M1 – BT
M1 profit up 8.2% to $42.5m in Q1
M1’s first-quarter net profit climbed 8.2 per cent to $42.5 million, from $39.3 million last year, as the burden of heavy handset subsidies starts to ease this year.
Earnings per share for the three months ended March 31 came in at 4.7 cents, up from 4.4 cents last year.
First-quarter revenue grew 3.5 per cent to $257.6 million, from $249 million in 2010 due to a combination of higher mobile subscription and handset sales, as well as increased contribution from M1’s broadband business. Revenue from mobile services – which accounts for nearly two-thirds of the firm’s sales – edged up 1.3 per cent to $145.3 million in Q1.
Both postpaid and prepaid segments turned in a better scorecard, with revenue growing 1.3 per cent and 1.8 per cent year-on-year as M1 added 23,000 more mobile customers during the period.
The latest additions took its cellular subscriber base to 1.934 million, an increase of 7.7 per cent from 2010.
Last year, all three local telcos were hit by the smartphone wave as consumers flocked towards so-called smartphones such as the Apple iPhone.
While the gadget fever resulted in higher customer numbers, their bottom lines had to take a short-term hit as these phones came with higher upfront subsidies. However, the bane is now easing with M1’s operating expenses growing a moderate 2.3 per cent in the first quarter to $204.8 million.
In 2010, the firm’s operating expenses climbed a staggering 30.5 per cent largely due to heavy smartphone subsidies.
Revenue from its international calls was almost flat in Q1 at $32.3 million but M1’s broadband diversification continues to pay off with its fixed services revenue climbing 19.2 per cent to $7 million.
‘For 2011, we see exciting opportunities in the fixed segment, driven by enhanced experience on the new fibre network and progressive expansion of its coverage,’ M1 chief executive Karen Kooi said in a statement yesterday. ‘Growth in the mobile segment will be driven by increased adoption of tablets and other mobile broadband devices.’
Looking ahead to the full year, Ms Kooi expects to see an improvement to M1’s bottom line if operating conditions remain stable.
The counter closed two cents lower at $2.41 yesterday.
SPH – Kim Eng
Steady on all fronts
Event
• Singapore Press Holdings’ (SPH) 2QFY Aug11 revenue met consensus forecast at $287.8m. However, operating profit was lower than expected at $78.9m due to gestation loss from Clementi Mall and the increase in newsprint and staff costs. The Group declared a dividend per share of 7 cents and we believe the steady demand for display advertisement will continue to underpin its dividend yield of 5.6%. Maintain BUY with a target price of $4.68.
Our View
• Some tenants in the basement and on the first floor of Clementi Mall have commenced operations. Management expects the mall, which is 60%-owned by SPH, to be fully operational by 4Q11. Until then, minor gestation loss is still expected. At an average rental rate of $14 psf pm, we estimate the mall will account for about 20% of SPH’s total rental revenue.
• In the core media business, display advertising revenue continues to drive the growth of the newspaper and magazine segment (+5% YoY). Management raised the guidance for average newsprint cost (+8% vs our estimate) due to the gradually rising newsprint spot price but the cost pressure is mitigated by favourable foreign exchange exposure.
• The possibility of a successful participation in the Government Land Sales programme could be a near-term positive catalyst for the group. The white site at Boon Lay Way, next to Jurong East MRT station, seems to be a suitable target, in our view. (Tender submission date: 25 May). We also anticipate the launch of fee-based applications on tablet PCs in the next 12 months, which could enlarge SPH’s revenue stream.
Action & Recommendation
We lower our FY Aug11F-12F net profit by 5-6% to take into account the higher newsprint costs. Our SOTP-based target price is reduced from $4.75 to $4.68. To reflect the earnings revisions, our full-year DPS forecast is lowered from 23.4 cents to 22.2 cents. Maintain BUY.
SPH – Kim Eng
Steady on all fronts
Event
• Singapore Press Holdings’ (SPH) 2QFY Aug11 revenue met consensus forecast at $287.8m. However, operating profit was lower than expected at $78.9m due to gestation loss from Clementi Mall and the increase in newsprint and staff costs. The Group declared a dividend per share of 7 cents and we believe the steady demand for display advertisement will continue to underpin its dividend yield of 5.6%. Maintain BUY with a target price of $4.68.
Our View
• Some tenants in the basement and on the first floor of Clementi Mall have commenced operations. Management expects the mall, which is 60%-owned by SPH, to be fully operational by 4Q11. Until then, minor gestation loss is still expected. At an average rental rate of $14 psf pm, we estimate the mall will account for about 20% of SPH’s total rental revenue.
• In the core media business, display advertising revenue continues to drive the growth of the newspaper and magazine segment (+5% YoY). Management raised the guidance for average newsprint cost (+8% vs our estimate) due to the gradually rising newsprint spot price but the cost pressure is mitigated by favourable foreign exchange exposure.
