
12.00 |
$2.490 |
4.819% |
10.99 |
Interim 4ct ; Final 8ct |
|
SingPost |
FY12 (Mar) |
7.407 |
6.25 |
$1.015 |
6.158% |
13.70 |
Q1, Q2, Q3 1.25ct ; Q4 2.5ct |
|
SPH |
FY11 (Aug) |
24 |
24.0 |
$3.970 |
6.045% |
16.54 |
Interim 7ct ; Final 9ct + Special 8ct |
Aviation Services
|
Stock |
Period |
EPS cts |
DPS cts |
Mkt |
Yield |
PE |
Div Breakdown |
|
SATS |
FY11 (Mar) |
17.40 |
17.0 |
$2.610 |
6.513% |
15.00 |
Interim 5ct ; Final 6ct + Special 6ct |
|
SIA Engg |
FY11 (Mar) |
23.77 |
30.0 |
$3.940 |
7.614% |
16.58 |
Interim 6ct ; Final 14ct + Special 10ct |
|
ST Engg |
FY11 (Dec) |
17.28 |
15.5 |
$3.010 |
5.150% |
17.42 |
Interim 3ct ; Final 4ct + Special 8.5ct |
Note : SIA Engg & SATS Special Div are Observed to be Non-Recurring
Transport
|
Stock |
Period |
EPS cts |
DPS cts |
Mkt |
Yield |
PE |
Div Breakdown |
|
SBSTransit |
FY11 (Dec) |
11.89 |
5.90 |
$1.690 |
3.491% |
14.21 |
Interim 3.1ct ; Final 2.8ct |
|
ComfortDelGro |
FY11 (Dec) |
11.27 |
6.00 |
$1.530 |
3.922% |
13.58 |
Interim 2.7ct ; Final 3.3ct |
|
SMRT |
FY12 (Mar) |
7.9 |
7.45 |
$1.680 |
4.435% |
21.27 |
Interim 1.75ct ; Final 5.7ct |
TELCO
|
Stock |
Period |
EPS cts |
DPS cts |
Mkt |
Yield |
PE |
Div Breakdown |
|
SingTel |
FY11 (Mar) |
24.02 |
25.8 |
$3.120 |
8.269% |
12.99 |
Interim 6.8ct ; Final 9ct + Special 10ct |
|
M1 |
FY11 (Dec) |
18.1 |
14.5 |
$2.440 |
5.943% |
13.48 |
Interim 6.6ct ; Final 7.9ct |
|
StarHub |
FY11 (Dec) |
18.40 |
20 |
$3.190 |
6.270% |
17.34 |
Q1 5ct ; Q2 5ct ; Q3 5ct ; Q4 5ct |
Note : SingTel Special Div is Observed to be Non-Recurring
Funds / Infrastructure
|
Stock |
Period |
DPS cts |
Mkt |
Yield |
NAV |
Div Breakdown |
|
SPAus |
1H – Sep11 |
A4.0 (Gross) |
$1.420 |
7.263% |
A$0.89 |
2H11 A4.0ct ; 1H11 A4.0ct |
|
MIIF |
2H – Dec11 |
2.75 |
$0.580 |
9.483% |
$0.83 |
1H11 2.75ct ; 2H11 2.75ct |
* SPAus DPU in A$. Yield is Calculated Using Latest Exchange Rate (1.2938) fm Yahoo
NOTES :
- Mkt Price is as on 30-Apr-12
- SMRT : Q412 (Mar12) – Final 5.7ct ; Q212 (Sep11) – Interim 1.75ct
- SingPost : Q412 (Mar12) – 2.5ct ; Q312 (Dec11) – 1.25ct ; Q212 (Sep11) – 1.25ct ; Q112 (Jun11) – 1.25ct
- SPH : 1H12 (Feb) – 7ct
- ST Engg : 1H11 (Jun) – 3ct ; 2H11 (Dec) – 4ct (Final) + 8.5ct (Special)
- MIIF : 1H11 (Jun) – 2.75ct ; 2H11 (Dec) – 2.75ct
- ComfortDelgro : Q411 (Dec) – 3.3ct ; Q211 (Jun) – 2.7ct
- SBSTransit : Q411 (Dec) – 2.8ct ; Q211 (Jun) – 3.1ct
- StarHub : FY12 Div Guidance – 5ct/Q
- StarHub : Q411 (Dec ) – 5ct ; Q311 (Sep) – 5ct ; Q211 (Jun) – 5ct ; Q111 (Mar) – 5ct
- M1 : 2H11 (Dec) – Final 7.9ct ; 1H11 (Jun) – Interim 6.6ct
- SATSvcs : Q212 (Sep11) – Interim 5ct
- SingTel : 1H12 (Sep11) – Interim 6.8ct
- SPAus : 2H11 (Mar11) – A4ct (before tax) / A3.7721ct (after tax) ; 1H11 (Sep10) – A4ct (before tax) / A3.7772ct (after tax)
SingPost – BT
SingPost Q4 profit slides 17% to $30.55m
Group steps up investments in transformational programme to drive future growth; proposes 2.5-cent final dividend
SINGAPORE Post (SingPost) saw net profit for the fourth quarter ended March 31, 2012 slide 17.4 per cent to $30.55 million due to investments put towards a transformational programme to drive future growth.
