SATS – BT
SATS shows great timing
SINGAPORE Airport Terminal Services’ (SATS) efforts to beef up its portfolio through the acquisition of a major stake in Japan-based airline caterer TFK Corporation seem to have been timed quite nicely.
After confirming it was in talks last week, the ground-handler announced on Monday that it is purchasing – via its wholly owned subsidiary SATS Investments – a 50.7 per cent stake in TFK from Japan Airlines International Co (JALI) for 7.8 billion yen (S$122.3 million).
TFK, which has operations at Japan’s Narita and Haneda Airports, serves about 30 international airlines. TFK’s other shareholders include its founder, the Nomaguchi family, with 43.2 per cent, and Air France with 0.3 per cent.
The acquisition, for starters, gives SATS a foothold in the Japanese catering market at a time when Japan’s aviation industry is expected to receive a boost from the recent opening of a new international terminal at Haneda Airport, which will enable more international airlines to touch down in Tokyo. Japan’s Ministry of Land Infrastructure, Transportation and Tourism had released projections earlier this year, declaring its intent to increase yearly slots at Narita and Haneda Airports by 80,000 and 87,000 respectively to 300,000 and 447,000 slots by 2014 – which suggests further potential for SATS to grow its business by leveraging on TFK.
Synergies
One research house pointed out, however, that SATS could have been a little more circumspect with its acquisition price. While it is unclear at this point exactly how the acquisition will boost SATS’ earnings, the net asset value for JALI’s shareholding in TFK was $90 million for the financial year ended March 31, 2010.
SATS is looking to complete the purchase by this month but also said the acquisition is not expected to have any material impact on the group’s earnings per share or net tangible assets per share for the current financial year ending March 31, 2011.
The acquisition will also mean synergies, especially when it comes to areas such as procurement and training, which should help the company keep a lid on costs.
Aside from its gateway services business, SATS also provides food solutions such as in-flight catering, food distribution and industrial catering.
Liberalising
But perhaps more importantly, the buy comes at a point when Changi Airport is poised to welcome a third ground-handler – another attempt at liberalising the sector after heavy losses forced Swissport International to pull out in March last year.
Four companies have been shortlisted so far, including Jetstar and SIA Engineering Company (SIAEC), and the third ground-handler will join incumbents SATS and Changi International Airport Services in the first quarter of 2011.
While SATS currently nets the bulk of the business at Changi Airport, the entry of a new player could mean stiffer competition down the line, especially if that player turns out to be SIAEC, given that SIAEC is part of the Singapore Airlines (SIA) group.
If nothing else, this latest acquisition will ‘help to diversify SATS’ customer base and reduce its reliance on the SIA Group (which accounts for some 60 per cent of SATS’ aviation revenue)’, CIMB pointed out in a report.
So for SATS, which has been talking about growing its core businesses both in and out of Singapore, it appears that the opportunity to snap up TFK couldn’t have come at a more opportune moment. 
SPH – BT
SPH seeks opportunities in property, new media
Group will continue to focus attention on core print business
SINGAPORE Press Holdings (SPH) is actively seeking out fresh opportunities for its property and new media arms while enhancing its core print business, the group’s chairman and management told shareholders yesterday.
Shareholders raised a couple of queries over whether dividend yields might fall now that the final contributions from SPH’s Sky@eleven condominium project have been recognised.
Chief executive Alan Chan said that while Sky@eleven was indeed a ‘one-off project’, the group’s property division remains on the look-out for opportunities.
He cited its recent bid for a residential-commercial site at Bedok Town Centre, which was the second highest after CapitaLand joint venture’s bid, as an example of active participation in competitive tendering for projects with high potential. Clementi Mall will begin to contribute a stream of rental income once it is operational early next year, he said.
Acknowledging that shareholders had gained in recent years from the recurring profits Sky@eleven brought, Mr Chan said that the challenge would be for the group to now find new businesses to make up for the difference. These would include, among others, its stake in the OpenNet, which is building the optical fibre network for Singapore’s Next Generation Nationwide Broadband Network, as well acquisitions to strengthen its events and exhibition services arm.
SPH chairman Tony Tan also told shareholders, who filled the News Centre’s auditorium yesterday, that the media and property group would ‘continue to focus our attention on our core print business’, improving content and widening readership. At the same time, ‘we will keep growing our adjacent businesses to secure the company’s long-term growth’, he added.
In the light of how the Internet has challenged the traditional media industry worldwide, new media is ‘an investment we cannot neglect’ to prepare SPH for the future, Mr Chan said in response to questions on when the group’s new media ventures would turn profitable.
He added that its ‘first-generation products’, such as the newspapers’ websites, are in fact already profitable, though ‘second-generation’ ones such as STOMP, RazorTV and ST701 are still being nurtured.