• The possibility of a successful participation in the Government Land Sales programme could be a near-term positive catalyst for the group. The white site at Boon Lay Way, next to Jurong East MRT station, seems to be a suitable target, in our view. (Tender submission date: 25 May). We also anticipate the launch of fee-based applications on tablet PCs in the next 12 months, which could enlarge SPH’s revenue stream.
Action & Recommendation
We lower our FY Aug11F-12F net profit by 5-6% to take into account the higher newsprint costs. Our SOTP-based target price is reduced from $4.75 to $4.68. To reflect the earnings revisions, our full-year DPS forecast is lowered from 23.4 cents to 22.2 cents. Maintain BUY.
SPH – DBSV
Rising cost caps profit growth
• 2Q within expectations, but watch for rising cost
• Ad revenues registered growth, albeit at slower rate
• Clementi Mall fully let, a good mall notwithstanding its price; expect to achieve S$14 psf avg rents
• Trim earnings by 4%/1% on higher costs; Maintain Hold, TP: S$4.20. 6% dividend yield should support price.
2Q10 results within expectations. 2Q net profit ended at S$75.4m (-33.5% yoy, -16% qoq) mainly due to absence of Sky@Eleven (Sky11) development profits and effect of cost increases. Revenue dipped by 5% yoy to S$287.8m. Excluding the effect of Sky11, revenue would have grown by 7.5% yoy. As expected, total print ad revenues growth slowed to 6.6% in 2Q11, with flat performance from Classifieds but lifted by Display ads (+8% yoy) and Magazines (+20%). Due to higher staff costs, newsprint charge-out rates and others, 2Q11 EBIT margin fell to 31% vs 2Q10’s 36% (excluding Sky11’s contribution). Interim DPS of 7 Scts was declared.
Clementi Mall: Average rental of S$14psf achieved. Clementi Mall is expected to achieve average rental rate of S$14 psf when fully operational by the financial year-end. This compares favourably with other sub-urban malls such as NorthPoint and Causeway Point (~S$10 – 12.50 psf pm), but below Tampines Mall and Junction8 (~S$14.50 psf pm), which are more matured. Our weekday visit last week showed that crowd was decent, and the opening of the bus interchange should provide more footfalls. We understand management will continue to look out for more investment properties, particularly retail malls.
Trim earnings on higher costs; Hold, TP: S$4.20. We lowered our forecasts by a marginal 4% /1% for FY11F/12F, on higher staff costs and newsprint charge-out rates (US$670/mt). Our sum-of-parts TP is lowered to S$4.20 (previously S$4.37). Despite growing top-line, higher costs will cap bottom-line growth. Maintain Hold, share price will be supported by its attractive dividend yield of 6%, based on our 24 Scts DPS forecast for FY11F.
SPH – DBSV
Rising cost caps profit growth
• 2Q within expectations, but watch for rising cost
• Ad revenues registered growth, albeit at slower rate
• Clementi Mall fully let, a good mall notwithstanding its price; expect to achieve S$14 psf avg rents
• Trim earnings by 4%/1% on higher costs; Maintain Hold, TP: S$4.20. 6% dividend yield should support price.
2Q10 results within expectations. 2Q net profit ended at S$75.4m (-33.5% yoy, -16% qoq) mainly due to absence of Sky@Eleven (Sky11) development profits and effect of cost increases. Revenue dipped by 5% yoy to S$287.8m. Excluding the effect of Sky11, revenue would have grown by 7.5% yoy. As expected, total print ad revenues growth slowed to 6.6% in 2Q11, with flat performance from Classifieds but lifted by Display ads (+8% yoy) and Magazines (+20%). Due to higher staff costs, newsprint charge-out rates and others, 2Q11 EBIT margin fell to 31% vs 2Q10’s 36% (excluding Sky11’s contribution). Interim DPS of 7 Scts was declared.
Clementi Mall: Average rental of S$14psf achieved. Clementi Mall is expected to achieve average rental rate of S$14 psf when fully operational by the financial year-end. This compares favourably with other sub-urban malls such as NorthPoint and Causeway Point (~S$10 – 12.50 psf pm), but below Tampines Mall and Junction8 (~S$14.50 psf pm), which are more matured. Our weekday visit last week showed that crowd was decent, and the opening of the bus interchange should provide more footfalls. We understand management will continue to look out for more investment properties, particularly retail malls.
Trim earnings on higher costs; Hold, TP: S$4.20. We lowered our forecasts by a marginal 4% /1% for FY11F/12F, on higher staff costs and newsprint charge-out rates (US$670/mt). Our sum-of-parts TP is lowered to S$4.20 (previously S$4.37). Despite growing top-line, higher costs will cap bottom-line growth. Maintain Hold, share price will be supported by its attractive dividend yield of 6%, based on our 24 Scts DPS forecast for FY11F.