ComfortDelgro – BT
ComfortDelGro’s Q3 profit up 10.4% at $61.4m
COMFORTDELGRO has reported a 10.4 per cent rise in third-quarter net profit to $61.4 million, taking the net profit for the first nine months to $173.9 million.
Revenue for the three months ended Sept 30 rose by $40.8 million, or 5.2 per cent year on year, to a record $823.4 million.
The growth came from the bus business, the taxi business, the rail business, the vehicle inspection and testing business, the driving centre business, the bus station business and the car rental and leasing business. It was, however, offset by a drop in the automotive engineering services business.
ComfortDelGro said yesterday that the growth would have been even stronger at 7.9 per cent had it not been for the negative translation effect of the weaker British pound, Chinese yuan and Vietnamese dong.
M1 – CIMB
A quad-play operator now
M1 launches pay-TV service
Maintain Outperform. M1’s new pay-TV service, while positive, is unlikely to be a game-changer for the company given the limited content on offer. Nevertheless, we are positive on the service as it would complete M1’s quad-play offering, provide some ARPU uplift and serve as a retention tool. The earnings impact is not expected to be big in the near term, and we retain our FY10-12 earnings forecasts along with our DCF-based target price of S$2.65 (WACC 8.5%). We continue to see catalysts from capital-management potential, upside from NGNBN and the news that it is now a quad-play operator. M1 remains our top pick in the sector.
The news
M1 will be launching its pay-TV service today where it will be offering niche content in education, music, movies and games etc. The service will only be available to existing M1 broadband customers on either the ADSL or fibre service as a value-added service and would be delivered over the Internet. The content will be offered on a monthly subscription basis except for movies which are payable per view. Customers would have to rent a set-top box for S$5/month or S$12/month depending on the broadband plans they are on. They would be able to receive the programmes by linking hardware to their TV and broadband connections, can use the set-top box to surf the Internet on TV, and play back videos and photos on the big screen as well. In addition to set-top box rental, they would be charged for the programmes on an à-lacarte basis.
Comments
Not a surprise but positive. We are not entirely surprised as M1 has long hinted at its intention to offer a niche IPTV service with the advent of NGNBN. We take a positive view as the service would: 1) enable M1 to become a quad-play telco; 2) increase stickiness among its subscribers; 3) lift M1’s broadband ARPU; and 4) attract customers as the programmes are offered on an à-la-carte basis similar to SingTel’s mio-TV.
Not groundbreaking. While we view the news positively, we do not see this development as groundbreaking. The success of a pay-TV business depends on the content offered, and M1’s content is rather niche and limited. SingTel’s IPTV service did not gain much traction even with video-on-demand, serials and some sports offerings but only took off in a meaningful way when it had secured more compelling
content such as the Barclays Premier League, though at a heavy price.
More niche strategy. Given M1’s smaller balance sheet and lower financial resources relative to the two incumbents, M1 is unlikely to bid for premier content. This could hamper its pay-TV aspirations. Nevertheless, we believe the cross-carriage ruling which mandates content-sharing by operators would favour M1 in the long run.
Valuation and recommendation
Maintain OUTPERFORM; still our top pick. While we are positive on this development, it is unlikely to be a game changer given the niche content on offer and the limited impact on M1’s earnings in the near term. We leave our FY10-12 numbers intact along with our DCF-based target price of S$2.65 (WACC 8.5%). M1 remains our top pick in the sector. We continue to see catalysts from capital-management
potential, upside from NGNBN and the news that it is now a quad-play operator.
M1 – CIMB
A quad-play operator now
M1 launches pay-TV service
Maintain Outperform. M1’s new pay-TV service, while positive, is unlikely to be a game-changer for the company given the limited content on offer. Nevertheless, we are positive on the service as it would complete M1’s quad-play offering, provide some ARPU uplift and serve as a retention tool. The earnings impact is not expected to be big in the near term, and we retain our FY10-12 earnings forecasts along with our DCF-based target price of S$2.65 (WACC 8.5%). We continue to see catalysts from capital-management potential, upside from NGNBN and the news that it is now a quad-play operator. M1 remains our top pick in the sector.
The news
M1 will be launching its pay-TV service today where it will be offering niche content in education, music, movies and games etc. The service will only be available to existing M1 broadband customers on either the ADSL or fibre service as a value-added service and would be delivered over the Internet. The content will be offered on a monthly subscription basis except for movies which are payable per view. Customers would have to rent a set-top box for S$5/month or S$12/month depending on the broadband plans they are on. They would be able to receive the programmes by linking hardware to their TV and broadband connections, can use the set-top box to surf the Internet on TV, and play back videos and photos on the big screen as well. In addition to set-top box rental, they would be charged for the programmes on an à-lacarte basis.
