SPH – OCBC
Continued headwinds for print
- REIT spin-off success
- Continued headwinds for print
- Downgrade to HOLD with S$4.14 FV
A REIT success but 18 S-cents bonus below view
As anticipated, SPH conducted a successful REIT spin-off for Paragon and Clementi Mall, yielding substantial cash proceeds and subsequently an 18 S-cents bonus dividend for shareholders. We see the establishment of a REIT subsidiary vehicle as a major positive for the group’s mall development business and believe management’s decision to hold a 70% majority stake makes significant sense – this enables accounting consolidation and for the bulk of property earnings to continue accreting to SPH. That said, the 18 S-cents bonus cash dividend was somewhat below view, particularly as the group was already sitting on an fairly hefty war-chest of ~S$0.9b investible funds as at end 3QFY13. We believe that investors could judge the degree in which management can expediently deploy excess capital for attractive returns as a key performance indicator for the group ahead.
Still seeing headwinds for the print business
In addition, the latest 3QFY13 figures presented a picture of continued headwinds for the group’s core print business. Over 3QFY13, operating revenue from the key Newspaper and Magazine segment fell 3.3% to S$259.3m. Given the cumulative impact from cooling measures and hawkish loan requirements on the property and automobile sectors, conditions for the print business remain challenging. We saw pressure on 3QFY13 ad revenues, which fell 4.5% YoY in 3QFY13, and circulation revenues also decreased S$4.9m YoY (down 3.2%) as the physical subscription base declined.
Downgrade to HOLD
Given current headwinds for the print business and limited visibility in terms of catalysts ahead, we believe the risk-reward proposition for the counter has turned fairly neutral. Downgrade to HOLD with a lowered fair value estimate of S$4.14, versus S$4.94 (before the REIT spin-off) previously. Our barometer for an upturn in outlook ahead consists of two key groups of operating metrics: for its print businesses – ad and circulation revenue growth; and for its retail property segment – expedient and accretive capital deployment.
SPH – OCBC
Continued headwinds for print
- REIT spin-off success
- Continued headwinds for print
- Downgrade to HOLD with S$4.14 FV
A REIT success but 18 S-cents bonus below view
As anticipated, SPH conducted a successful REIT spin-off for Paragon and Clementi Mall, yielding substantial cash proceeds and subsequently an 18 S-cents bonus dividend for shareholders. We see the establishment of a REIT subsidiary vehicle as a major positive for the group’s mall development business and believe management’s decision to hold a 70% majority stake makes significant sense – this enables accounting consolidation and for the bulk of property earnings to continue accreting to SPH. That said, the 18 S-cents bonus cash dividend was somewhat below view, particularly as the group was already sitting on an fairly hefty war-chest of ~S$0.9b investible funds as at end 3QFY13. We believe that investors could judge the degree in which management can expediently deploy excess capital for attractive returns as a key performance indicator for the group ahead.
Still seeing headwinds for the print business
In addition, the latest 3QFY13 figures presented a picture of continued headwinds for the group’s core print business. Over 3QFY13, operating revenue from the key Newspaper and Magazine segment fell 3.3% to S$259.3m. Given the cumulative impact from cooling measures and hawkish loan requirements on the property and automobile sectors, conditions for the print business remain challenging. We saw pressure on 3QFY13 ad revenues, which fell 4.5% YoY in 3QFY13, and circulation revenues also decreased S$4.9m YoY (down 3.2%) as the physical subscription base declined.
Downgrade to HOLD
Given current headwinds for the print business and limited visibility in terms of catalysts ahead, we believe the risk-reward proposition for the counter has turned fairly neutral. Downgrade to HOLD with a lowered fair value estimate of S$4.14, versus S$4.94 (before the REIT spin-off) previously. Our barometer for an upturn in outlook ahead consists of two key groups of operating metrics: for its print businesses – ad and circulation revenue growth; and for its retail property segment – expedient and accretive capital deployment.