All resolutions to re-appoint or re-elect the board’s directors, including Ascendas CEO Chong Siak Ching, who was appointed as a non-executive director in October, were duly passed by shareholders yesterday.
November 2010
Results Announcement
- 2 Nov 10 : SATS (Q211) – EPS 4.1ct (todate 8.2ct) ; Div 5ct
- 9 Nov 10 : StarHub (Q310) – EPS 4.78ct (todate 10.66ct) ; Div 5ct (todate 15ct)
- 9 Nov 10 : STEng (Q310) – EPS 4.31ct (todate 11.48ct)
- 10 Nov 10 (AM) : SPAusNet (1H11) – Div A$0.04 (Gross)
- 11 Nov 10 (AM) : SingTel (Q211) – EPS 5.6ct (todate 11.52ct) ; Div 6.8ct
- 11 Nov 10 : SBSTransit (Q310) – EPS 4.14ct (todate 14.3ct)
- 12 Nov 10 : ComfortDelgro (Q310) – EPS 2.94ct (todate 8.33ct)
STI = 3144.70 (-13.51)
|
Stock |
Period |
EPS cts |
DPS cts |
Mkt |
Yield |
PE |
Div Breakdown |
|
SPH |
FY10 (Aug) |
31 |
27 |
$4.19 |
6.444% |
13.52 |
Interim 7ct ; Final 9ct + 11ct (Special) |
|
SingPost |
FY10 (Mar) |
8.563 |
6.25 |
$1.16 |
5.388% |
13.55 |
Q1, Q2, Q3 1.25ct ; Q4 2.5ct |
|
STI ETF |
Jun-10 |
— |
3 |
$3.22 |
1.863% |
— |
Jun10 3ct ; Dec09 3ct |
|
SATS |
FY10 (Mar) |
16.7 |
13 |
$2.87 |
4.530% |
17.19 |
Final 8ct ; Interim 5ct |
|
ST Engg |
FY09 (Dec) |
14.78 |
13.3 |
$3.26 |
4.074% |
22.06 |
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 |
$1.93 |
4.560% |
10.87 |
Interim 4.5ct ; Final 4.3ct |
|
ComfortDelGro |
FY09 (Dec) |
10.52 |
5.3 |
$1.52 |
3.487% |
14.45 |
Interim 2.63ct ; Final 2.67ct |
|
SMRT |
FY10 (Mar) |
10.7 |
8.5 |
$2.03 |
4.187% |
18.97 |
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 |
$3.10 |
4.581% |
12.63 |
Interim 6.2ct ; Final 8ct |
|
M1 |
FY09 (Dec) |
16.8 |
13.4 |
$2.21 |
6.063% |
13.15 |
Interim 6.2ct ; Final 7.2ct |
|
StarHub |
FY09 (Dec) |
18.68 |
19 |
$2.63 |
7.224% |
14.08 |
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 |
8.969% |
A$0.94 |
2H10 A4.0ct ; 1H10 A4.0ct |
|
MIIF |
1H – Jun10 |
1.50 |
$0.560 |
5.357% |
$0.830 |
2H09 1.5ct ; 1H09 1.5ct |
* SPAus DPU in A$. Yield is Calculated Using Latest Exchange Rate (1.2669) fm Yahoo
NOTES :
- Mkt Price is as on 30-Nov-10
- 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
- SingPost : Q211 (Sep10) – 1.25ct ; Q111 (Jun10) – 1.25ct
- 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
- M1 : 1H10 (Jun) – Interim 6.3ct
- StarHub : FY10 Div Policy 20ct ie. 5ct/Q
SingTel – BT
Bharti’s latest woes may be a drag on SingTel
Indian telco may face big fine over cellular licences controversy
Singapore Telecommunications could be weighed down further by its Indian investment as Bharti Airtel is currently mired knee-deep in a controversy which might result in the unsavoury prospect of a billion-dollar government fine.
At the heart of the storm is the Indian government’s allegation that local telcos may have underpaid for a series of second-generation (2G) cellular licences that were issued in 2008, a fiasco which has resulted in the resignation of telecommunications minister Andimuthu Raja.
India’s chief auditor has already indicted the official for undervaluing these licences as he is said to have awarded them to new market entrants based on an outdated policy formulated in 2001.
At the same time, incumbents Bharti, BSNL and Vodafone were reportedly allotted more than their stipulated share of the 2G spectrum without incurring any upfront fees.
According to the Financial Times, the Comptroller and Auditor General of India claims that the bids involving these three operators have cost authorities some US$8 billion in lost revenue.
