February 2010
Results Announcement
- 11 Feb 11 : StarHub (Q410)
- 14 Feb 11 : ComfortDelgro (Q410)
- 14 Feb 11 : SBSTransit (Q410)
STI = 3184.74 (+5.02)
|
Stock |
Period |
EPS cts |
DPS cts |
Mkt |
Yield |
PE |
Div Breakdown |
|
SPH |
FY10 (Aug) |
31 |
27 |
$3.97 |
6.801% |
12.81 |
Interim 7ct ; Final 9ct + 11ct (Special) |
|
SingPost |
FY10 (Mar) |
8.563 |
6.25 |
$1.18 |
5.297% |
13.78 |
Q1, Q2, Q3 1.25ct ; Q4 2.5ct |
|
STI ETF |
Dec-10 |
— |
3.5 |
$3.22 |
2.174% |
— |
Dec10 3.5ct ; Jun10 3ct |
|
SATS |
FY10 (Mar) |
16.7 |
13 |
$2.80 |
4.643% |
16.77 |
Final 8ct ; Interim 5ct |
|
ST Engg |
FY09 (Dec) |
14.78 |
13.3 |
$3.24 |
4.099% |
21.92 |
Final 4ct + 6.28ct (Special) ; Interim 3ct |
Transport
|
Stock |
Period |
EPS cts |
DPS cts |
Mkt |
Yield |
PE |
Div Breakdown |
|
SBSTransit |
FY09 (Dec) |
17.75 |
8.8 |
$2.10 |
4.190% |
11.83 |
Interim 4.5ct ; Final 4.3ct |
|
ComfortDelGro |
FY09 (Dec) |
10.52 |
5.3 |
$1.57 |
3.376% |
14.92 |
Interim 2.63ct ; Final 2.67ct |
|
SMRT |
FY10 (Mar) |
10.7 |
8.5 |
$2.07 |
4.106% |
19.35 |
Interim 1.75ct ; Final 6.75ct |
TELCO
|
Stock |
Period |
EPS cts |
DPS cts |
Mkt |
Yield |
PE |
Div Breakdown |
|
SingTel |
FY10 (Mar) |
24.55 |
14.2 |
$3.06 |
4.641% |
12.46 |
Interim 6.2ct ; Final 8ct |
|
M1 |
FY10 (Dec) |
17.5 |
17.5 |
$2.45 |
7.143% |
14.00 |
Interim 6.3ct ; Final 7.7ct + Special 3.5ct |
|
StarHub |
FY09 (Dec) |
18.68 |
19 |
$2.61 |
7.280% |
13.97 |
Q1 4.5ct ; Q2 4.5ct ; Q3 5ct ; Q4 5ct |
Funds / Infrastructure
|
Stock |
Period |
DPS cts |
Mkt |
Yield |
NAV |
Div Breakdown |
|
SPAus |
2H10 (Mar-10) |
A4.0 (Gross) |
$1.130 |
9.080% |
A$0.91 |
2H10 A4.0ct ; 1H10 A4.0ct |
|
MIIF |
1H – Jun10 |
1.50 |
$0.590 |
5.085% |
$0.830 |
2H09 1.5ct ; 1H09 1.5ct |
* SPAus DPU in A$. Yield is Calculated Using Latest Exchange Rate (1.2826) fm Yahoo
NOTES :
- Mkt Price is as on 1-Feb-11
- SingPost : Q311 (Dec10) – 1.25ct ; Q211 (Sep10) – 1.25ct ; Q111 (Jun10) – 1.25ct
- M1 : 2H10 (Dec) – Final 7.7ct + Special 3.5ct ; 1H10 (Jun) – Interim 6.3ct
- SingTel : 1H11 (Sep10) – Interim 6.8ct
- SPAus : 1H11 (Sep10) – A4ct (before tax) / A3.7772ct (after tax) ; 2H10 (Mar10) – A4ct (before tax) / A3.7739ct (after tax)
- StarHub : Q310 (Sep) – 5ct ; Q210 (Jun) – 5ct ; Q110 (Mar) – 5ct
- SATSvcs : Q211 (Sep10) – Interim 5ct
- SMRT : Q211 (Sep10) – Interim 1.75ct
- SPH : 2H10 (Aug) – 20ct ; 1H10 (Feb) – 7ct
- SBSTransit : Q210 (Jun) – 4.5ct
- ComfortDelgro : Q210 (Jun) – 2.7ct
- MIIF : 1H10 (Jun) – 1.5ct
- ST Engg : Q210 (Jun) – 3ct
- StarHub : FY10 Div Policy 20ct ie. 5ct/Q
SMRT – Kim Eng
Circle line losses to taper off soon
Event
• While 3Q11 net profit formed a seemingly large 28% of our full year forecast, higher staff costs in 4Q11 ahead of the opening of Circle Line Stages 4&5 in 2011. Also, 4Q profit is expected to be hurt by higher scheduled train repair & maintenance costs. Having said that, Circle Line ridership is creeping closer to the 200k breakeven level. Also, although 4Q staff costs will rise, there is a buffer from lower staff costs seen since 2Q11 following Palm Jumeirah’s demobilisation. We are raising our target price to $1.97 as we roll forward target valuation to FY12. We rate the stock a HOLD.