August 2013
Results Announcement
- 2 Aug 13 : SingPost (Q114) – EPS 1,775ct ; Div 1.25ct
- 6 Aug 13 : HLFin (Q213) – Annualised EPS 15.74ct ; Div 4ct
- 6 Aug 13 : StarHub (Q213) – EPS 5.85ct (todate 11.15ct) ; Div 5ct (todate 10ct)
- 13 Aug 13 : SBSTransit (Q213) – EPS 1.02ct (todate 1.94ct) ; Div 0.9ct
- 13 Aug 13 : STEng (Q213) – EPS 4.78ct (todate 9.11ct) ; Div 3ct
- 14 Aug 13 (AM) : Singtel (Q114) – EPS 6.35ct
- 14 Aug 13 : ComfortDelgro (Q213) – EPS 3.26ct (Todate 6ct) ; Div 3ct
- 14 Aug 13 : MIIF (1H13) – Div 0.7ct
STI = 3028.94 (-192.99 for the Month)
|
Stock |
Period |
EPS cts |
DPS cts |
Mkt |
Yield |
PE |
Div Breakdown |
|
HL Fin |
FY12 (Dec) |
17.60 |
12.00 |
$2.560 |
4.688% |
14.55 |
Interim 4ct ; Final 8ct |
|
SingPost |
FY13 (Mar) |
6.435 |
6.25 |
$1.245 |
5.020% |
19.35 |
Q1, Q2, Q3 1.25ct ; Q4 2.5ct |
|
SPH |
FY12 (Aug) |
23 |
24.0 |
$3.930 |
6.107% |
17.09 |
Interim 7ct ; Final 9ct + Special 8ct |
Aviation Services
|
Stock |
Period |
EPS cts |
DPS cts |
Mkt |
Yield |
PE |
Div Breakdown |
|
SATS |
FY13 (Mar) |
16.60 |
15.0 |
$3.010 |
4.983% |
18.13 |
Interim 5ct ; Final 6ct + Special 4ct |
|
SIA Engg |
FY13 (Mar) |
24.51 |
22.0 |
$4.600 |
4.783% |
18.77 |
Interim 7ct ; Final 15ct |
|
ST Engg |
FY12 (Dec) |
18.76 |
16.8 |
$3.960 |
4.242% |
21.11 |
Interim 3ct ; Final 4ct + Special 9.8ct |
Note : SATS Special Div is Observed to be Non-Recurring
Transport
|
Stock |
Period |
EPS cts |
DPS cts |
Mkt |
Yield |
PE |
Div Breakdown |
|
SBSTransit |
FY12 (Dec) |
6.01 |
3.00 |
$1.360 |
2.206% |
22.63 |
Interim 1.35ct ; Final 1.65ct |
|
ComfortDelGro |
FY12 (Dec) |
11.89 |
6.40 |
$1.845 |
3.469% |
15.52 |
Interim 2.9ct ; Final 3.5ct |
|
SMRT |
FY13 (Mar) |
5.5 |
2.50 |
$1.300 |
1.923% |
23.64 |
Interim 1.5ct ; Final 1.0ct |
TELCO
|
Stock |
Period |
EPS cts |
DPS cts |
Mkt |
Yield |
PE |
Div Breakdown |
|
SingTel |
FY13 (Mar) |
22.02 |
16.8 |
$3.510 |
4.786% |
15.94 |
Interim 6.8ct ; Final 10ct |
|
M1 |
FY12 (Dec) |
16.1 |
14.6 |
$3.220 |
4.534% |
20.00 |
Interim 6.6ct ; Final 6.3ct + Special 1.7ct |
|
StarHub |
FY12 (Dec) |
20.93 |
20 |
$4.200 |
4.762% |
20.07 |
Q1 5ct ; Q2 5ct ; Q3 5ct ; Q4 5ct |
Funds / Infrastructure
|
Stock |
Period |
DPS cts |
Mkt |
Yield |
NAV |
Div Breakdown |
|
SPAus |
2H – Mar13 |
A4.1 (Gross) |
$1.315 |
7.092% |
A$0.91 |
1H13 A4.1ct ; 2H13 A4.1ct |
|
MIIF |
FY13 – Guidance |
1.90 |
$0.191 |
9.948% |
$0.250 |
1H12 2.75ct ; 2H12 2.75ct + 3ct (Special) ; Capital Return = 44.329ct + 1.04ct |
* SPAus DPU in A$. Yield is Calculated Using Latest Exchange Rate (1.1373) fm Yahoo
NOTES :
- Mkt Price is as on 30-Aug-13
- MIIF : 1H13 (Jun) –0.7ct
- ComfortDelgro : Q213 (Jun) –3ct
- ST Engg : 1H13 (Jun) – 3ct
- SBSTransit : Q213 (Jun) – 0.9ct
- HLFin : 1H13 (Jun) – 4ct
- StarHub : Q213 (Jun) – 5ct ; Q113 (Mar) – 5ct
- SingPost : Q413 Q114 (Jun13) – 1.25ct
- M1 : 1H13 (Jun) – Interim 6.8ct
- MIIF : FY13 Guidance 1H13 (Jun) –0.7ct ; 2H13 (Dec) – 1.2ct (Final) ; APTT IPO Entitlement / 1000 MIIF Shares (Estimate) = 457 APTT Shares or $443.29
