June 2010
STI = 2835.51 (+5.17)
|
Stock |
Period |
EPS cts |
DPS cts |
Mkt |
Yield |
PE |
Div Breakdown |
|
SPH |
FY09 (Aug) |
26 |
25 |
$3.79 |
6.596% |
14.58 |
Interim 7ct ; Final 9ct + 9ct (Special) |
|
SingPost |
FY10 (Mar) |
8.563 |
6.25 |
$1.13 |
5.531% |
13.20 |
Q1, Q2, Q3 1.25ct ; Q4 2.5ct |
|
STI ETF |
Dec-09 |
— |
3 |
$2.89 |
2.076% |
— |
Dec09 3ct ; Jun09 4ct |
|
SATSvcs |
FY10 (Mar) |
16.7 |
13 |
$2.68 |
4.851% |
16.05 |
Final 8ct ; Interim 5ct |
|
ST Engg |
FY09 (Dec) |
14.78 |
13.3 |
$3.29 |
4.036% |
22.26 |
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 |
$1.75 |
5.029% |
9.86 |
Interim 4.5ct ; Final 4.3ct |
|
ComfortDelGro |
FY09 (Dec) |
10.52 |
5.3 |
$1.46 |
3.630% |
13.88 |
Interim 2.63ct ; Final 2.67ct |
|
SMRT |
FY10 (Mar) |
10.7 |
8.5 |
$2.22 |
3.829% |
20.75 |
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 |
$3.04 |
4.671% |
12.38 |
Interim 6.2ct ; Final 8ct |
|
M1 |
FY09 (Dec) |
16.8 |
13.4 |
$2.14 |
6.262% |
12.74 |
Interim 6.2ct ; Final 7.2ct |
|
StarHub |
FY09 (Dec) |
18.68 |
19 |
$2.26 |
8.407% |
12.10 |
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) |
$0.93 |
10.324% |
A$0.94 |
2H10 A4.0ct ; 1H10 A4.0ct |
|
MIIF |
2H – Dec09 |
1.50 |
$0.485 |
6.186% |
$0.82 |
2H09 1.5ct ; 1H09 1.5ct |
* SPAus DPU in A$. Yield is Calculated Using Latest Exchange Rate (1.1937) fm Yahoo
NOTES :
- Mkt Price is as on 30-Jun-10
- SingTel : 2H10 (Mar10) – Final 8ct ; 1H10 (Sep09) – Interim 6.2ct
- SPAus : 2H10 (Mar10) – A4ct (before tax) / A3.7739ct (after tax) ; 1H10 (Sep09) – A4ct (before tax) / A3.8113ct (after tax)
- StarHub : Q110 (Mar) – 5ct
- SATSvcs : Q410 (Mar10) – Final 8ct ; Q210 (Sep09) – Interim 5ct
- SMRT : Q410 (Mar10) – Final 6.75ct ; Q210 (Sep09) – Interim 1.75ct
- SingPost : Q410 (Mar10) – 2.5ct ; Q310 (Dec09) – 1.25ct ; Q210 (Sep09) – 1.25ct ; Q110 (Jun09) – 1.25ct
- SPH : 1H10 (Feb) – 7ct
- MIIF : 2H09 (Dec) – 1.5ct ; 1H09 (Jun) – 1.5ct
- ST Engg : Q409 (Dec) – 4ct (Final) + 6.28ct (Special) ; Q209 (Jun) – 3ct
- SBSTransit : Q409 (Dec) – 4.3ct ; Q209 (Jun) – 4.5ct
- ComfortDelgro : Q409 (Dec) – 2.67ct ; Q209 (Jun) – 2.63ct
- StarHub : FY10 Div Policy 20ct ie. 5ct/Q
- M1 : 2H09 (Dec) – Final 7.2ct ; 1H09 (Jun) – Interim 6.2ct
SingTel – CIMB
Multiple headwinds
• Facing headwinds. We maintain our UNDERPERFORM on SingTel following our recent visit as the telco faces de-rating catalysts in the medium term except that dividend payouts should remain high, in our view. Concerns over Bharti’s gearing and earnings dilution, margin pressure in Singapore and Telkomsel’s poor performance will likely weigh down on SingTel. In the longer term, we continue to see SingTel benefiting from NGNBN. We also believe Bharti’s acquisition of Zain Africa will effectively shut SingTel out of a direct foothold in Africa. We maintain our earnings forecasts and sum-of-the-parts target price of S$3.00.
• Prefers to raise its stakes. SingTel still prefers to raise its stakes in its associates. However, we gather that consolidation could happen in Pakistan which suffers from stiff competition and political uncertainties.
• Dividend payouts likely to remain high. We believe SingTel will continue to pay dividends at the upper bound of its policy of 45-60% given a lack of imminent sizeable acquisition targets. Bharti’s acquisition of Zain Africa should effectively preclude SingTel from trying to acquire a direct stake in an African telco group, if it wants to avoid straining its relationship with Bharti
• Beneficiary of NGNBN. We continue to believe that SingTel will be a net beneficiary of NGNBN, namely from monetising its passive assets in 2014. In the medium term, SingTel will benefit from fixed and revenue share payments from OpenNet.