Our View
• 3Q11 net profit rose 10% YoY to $43m or 4% if 3Q10 is adjusted for Jobs Credit subsidies and a $6.6m provision for goodwill impairment. Operating profit rose 6% YoY as higher rental and advertising income made up for lower Train profit, losses by LRT and Bus and lower contribution from Taxi.
• Higher oil prices resulted in higher cost of electricity and diesel. Energy costs rose 14% YoY to $31m while “other” costs, mainly diesel sold to taxi hirers, rose 19% YoY from 3Q10 (base adjusted for train goodwill). SMRT is currently unhedged for diesel and electricity as management wants to wait for clearer trends after the winter.
• SMRT will hire another 150‐200 staff from 4Q11 for the opening of Circle Line Stages 4&5 sometime in 2011. This will lead to higher staff costs in 4Q11 and 1Q12, depending on the speed of the hiring exercise. However, ridership of 163k has improved from 154k in 2Q11, and is creeping up toward the 200k needed to break even. At this rate, losses should continue to reduce every quarter.
Action & Recommendation
We roll forward our target valuation to 17x FY12 EPS, thus raising our target price to $2.20. We rate the stock a HOLD. Prefer ComfortDelgro.
SingPost – OCBC
Steady 3QFY11 results
3QFY11 results in line with expectations. Singapore Post (SingPost) reported a 6.3% YoY rise in revenue to S$148.5m and a 0.7% drop in net profit to S$43.8m in 3QFY11, such that 9MFY11 net profit accounted for 74.7% of our full year estimates and 78.5% of Bloomberg’s mean consensus. Excluding one-off items such as amortization of deferred gain on intellectual property rights and benefits from the Jobs Credit Scheme (in 3QFY10), underlying net profit increased 5.1% YoY to S$40.9m.
Growth in mail and logistics businesses. Mail revenue grew 7.5% YoY on the back of strong growth in the direct mail business and better economic conditions, while international mail was underpinned by growth in e-commerce activities. More transshipment and vPOST shipping activities contributed to the 10.2% YoY increase in logistics revenue, but operating profit from this division declined as transshipment generally has lower margins.
Diversifying its businesses and markets. Management reiterated that it continues to face “formidable challenges” in the postal industry, driven by factors such as e-substitution. With the global trend of declining mail volumes, the group wants to reduce its reliance on mail revenue and diversify its revenue base. Indeed, the mail division’s contribution to total revenue has fallen steadily from 77% in FY08 to 68% in 9MFY11. However, being Singapore’s dominant postal operator, SingPost will still focus on the mail business to meet the changing and growing needs of its customers, while expanding its logistics and retail divisions. The group is also exploring acquisition opportunities to grow its businesses in the region.
