SingTel – BT
SingTel may get boost in Europe through Cable & Wireless
Singapore Telecom will be able to stake a major claim to European markets if it acquires Cable and Wireless Worldwide (C&WW), but the integration of these two giants could be challenging at first, analysts say.
On Sunday, British daily The Independent said SingTel is considering a bid for UK-based Cable & Wireless Worldwide (C&WW).
Singapore’s largest operator has reportedly contacted investment banks in the region, as well as London, to discuss the acquisition.
SingTel has refused to comment directly on the report, saying it does not respond to ‘market speculation’.
The company derives 73 per cent of its Ebitda – earnings before interest, tax, depreciation and amortisation – from overseas through Australian subsidiary Optus and its six regional mobile associates.
Market watchers have repeatedly highlighted the need for SingTel to continue spreading its wings abroad to fuel growth.
But SingTel has not made a single purchase in the three years since it bought a 30 per cent stake in Pakistani operator Warid in June 2007 – a unit that continues to struggle for profitability.
This could change, following the appointment of new international CEO Hui Weng Cheong last month.
The former chief operating officer of SingTel’s Thai associate AIS will officially take over from current chief Lim Chuan Poh when he retires at the end of this year.
C&WW is a major player in the UK telecoms market and remains dominant in several overseas markets including the British Virgin Islands and the Cayman Islands in the Caribbean.
‘SingTel does not really have a strong position in Europe, and if it does acquire C&WW, SingTel will be able to boost its credibility and capability in serving large multi-national customers in Europe and Asia,’ said telecoms consultant Soh Siow Meng.
‘However, I do think there will be a lot of issues initially when it comes to integrating SingTel’s enterprise and wholesale operations with C&WW before any synergy can be achieved.’
StarHub – Phillip
Launch of NGNBN
• StarHub held a media conference on its plans and solutions for NGNBN
• Raise our revenue and net profit estimates
• Maintain Hold and raise fair value from S$2.16 to S$2.41
Media conference
StarHub held a media conference on 2 September 2010 to launch its plans and solutions for the Next Generation National Broadband Network (NGNBN). In particular, StarHub highlighted its home and business solutions for the fibre optic network. With NGNBN, it can reach out to all businesses and homes in Singapore. This would place it on an equal footing to compete with SingTel, which is the current leader in the broadband market. It also demonstrated to analysts on the use of its solutions for 3D gaming, cable television programs and video conferences.
Our views on StarHub’s plans
We are impressed by StarHub’s plans on NGNBN. It has also become the first telecommunications company to provide more details of its price plans for NGNBN, which are named as MaxInfinity. In fact, it has four access plans that are priced from S$68.27 to S$395.90. No details have been provided on the operating margins, but we believe that StarHub will benefit from the new plans.
Revised revenue and net profit estimates
We have raised StarHub’s broadband revenue estimates by 5.6%, 33.2% and 42.5% to S$281.5m, S$370.8m and S$414.1m in FY2010E, FY2011E and FY2012E respectively. This is because we expect StarHub to register a net gain of 60,000, 30,000 and 20,000 broadband subscribers in FY2010E, FY2011E and FY2012E respectively. Moreover, net profit is projected to increase by 5.1%, 32.3% and 41.9% to S$216.5m, S$267.1m and S$293.2m in FY2010E, FY2011E and FY2012E respectively.
SPH – CIMB
Steady ad demand
• Maintain Outperform. Following our recent meeting with management, we remain confident about SPH’s prospects. We expect ad demand to improve further yoy from healthy retail and job markets. No change to our earnings estimates. Our sum-of-the parts target price remains S$4.47. Maintain Outperform as SPH’s future earnings should be bolstered by higher ad demand, in line with Singapore’s improving economy. We expect stock catalysts from lower-than-expected newsprint costs.
• Expect pick-up in ad demand come 1Q11. The Saturday edition of The Straits Times averaged 228 pages in August, up 7% yoy but down 6% mom due to a quieter property market during the Hungry Ghost month. However, we believe there will be a pick-up in ad demand come 1Q11 (September-November) as the festive season approaches. YTD page count is up 19% yoy. In line with the economic recovery, newsprint prices have been climbing to US$600-650MT, though still much below peak prices. Newsprint prices have been locked in till Mar 11.
• Reasons to like SPH. We continue to like SPH as we believe its print business is well-positioned to benefit from events planned for Asia over the next few years. Also, its dividend yields of 6-7% are comparable to average S-REIT yields and higher than the yields of other large caps.
SPH – Lim and Tan
Ahead Of Final Results
• Looks as if some have started to speculate on how generous SPH is likely to be with its final & special dividend payout for ye Aug ’10, results for which are not due for another month or so (Oct 12th last year).
• The stock has risen 23 cents or 6% in just over 2 weeks, to $4.15 yesterday.
• SPH’s dividend had been steadily rising, until ye Aug ’09 (covering the worst period of the financial crisis), when it was cut to 25 cents (7 interim + 9 final + 9 special) from the peak of 27 cents the year before (8+9+10).
• We expect SPH to reinstate the final special to 10 cents (and it can more than afford to given the sharp recovery in advertising spending), which with the 7 cents interim already paid, would bring the total for the year to 26 cents, giving a 6.3% yield. (Net profit for 9 months ended May ’10 of $422.6 mln was 23.7% above the same period the fiscal year before.)
• This has to be considered attractive.
• Yesterday’s $4.15 close has some technical significance, being close to the support-turned resistance level, ie need for some “consolidation”:
– In July ’08, SPH had breached support at the $4.20 level, which had held for much of the period since 2005, and has not been able to surpass the level since.
– The top end of the range had generally been around $4.70-4.80, except for a few occasions when SPH hit as high as $4.90 in Oct ’05, and as low as $3.88 in Aug ’06. (The high in 2007 was $4.74.)
– It bottomed at $2.32 in Mar ’09, like just every other stock in the world.
• A commitment by management to a dividend policy would, we believe, enable SPH to retest its high, and possibly even scale new heights.
• We maintain BUY.
SPH – Lim and Tan
Ahead Of Final Results
• Looks as if some have started to speculate on how generous SPH is likely to be with its final & special dividend payout for ye Aug ’10, results for which are not due for another month or so (Oct 12th last year).
• The stock has risen 23 cents or 6% in just over 2 weeks, to $4.15 yesterday.
• SPH’s dividend had been steadily rising, until ye Aug ’09 (covering the worst period of the financial crisis), when it was cut to 25 cents (7 interim + 9 final + 9 special) from the peak of 27 cents the year before (8+9+10).
• We expect SPH to reinstate the final special to 10 cents (and it can more than afford to given the sharp recovery in advertising spending), which with the 7 cents interim already paid, would bring the total for the year to 26 cents, giving a 6.3% yield. (Net profit for 9 months ended May ’10 of $422.6 mln was 23.7% above the same period the fiscal year before.)
• This has to be considered attractive.
• Yesterday’s $4.15 close has some technical significance, being close to the support-turned resistance level, ie need for some “consolidation”:
– In July ’08, SPH had breached support at the $4.20 level, which had held for much of the period since 2005, and has not been able to surpass the level since.
– The top end of the range had generally been around $4.70-4.80, except for a few occasions when SPH hit as high as $4.90 in Oct ’05, and as low as $3.88 in Aug ’06. (The high in 2007 was $4.74.)
– It bottomed at $2.32 in Mar ’09, like just every other stock in the world.
• A commitment by management to a dividend policy would, we believe, enable SPH to retest its high, and possibly even scale new heights.
• We maintain BUY.