Comments
Not a surprise but positive. We are not entirely surprised as M1 has long hinted at its intention to offer a niche IPTV service with the advent of NGNBN. We take a positive view as the service would: 1) enable M1 to become a quad-play telco; 2) increase stickiness among its subscribers; 3) lift M1’s broadband ARPU; and 4) attract customers as the programmes are offered on an à-la-carte basis similar to SingTel’s mio-TV.
Not groundbreaking. While we view the news positively, we do not see this development as groundbreaking. The success of a pay-TV business depends on the content offered, and M1’s content is rather niche and limited. SingTel’s IPTV service did not gain much traction even with video-on-demand, serials and some sports offerings but only took off in a meaningful way when it had secured more compelling
content such as the Barclays Premier League, though at a heavy price.
More niche strategy. Given M1’s smaller balance sheet and lower financial resources relative to the two incumbents, M1 is unlikely to bid for premier content. This could hamper its pay-TV aspirations. Nevertheless, we believe the cross-carriage ruling which mandates content-sharing by operators would favour M1 in the long run.
Valuation and recommendation
Maintain OUTPERFORM; still our top pick. While we are positive on this development, it is unlikely to be a game changer given the niche content on offer and the limited impact on M1’s earnings in the near term. We leave our FY10-12 numbers intact along with our DCF-based target price of S$2.65 (WACC 8.5%). M1 remains our top pick in the sector. We continue to see catalysts from capital-management
potential, upside from NGNBN and the news that it is now a quad-play operator.
SingTel – BT
Bharti’s African safari hits SingTel earnings
Q2 profit down 6.7% but SingTel still ups dividend payout ratio
Singapore Telecommunications’ bottom line has been hit by its indirect expedition to Africa but the operator still raised its dividend payout ratio even as the pain lingers on in the coming quarters.
South-east Asia’s largest telco yesterday reported an unexpected 6.7 per cent dip in second-quarter net profit to $892 million, from $956 million a year earlier.
The result falls short of the average forecast from seven analysts polled by Dow Jones, which pegged the firm’s Q2 earnings at $969 million.
Consequently, underlying earnings per share for the three months ended Sep 30 fell to 5.59 cents, from 5.98 cents even though sales climbed 8.1 per cent to $4.4 billion, from $4.1 billion in 2009.
But despite the earnings blip, the company has raised its dividend payout ratio for this year to between 55 per cent to 70 per cent of underlying net profit, from 45 per cent to 60 per cent previously.
SingTel saw its pre-tax profits from its six regional associates fall 6.2 per cent to $536 million in its second-quarter.
The company, which derives 76 per cent of its ebitda (earnings before interest, tax, depreciation and amortisation) from overseas, was heavily weighed down by the cost of Bharti Airtel’s expansion into South Africa. In addition, a weaker performance from its Indonesian associate Telkomsel and higher operating costs in Singapore also contributed to the Q2 decline.
In June, SingTel’s largest regional associate Bharti, in which it has a 32 per cent stake, successfully acquired the 15 South African mobile assets belonging to Kuwaiti conglomerate Zain.
Beyond chipping in its share of the financing costs for this deal, 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.
According to its CEO Chua Sock Koong, Bharti has stated that it needs around six months to restructure the company and profitability should begin to improve by April next year.
‘We have to be patient. It will take a bit of time to integrate the operations (of Bharti and Zain),’ SingTel’s chief financial officer Jeann Low told reporters at a briefing yesterday.
Meanwhile, Bharti’s pre-tax contributions fell 11.5 per cent to $209 million in Q2. Contributions from Indonesian associate Telkomsel fell 8.8 per cent to $230 million due to a triple-whammy of heightened price wars, network upgrading costs and depreciation charges.
Globe Telecom’s share of SingTel’s pre-tax profit fell 7.8 per cent in the second quarter to $49 million as a result of intensified competition in the Philippines. Pacific Bangladesh Telecom and Pakistani associate Warid Telecom, on the other hand, continue to be in the red with pre-tax losses of $4 million and $14 million respectively.
The lone exception among SingTel’s regional investments was again Thai associate Advanced Info Service, which saw its pre-tax contributions jump 26 per cent to $67 million due to explosive mobile data take-up.
Australian subsidiary Optus also helped cushion the fall. The operator, which accounts for 31 per cent of SingTel’s ebitda, enjoyed another bull run in the second-quarter as its net profit climbed 17.5 per cent to $216 million.
Net income from SingTel’s Singapore operations fell 11.9 per cent in the second-quarter to $295 million due to higher mobile customer acquisition and retention costs, as well as continued investments in pay-TV content.
The firm attracted 39,000 new local postpaid mobile subscribers in the July to September period but it had to suffer the bane of higher handset subsidies as most of them are smart phone users.
The addition of 25,000 new pay-television customers in Q2 took SingTel’s mio TV customer base to 245,000. Revenue from pay-TV now stands at $22 million.
For the first six months of its new financial year, SingTel’s net profit fell 3.5 per cent to $1.8 billion, while revenue rose 9.7 per cent to $8.7 billion.