- SPAus : 2H13 (Mar13) – A4.1ct = A1.367ct (Franked) + A2.649ct (Interest) + A0.084ct (Capital Returns) ; 1H13 (Sep12) – A4.1ct = A1.367ct (Franked) + A2.467ct (Interest) + A0.266ct (Capital Returns)
- SPAus : FY14 Guidance = A8.36ct
- SATSvcs : 2H13 (Mar13) – Final 6ct + Special 4ct ; 1H13 (Sep12) – Interim 5ct
- SingTel : 2H13 (Mar) – Final 10ct ; 1H13 (Sep12) – Interim 6.8ct ; Div Policy – 60% to 75% of Underlying Net Profit
- SIAEC : Q413 (Mar13) – Final 15ct ; Q213 (Sep12) – Interim 7ct
- SMRT : Q413 (Mar13) – Final 1.0ct ; Q213 (Sep12) – Interim 1.5ct
- SPH : 1H13 (Feb) – Interim = 7ct
- StarHub : FY13 Div Guidance – 5ct/Q
August 2013
Results Announcement
- 2 Aug 13 : SingPost (Q114) – EPS 1,775ct ; Div 1.25ct
- 6 Aug 13 : HLFin (Q213) – Annualised EPS 15.74ct ; Div 4ct
- 6 Aug 13 : StarHub (Q213) – EPS 5.85ct (todate 11.15ct) ; Div 5ct (todate 10ct)
- 13 Aug 13 : SBSTransit (Q213) – EPS 1.02ct (todate 1.94ct) ; Div 0.9ct
- 13 Aug 13 : STEng (Q213) – EPS 4.78ct (todate 9.11ct) ; Div 3ct
- 14 Aug 13 (AM) : Singtel (Q114) – EPS 6.35ct
- 14 Aug 13 : ComfortDelgro (Q213) – EPS 3.26ct (Todate 6ct) ; Div 3ct
- 14 Aug 13 : MIIF (1H13) – Div 0.7ct
STI = 3028.94 (-192.99 for the Month)
|
Stock |
Period |
EPS cts |
DPS cts |
Mkt |
Yield |
PE |
Div Breakdown |
|
HL Fin |
FY12 (Dec) |
17.60 |
12.00 |
$2.560 |
4.688% |
14.55 |
Interim 4ct ; Final 8ct |
|
SingPost |
FY13 (Mar) |
6.435 |
6.25 |
$1.245 |
5.020% |
19.35 |
Q1, Q2, Q3 1.25ct ; Q4 2.5ct |
|
SPH |
FY12 (Aug) |
23 |
24.0 |
$3.930 |
6.107% |
17.09 |
Interim 7ct ; Final 9ct + Special 8ct |
Aviation Services
|
Stock |
Period |
EPS cts |
DPS cts |
Mkt |
Yield |
PE |
Div Breakdown |
|
SATS |
FY13 (Mar) |
16.60 |
15.0 |
$3.010 |
4.983% |
18.13 |
Interim 5ct ; Final 6ct + Special 4ct |
|
SIA Engg |
FY13 (Mar) |
24.51 |
22.0 |
$4.600 |
4.783% |
18.77 |
Interim 7ct ; Final 15ct |
|
ST Engg |
FY12 (Dec) |
18.76 |
16.8 |
$3.960 |
4.242% |
21.11 |
Interim 3ct ; Final 4ct + Special 9.8ct |
Note : SATS Special Div is Observed to be Non-Recurring
Transport
|
Stock |
Period |
EPS cts |
DPS cts |
Mkt |
Yield |
PE |
Div Breakdown |
|
SBSTransit |
FY12 (Dec) |
6.01 |
3.00 |
$1.360 |
2.206% |
22.63 |
Interim 1.35ct ; Final 1.65ct |
|
ComfortDelGro |
FY12 (Dec) |
11.89 |
6.40 |
$1.845 |
3.469% |
15.52 |
Interim 2.9ct ; Final 3.5ct |
|
SMRT |
FY13 (Mar) |
5.5 |
2.50 |
$1.300 |
1.923% |
23.64 |
Interim 1.5ct ; Final 1.0ct |
TELCO
|
Stock |
Period |
EPS cts |
DPS cts |
Mkt |
Yield |
PE |
Div Breakdown |
|
SingTel |
FY13 (Mar) |
22.02 |
16.8 |
$3.510 |
4.786% |
15.94 |
Interim 6.8ct ; Final 10ct |
|
M1 |
FY12 (Dec) |
16.1 |
14.6 |
$3.220 |
4.534% |
20.00 |
Interim 6.6ct ; Final 6.3ct + Special 1.7ct |
|
StarHub |
FY12 (Dec) |
20.93 |
20 |
$4.200 |
4.762% |
20.07 |
Q1 5ct ; Q2 5ct ; Q3 5ct ; Q4 5ct |
Funds / Infrastructure
|
Stock |
Period |
DPS cts |
Mkt |
Yield |
NAV |
Div Breakdown |
|
SPAus |
2H – Mar13 |
A4.1 (Gross) |
$1.315 |
7.092% |
A$0.91 |
1H13 A4.1ct ; 2H13 A4.1ct |
|
MIIF |
FY13 – Guidance |
1.90 |
$0.191 |
9.948% |
$0.250 |
1H12 2.75ct ; 2H12 2.75ct + 3ct (Special) ; Capital Return = 44.329ct + 1.04ct |
* SPAus DPU in A$. Yield is Calculated Using Latest Exchange Rate (1.1373) fm Yahoo
NOTES :