SingPost – OCBC
Limited upside potential for now
Stock has performed well. Singapore Post (SingPost) has outperformed the STI not only for the past half a year, but also over a longer period of time since 2004. The stock has risen about 11% YTD, compared to the STI’s near flattish performance. Backed by its relatively stable business, it has been a good place for investors to park their funds during times of uncertainty and volatility. SingPost’s price
has also appreciated by about 79% since the start of 2004 vs the STI’s 63% gain. All these do not take into account its dividend payouts.
Looking at the future. We have mentioned that the future of SingPost over the long term hinges on its ability to make astute investment decisions as it seeks new business opportunities. There is the need to find new drivers to sustain growth as the domestic postal industry has limited growth prospects. As SingPost seeks to transform into an organization offering various solutions to consumers, it is likely to leverage on its core competencies such as its extensive network, technology, and consumer-oriented focus. According to the Universal Postal Union, with over 660,000 post offices in 191 countries, the postal sector is the world’s largest physical distribution network.
Enhancing regional presence. The group is also looking to expand its regional presence using G3 Worldwide Aspac as a platform (with it, the group now has a network of offices in 10 countries/territories). SingPost is also part of the Kahala Posts Group, an alliance of 10 postal services (e.g. Australia Post, China Post Group, Japan Post etc) which focuses on International Express Mail Services (EMS). According to Korea Post, the EMS brand is now recognized as a fast, safe and high-quality premium services in its region1. SingPost has also been forging partnerships with other operators, such as its
joint declaration with the Egyptian National Postal Organisation this year to establish a bilateral partnership.
Downgrade to HOLD. The stock has performed well and has almost reached our fair value estimate of S$1.16. Given limited upside potential to our fair value estimate, we downgrade the stock to HOLD based on valuation grounds. Investors should continue to expect a dividend of about S$0.0625/share per year given the group’s comfortable cash flow position, barring unforeseen circumstances.
STEng – DB
Record passenger bumping suggest US airline recovery
According to a recent Bloomberg article, U.S. airlines may bump the most passengers in nine years as business travelers resume flying following the deepest cuts in seats since World War II. U.S. Transportation Dept data indicate that almost 220,000 passengers were not able to board flights in 1Q 2010 even though they bought tickets, which is 25% higher yoy. At that pace, denied boardings in 2010 would surpass 2009’s 762,400 and reach the highest total since 2001. The increase in passenger bumping stems from traffic revival at carriers such as Delta and American Airlines, which have yet to restore reductions in capacity made during the recession. Continental and Southwest Airlines indicated their planes flew fuller than ever in May 2010. US Airways indicated that the industry is seeing a dramatic recovery in business travel. Airlines routinely sell more coach tickets than they have available on the assumption that not all passengers will show up.
This news is positive in our view and may prompt the eventual return of aircraft to active service for those which have been placed in storage during the crisis. ST Aerospace is well positioned to benefit with it being amongst the top two MRO providers in the US. The group currently handles about 70% of FedEx’s global fleet in MRO activities and about a third of UPS’s global fleet. In addition, its key US customers include United, US Airways, Delta, Northwest, Continental, Southwest and American Airways. The recovery of business travel is in line with IATA’s more positive view of global airline industry. IATA indicated recently that the industry will post US$2.5b profit in 2010, reversing two years of losses. It had been predicting US $2.8b loss as recently as March but has now removed that estimate as the economy rebounds.
SingTel – DB
STel’s Sing/Australia fwd PE looking stretched again
STel fell 2.9% today but is still up 18c (6.3%) over the last month despite the per share value of STel’s listed Associates staying effectively unchanged over the same period. The result of this relative STel out-performance versus its listed Associates has been a re-rating of the Sing/Australia businesses. In fact, the current implied Sing/Au fwd PE at 15.5x, although down on yesterday’s 16.3x, is still close to 2yr highs.
A high Sing/Au PE signals near-term STel price weakness
As previously highlighted, the implied Sing/Au fwd PE is inversely correlated with STel’s subsequent near-term price performance. On the 200 specific days over the last 5yrs when the estimated Sing/Au fwd PE exceeded 15.5x, STel’s price fell over the next three months on 89% of such times with an average 11% decline. And since it is difficult to imagine the Associates being significantly re-rated over the near-term (which would de-rate Sing/Au), we expect STel’s share price to be near-term pressured.
STel has been range-bound around S$2.90-3.20 for more than a year. On 26 June 09, it closed at S$3.01 with the Associates valued at S$1.53/share. Today STel is at S$3.04 but the estimated value of the Associates is now S$1.26. This divergence seems a bit odd. In fact, on current FX and prices, the listed Associates are worth S$0.89/share and the Telkomsel stake is estimated at S$0.37/share. And if we apply the average historic PE multiple to our Sing/Au estimate, then the implied value of those business would be S$1.54/share – giving a total theoretical price of S$2.80.
In summary, we expect STel to stay range-bound. But given the current Sing/Au fwd PE, near-term risks are skewed to the downside and it is possible the lower end of the range could be reset at or below S$2.80 over the near-term.