Citing an unnamed source, the FT further reported that Bharti and Vodafone could be fined more than US$1 billion each as a result of the fiasco. Bharti Airtel is the largest operator in India with a local subscriber base of 143 million.
‘Those who were given more at less will have to pay something back to the government … the exact amount is being worked out but BSNL, Bharti and Vodafone are the ones that benefited the most so they will pay the most,’ an Indian official was quoted as saying.
Besides the three incumbents, the six other operators that are being implicated are Idea Cellular, MTNL, BPL, Aircel, Reliance and Spice.
Some market watchers believe a government charge would hurt some of these new market entrants more than incumbents such as Bharti.
‘We believe some of the recent events in the regulatory environment appear to be negative for new operators as they risk paying heavy fines or surrendering their licences,’ Goldman Sachs said in a recent report on Bharti.
‘We therefore believe the regulatory environment in the next 12-18 months will be more favourable to incumbents than new entrants,’ it added.
Nonetheless, if a huge fine is indeed levied on Bharti, SingTel’s earnings will undoubtedly be further dented by its largest regional investment.
When contacted, SingTel declined comment. Earlier this month, Singapore’s largest operator reported an unexpected 6.7 per cent dip in second-quarter net profit to $892 million.
SingTel, which has a 32 per cent stake in Bharti, was hit by the Indian operator’s African expansion for the second quarter in a row.
The Indian operator acquired Kuwaiti conglomerate Zain’s mobile assets in June this year in a deal valued at US$10.7 billion.
Beyond chipping in its share of the financing costs for the acquisition, SingTel’s earnings were dented by the inclusion of the first full quarter of losses from Bharti’s newly acquired cellular companies in Africa. If these were excluded, SingTel said its net profit would have dipped by only 3 per cent in the second quarter.
SingTel CEO Chua Sock Koong previously said Bharti would need around six months to restructure its operations and profitability should begin to improve by April next year.
SingTel – BT
Bharti’s latest woes may be a drag on SingTel
Indian telco may face big fine over cellular licences controversy
Singapore Telecommunications could be weighed down further by its Indian investment as Bharti Airtel is currently mired knee-deep in a controversy which might result in the unsavoury prospect of a billion-dollar government fine.
At the heart of the storm is the Indian government’s allegation that local telcos may have underpaid for a series of second-generation (2G) cellular licences that were issued in 2008, a fiasco which has resulted in the resignation of telecommunications minister Andimuthu Raja.
India’s chief auditor has already indicted the official for undervaluing these licences as he is said to have awarded them to new market entrants based on an outdated policy formulated in 2001.
At the same time, incumbents Bharti, BSNL and Vodafone were reportedly allotted more than their stipulated share of the 2G spectrum without incurring any upfront fees.
According to the Financial Times, the Comptroller and Auditor General of India claims that the bids involving these three operators have cost authorities some US$8 billion in lost revenue.
Citing an unnamed source, the FT further reported that Bharti and Vodafone could be fined more than US$1 billion each as a result of the fiasco. Bharti Airtel is the largest operator in India with a local subscriber base of 143 million.
‘Those who were given more at less will have to pay something back to the government … the exact amount is being worked out but BSNL, Bharti and Vodafone are the ones that benefited the most so they will pay the most,’ an Indian official was quoted as saying.
Besides the three incumbents, the six other operators that are being implicated are Idea Cellular, MTNL, BPL, Aircel, Reliance and Spice.
Some market watchers believe a government charge would hurt some of these new market entrants more than incumbents such as Bharti.
‘We believe some of the recent events in the regulatory environment appear to be negative for new operators as they risk paying heavy fines or surrendering their licences,’ Goldman Sachs said in a recent report on Bharti.
‘We therefore believe the regulatory environment in the next 12-18 months will be more favourable to incumbents than new entrants,’ it added.
Nonetheless, if a huge fine is indeed levied on Bharti, SingTel’s earnings will undoubtedly be further dented by its largest regional investment.
When contacted, SingTel declined comment. Earlier this month, Singapore’s largest operator reported an unexpected 6.7 per cent dip in second-quarter net profit to $892 million.
SingTel, which has a 32 per cent stake in Bharti, was hit by the Indian operator’s African expansion for the second quarter in a row.
The Indian operator acquired Kuwaiti conglomerate Zain’s mobile assets in June this year in a deal valued at US$10.7 billion.
Beyond chipping in its share of the financing costs for the acquisition, SingTel’s earnings were dented by the inclusion of the first full quarter of losses from Bharti’s newly acquired cellular companies in Africa. If these were excluded, SingTel said its net profit would have dipped by only 3 per cent in the second quarter.
SingTel CEO Chua Sock Koong previously said Bharti would need around six months to restructure its operations and profitability should begin to improve by April next year.