- Mkt Price is as on 30-Aug-13
- MIIF : 1H13 (Jun) –0.7ct
- ComfortDelgro : Q213 (Jun) –3ct
- ST Engg : 1H13 (Jun) – 3ct
- SBSTransit : Q213 (Jun) – 0.9ct
- HLFin : 1H13 (Jun) – 4ct
- StarHub : Q213 (Jun) – 5ct ; Q113 (Mar) – 5ct
- SingPost : Q413 Q114 (Jun13) – 1.25ct
- M1 : 1H13 (Jun) – Interim 6.8ct
- MIIF : FY13 Guidance 1H13 (Jun) –0.7ct ; 2H13 (Dec) – 1.2ct (Final) ; APTT IPO Entitlement / 1000 MIIF Shares (Estimate) = 457 APTT Shares or $443.29
- SPAus : 2H13 (Mar13) – A4.1ct = A1.367ct (Franked) + A2.649ct (Interest) + A0.084ct (Capital Returns) ; 1H13 (Sep12) – A4.1ct = A1.367ct (Franked) + A2.467ct (Interest) + A0.266ct (Capital Returns)
- SPAus : FY14 Guidance = A8.36ct
- SATSvcs : 2H13 (Mar13) – Final 6ct + Special 4ct ; 1H13 (Sep12) – Interim 5ct
- SingTel : 2H13 (Mar) – Final 10ct ; 1H13 (Sep12) – Interim 6.8ct ; Div Policy – 60% to 75% of Underlying Net Profit
- SIAEC : Q413 (Mar13) – Final 15ct ; Q213 (Sep12) – Interim 7ct
- SMRT : Q413 (Mar13) – Final 1.0ct ; Q213 (Sep12) – Interim 1.5ct
- SPH : 1H13 (Feb) – Interim = 7ct
- StarHub : FY13 Div Guidance – 5ct/Q
SingTel – Phillip
Stable outlook, but Guidance lowered on AUD depreciation
Company Overview
SingTel (ST) is a leading communications service provider with diversified geographical exposures. The core part of SingTel’s business resides in Singapore & Australia, while meaningful stakes in its regional Associates provides the Group with exposure across Asia-Pacific.
- Underlying 1Q14 profits up 5.5% y-y to S$897 million
- FY14 Guidance revised downwards on FX weakness.
- Maintain “Accumulate” with new TP of S$3.99, based on Dividend yield, Strong business fundamentals, and Growth potential from Associates.
What is the news?
SingTel reported 1Q14 underlying profits of S$897 million. Revenue decreased -5.3% y-y, due to lower revenue from Australia. FY14 guidance was revised downward due to expected depreciation of key currencies, including AUD. Excluding this FX impact, management guides business fundamentals remains unchanged and strong. SingTel has changed its presentation to focus on 1) Group Consumer (62% Group’s EBITDA ex-assoc), 2) Group Enterprise (41.5%) and 3) Group Digital Life. (-2.0%)
How do we view
Positively, the improvement in cost management mitigated the decline in revenue, leading to y-y EBITDA margin improvements. For SG Group Consumer, data monetizing continues to gain traction, while residential pay TV showed significant improvements. AU Group Consumer EBITDA increased 4.6% y-y on cost optimizing and similar data monetizing. Management stressed its focus on retaining and maximizing profits from existing customers, instead of growth of customer base. Group Enterprise revenue was lower on weaker business environment, but EBITDA was up 3.1% y-y on cost management.
Investment Actions?
We factor in 1Q14’s earnings. We derive a new Sum-of-the-parts (SOTP) target price of S$3.99. SingTel’s dividend yield remains attractive, while the business remains fundamentally strong, and the associates provide growth potential. We therefore maintain our “Accumulate” rating.