Maintain HOLD. To accelerate the group’s transformation and growth, SingPost has announced an organizational restructuring in which there will be a CEO in charge of Postal and Corporate Services while another CEO will focus on the international business. We are positive on this latest development as the segregation of duties should result in a sharper focus on both the mail business (faces own challenges in the industry) and the group’s international expansion efforts (essential to seek new growth drivers). Meanwhile, we continue to await news on the M&A front. An interim dividend of S$0.0125/share has been declared, in line with the group’s usual practice. Though the stock has an estimated dividend yield of 5.3%, there is limited upside potential to our DCFbased fair value estimate of S$1.16. Hence we maintain our HOLD rating.
SMRT – DBSV
No surprises
At a Glance
• 3Q11 net profit of S$43m (+10% yoy; -6% qoq) within expectations
• Circle Line ridership at c.163k/day, still below 200k/day for breakeven
• Expect 4Q11F net profit to slide q-o-q on higher staff and maintenance costs
• Maintain Hold and S$2.15 TP
Comment on Results
3Q11 within expectations. 3Q11 net profit rose 9.6% yoy to S$43m, largely due to the absence of S$6.6m goodwill impairment in 3Q10. Excluding the goodwill charge in 3Q10, EBIT would have been down 6.7% to S$52.1m due to higher energy, maintenance and staff costs. Revenue rose by 8.5% to S$243.9m on higher rail ridership revenue (+9%), advertising revenue (+14%), and rental income (+12%).
Circle Line still dragging rail performance, but this is not a surprise. SMRT will soon start recruiting for Circle Line Stages 4 &5 in preparation for its opening by 4Q2011. Daily ridership for CCL is at c.163k, still below the 200k originally expected. With CCL Stages 4 & 5 due to open by 4Q2011, this should be positive for total ridership and SMRT over the longer term.
Recommendation
Weak FY11F priced in; Maintain Hold and S$2.15 TP. We expect 4Q’s net profit to decline q-o-q largely on higher staff and maintenance costs. On a y-o-y basis, we could see an improvement due to a low base in 4Q10. In our view, the operating losses from Circle Line have been factored into the share price. As stated in our last report, SMRT will benefit given the positive industry developments slated for the latter part of 2011 onwards, such as the completion Jurong East Modification Project and CCL4&5 opening. We maintain our Hold recommendation and TP of S$2.15 based on PE/DCF.
SingPost – DBSV
New CEO (international) for regional Expansion
At a Glance
• Net profit of S$43.8m (-0.7% yoy, +10.0% qoq) and quarterly DPS of 1.25 Scents were in line.
• The appointment of new CEO for international business shows regional focus. Regional M&A and share buybacks cannot be ruled out.
• Maintain HOLD with DDM-based S$1.17 TP (cost of equity 7.7%, growth rate 2%). We have assumed that dividends can grow by 2% p.a. in the long term.
Comment on results
Net profit of S$43.8m (-0.7% yoy, +10.0% qoq) was in line. Mail segment grew strongly by 7.5% yoy on the back of direct and international mail, benefiting from higher business activities. This offset the impact of higher terminal dues (about S$2-3m impact in FY11F) and absence of benefits from job credit scheme (S$5m adverse impact in FY11F), which expired in June 2010. 9M11 earnings constitute 77% of our FY11F forecast. 3Q is typically the strongest quarter due to higher mail traffic during the festive season.
New CEO (international) to drive regionalization. As Partner at McKinsey, Dr Wolfgang Baier, has been working with Singpost for the last five years and has extensive experience in Asian and Western markets. He will be driving the logistics and retail business, which can expand further regionally. With S$200m raised through bond-issue in March 2010, Singpost has enough muscle to acquire small companies. Given that Singpost has a mandate to buy 10% of its shares, share buy backs cannot be ruled out either in our view.
Recommendation
We do not see any risk to its dividend payout and recommend HOLD with DDM-based TP of S$1.17.