"During the year, we invested in capabilities and resources in areas such as people, IT and operations and the results – revenue growth in our non-postal business, namely logistics and retail, in spite of challenging conditions – show that we are on the right track. We will continue to invest in the five business pillars – mail, digital services, logistics, e-commerce and retail & financial services," said group chief executive officer Wolfgang Baier. Some $9.7 million has been invested so far in 20 corporate-wide initiatives as part of the programme which will be executed through to FY2014/15.
Faced with a "difficult postal landscape and weaker business environment" as well as increasing cost pressures, SingPost is trying to build new revenue streams in the digital services and e-commerce businesses while pursuing growth in regional logistics and e-fulfilment.
SMRT – Phillip
Lifting our CAPEX estimates
Company Overview
SMRT is a multi-modal land transport operator with exposures to various modes of operations, including rail, bus & taxi services. A significant part of its profits are generated from its ancillary businesses, such as advertising & rental of commercial spaces.
• S$900mn renewal and upgrading of train network
• Majority of expenses over next 4-5yrs
• Expect CAPEX to double historical figures to c.S$200mn/yr
• Impairment charge on goodwill for bus business inevitable
• Reiterate Sell with revised target price of S$1.31
What is the news?
Following a series of service disruptions, SMRT announced plans to renew and upgrade its train network at an estimated cost of S$900mn. As SMRT is still in discussions with LTA for cost sharing arrangements, the exact cost to be incurred by the company is not confirmed. Based on the schedule of upgrades, we believe that majority of the expenses would be incurred over the next 4-5yrs.
How do we view this?
We assume that SMRT would incur 75% of the estimated S$900mn disclosed and reviewed our CAPEX estimates for the major business segments. We expect average CAPEX incurred by SMRT to double its historical figures in FY13-16E, from c.S$100mn to c.S$200mn/yr. However, the strong cash generating nature of its business would allow SMRT to sustain its current annual dividend payout of c.8.5cents per share.
Investment Actions?
We believe that a partial impairment charge on goodwill for the bus business (S$21.7mn on book) is inevitable with oil prices (+7.7% q-q) staying high and is likely to be a key source of variance from market expectations. Even before accounting for this potential impairment charge, we expect profits to decline 9%y-y to S$31mn in 4QFY12E. We roll over our forecasts and reiterate our Sell recommendation on SMRT.
SMRT – Phillip
Lifting our CAPEX estimates
Company Overview
SMRT is a multi-modal land transport operator with exposures to various modes of operations, including rail, bus & taxi services. A significant part of its profits are generated from its ancillary businesses, such as advertising & rental of commercial spaces.
• S$900mn renewal and upgrading of train network
• Majority of expenses over next 4-5yrs
• Expect CAPEX to double historical figures to c.S$200mn/yr
• Impairment charge on goodwill for bus business inevitable
• Reiterate Sell with revised target price of S$1.31
What is the news?
Following a series of service disruptions, SMRT announced plans to renew and upgrade its train network at an estimated cost of S$900mn. As SMRT is still in discussions with LTA for cost sharing arrangements, the exact cost to be incurred by the company is not confirmed. Based on the schedule of upgrades, we believe that majority of the expenses would be incurred over the next 4-5yrs.
How do we view this?
We assume that SMRT would incur 75% of the estimated S$900mn disclosed and reviewed our CAPEX estimates for the major business segments. We expect average CAPEX incurred by SMRT to double its historical figures in FY13-16E, from c.S$100mn to c.S$200mn/yr. However, the strong cash generating nature of its business would allow SMRT to sustain its current annual dividend payout of c.8.5cents per share.
Investment Actions?
We believe that a partial impairment charge on goodwill for the bus business (S$21.7mn on book) is inevitable with oil prices (+7.7% q-q) staying high and is likely to be a key source of variance from market expectations. Even before accounting for this potential impairment charge, we expect profits to decline 9%y-y to S$31mn in 4QFY12E. We roll over our forecasts and reiterate our Sell recommendation on SMRT.