The firm has declared an interim dividend of 6.8 cents for its H1 performance, up from 6.2 cents last year.
In spite of the higher payout to shareholders, Ms Chua maintains that SingTel still has the ‘financial flexibility’ to pursue new investments and further acquisitions.
Looking ahead to the full-year, SingTel expects pre-tax profits from Singapore and Australia to grow by a ‘mid single digit’.
Bharti’s earnings will continue to be diluted by the acquisition financing costs for Zain as well as investments into third-generation cellular networks, while Telkomsel’s ebitda margin is set to ‘decline slightly’, it said.
SingTel shares closed six cents higher at $3.31 yesterday.
SingTel – BT
Bharti’s African safari hits SingTel earnings
Q2 profit down 6.7% but SingTel still ups dividend payout ratio
Singapore Telecommunications’ bottom line has been hit by its indirect expedition to Africa but the operator still raised its dividend payout ratio even as the pain lingers on in the coming quarters.
South-east Asia’s largest telco yesterday reported an unexpected 6.7 per cent dip in second-quarter net profit to $892 million, from $956 million a year earlier.
The result falls short of the average forecast from seven analysts polled by Dow Jones, which pegged the firm’s Q2 earnings at $969 million.
Consequently, underlying earnings per share for the three months ended Sep 30 fell to 5.59 cents, from 5.98 cents even though sales climbed 8.1 per cent to $4.4 billion, from $4.1 billion in 2009.
But despite the earnings blip, the company has raised its dividend payout ratio for this year to between 55 per cent to 70 per cent of underlying net profit, from 45 per cent to 60 per cent previously.
SingTel saw its pre-tax profits from its six regional associates fall 6.2 per cent to $536 million in its second-quarter.
The company, which derives 76 per cent of its ebitda (earnings before interest, tax, depreciation and amortisation) from overseas, was heavily weighed down by the cost of Bharti Airtel’s expansion into South Africa. In addition, a weaker performance from its Indonesian associate Telkomsel and higher operating costs in Singapore also contributed to the Q2 decline.
In June, SingTel’s largest regional associate Bharti, in which it has a 32 per cent stake, successfully acquired the 15 South African mobile assets belonging to Kuwaiti conglomerate Zain.
Beyond chipping in its share of the financing costs for this deal, 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.
According to its CEO Chua Sock Koong, Bharti has stated that it needs around six months to restructure the company and profitability should begin to improve by April next year.
‘We have to be patient. It will take a bit of time to integrate the operations (of Bharti and Zain),’ SingTel’s chief financial officer Jeann Low told reporters at a briefing yesterday.
Meanwhile, Bharti’s pre-tax contributions fell 11.5 per cent to $209 million in Q2. Contributions from Indonesian associate Telkomsel fell 8.8 per cent to $230 million due to a triple-whammy of heightened price wars, network upgrading costs and depreciation charges.
Globe Telecom’s share of SingTel’s pre-tax profit fell 7.8 per cent in the second quarter to $49 million as a result of intensified competition in the Philippines. Pacific Bangladesh Telecom and Pakistani associate Warid Telecom, on the other hand, continue to be in the red with pre-tax losses of $4 million and $14 million respectively.
The lone exception among SingTel’s regional investments was again Thai associate Advanced Info Service, which saw its pre-tax contributions jump 26 per cent to $67 million due to explosive mobile data take-up.
Australian subsidiary Optus also helped cushion the fall. The operator, which accounts for 31 per cent of SingTel’s ebitda, enjoyed another bull run in the second-quarter as its net profit climbed 17.5 per cent to $216 million.
Net income from SingTel’s Singapore operations fell 11.9 per cent in the second-quarter to $295 million due to higher mobile customer acquisition and retention costs, as well as continued investments in pay-TV content.
The firm attracted 39,000 new local postpaid mobile subscribers in the July to September period but it had to suffer the bane of higher handset subsidies as most of them are smart phone users.
The addition of 25,000 new pay-television customers in Q2 took SingTel’s mio TV customer base to 245,000. Revenue from pay-TV now stands at $22 million.
For the first six months of its new financial year, SingTel’s net profit fell 3.5 per cent to $1.8 billion, while revenue rose 9.7 per cent to $8.7 billion.
The firm has declared an interim dividend of 6.8 cents for its H1 performance, up from 6.2 cents last year.
In spite of the higher payout to shareholders, Ms Chua maintains that SingTel still has the ‘financial flexibility’ to pursue new investments and further acquisitions.
Looking ahead to the full-year, SingTel expects pre-tax profits from Singapore and Australia to grow by a ‘mid single digit’.
Bharti’s earnings will continue to be diluted by the acquisition financing costs for Zain as well as investments into third-generation cellular networks, while Telkomsel’s ebitda margin is set to ‘decline slightly’, it said.
SingTel shares closed six cents higher at $3.31 yesterday.