SATS – CIMB
Cruise control
SATS wrapped up FY13 on a pleasant note, not only reporting stronger-than-expected profits but also dishing out higher-than-expected dividends.
FY13 core net profit surpassed Street and our expectations by 8% on the back of margin strength. We fine-tune our FY14-15 EPS by less than 1% and raise our target price (still at 16.8x CY14 P/E, 1SD above its 8-year mean) marginally. Maintain Outperform with re-rating catalysts to come from growth in Changi Airport’s passenger traffic.
Leveraging Changi Airport’s growth
We expect strong intra-Asia travel to buoy SATS’s revenue. Stronger passenger volume had lifted its FY13 revenue by 8% yoy, with revenue growth across the board: gateway services (+8%) and food solutions (+8%). High staff costs were mitigated by slower rises in raw-material costs, supporting a 0.6%-pt expansion in EBIT margins to 10.6%. Excluding a S$16.8m impairment charge relating to its divestment of Daniels, core net profit grew 20%.
Gateway services hit by labour costs
Costlier labour took a toll on gateway services EBIT (-54%). Wage inflation was attributed to headcount increases and foreign-worker levies. Fortunately, growth from food solutions overwhelmed the weakness. EBIT margins from food solutions gained 2.8% pts, thanks to slower rises in raw-material costs and productivity gains.
Dividend sweetener
A 6ct final dividend and 4ct special dividend was declared, taking FY13 DPS to 15cts, above our 11.8ct forecast. Dividend prospects remain favourable with SATS enjoying positive free cash flows and a net-cash position.
SATS – Lim & Tan
- Notwithstanding the one-off impairment charge for sale of Daniels Group which was completed in October 2011 for S$16.8 million and other small exceptional items, SAT’s 4Q ’13 underlying net profit from continuing operations rose 32.4% y-o-y, buoyed by increased flights and higher meal volumes.
- SATS also proposed a final dividend of 6 cents per share, and cut its special dividend to 4 cents per share from last year’s 15 cents per share. The full financial year 2013 dividend yield amounts to 4.7%.
- Management guided that demand for the Group’s gateway and food business could continue to be underpinned by strong growth of passenger traffic at Changi Airport and within the Asian region. But air freight demand could remain weak. Similar to other Singapore corporates with domestic operations, the company could see rising wage costs due to the Singapore government’s manpower policies going forward.
SATS – Lim & Tan
- Notwithstanding the one-off impairment charge for sale of Daniels Group which was completed in October 2011 for S$16.8 million and other small exceptional items, SAT’s 4Q ’13 underlying net profit from continuing operations rose 32.4% y-o-y, buoyed by increased flights and higher meal volumes.
- SATS also proposed a final dividend of 6 cents per share, and cut its special dividend to 4 cents per share from last year’s 15 cents per share. The full financial year 2013 dividend yield amounts to 4.7%.
- Management guided that demand for the Group’s gateway and food business could continue to be underpinned by strong growth of passenger traffic at Changi Airport and within the Asian region. But air freight demand could remain weak. Similar to other Singapore corporates with domestic operations, the company could see rising wage costs due to the Singapore government’s manpower policies going forward.
ComfortDelgro – OCBC
Decent start to the year
- Group did well in 1Q13
- Fuel savings for FY13
- Still hopeful for fare increase
1Q13 results show YoY improvement
ComfortDelGro’s 1Q13 results saw revenue increasing slightly by 1.8% YoY to S$870.8m on the back of broad–based growth across its segments while operating profit improved 2.8% to S$95.9m as higher staff (+5.1% to S$276.5m) and repairs and maintenance expenses (+1.7% to S$42.9m) were offset by a reduction in fuel and electricity expenditure (-9.7% to S$64.9m). As a result, PATMI rose 7.9% to S$57.7m.
Group to benefit from lower fuel costs
The group has benefited from proactive fuel hedges put in place during the lull in fuel prices, and this has helped to mitigate cost pressures in other areas (i.e. increase in hiring related to the Downtown Line) as well as take the sting out of sustained weakness in its SG core bus operations, which saw a wider operating loss of S$5.4m (1Q12: -S$3.7m). With 60-70% of its diesel and 70% of its electricity requirements hedged for FY13, we expect this trend to continue in the coming quarters.
No word on possible fare increase but other catalysts remain
We had previously expected the fare review committee to announce a fare increase by the middle of 2Q13. With that time-frame now unrealistic, we temper our projections for ComfortDelgro’s Singapore operations for the remainder of FY13 but still expect to see an implementation this year. Nonetheless, the group’s other segments (i.e. Viacom, taxi etc) and overseas ventures remain attractive. For instance, it is in the tendering process for additional bus routes in NSW, Australia, and if successful, will benefit the group beyond FY13.
ComfortDelgro – OCBC
Decent start to the year
- Group did well in 1Q13
- Fuel savings for FY13
- Still hopeful for fare increase
1Q13 results show YoY improvement
ComfortDelGro’s 1Q13 results saw revenue increasing slightly by 1.8% YoY to S$870.8m on the back of broad–based growth across its segments while operating profit improved 2.8% to S$95.9m as higher staff (+5.1% to S$276.5m) and repairs and maintenance expenses (+1.7% to S$42.9m) were offset by a reduction in fuel and electricity expenditure (-9.7% to S$64.9m). As a result, PATMI rose 7.9% to S$57.7m.
Group to benefit from lower fuel costs
The group has benefited from proactive fuel hedges put in place during the lull in fuel prices, and this has helped to mitigate cost pressures in other areas (i.e. increase in hiring related to the Downtown Line) as well as take the sting out of sustained weakness in its SG core bus operations, which saw a wider operating loss of S$5.4m (1Q12: -S$3.7m). With 60-70% of its diesel and 70% of its electricity requirements hedged for FY13, we expect this trend to continue in the coming quarters.
No word on possible fare increase but other catalysts remain
We had previously expected the fare review committee to announce a fare increase by the middle of 2Q13. With that time-frame now unrealistic, we temper our projections for ComfortDelgro’s Singapore operations for the remainder of FY13 but still expect to see an implementation this year. Nonetheless, the group’s other segments (i.e. Viacom, taxi etc) and overseas ventures remain attractive. For instance, it is in the tendering process for additional bus routes in NSW, Australia, and if successful, will benefit the group beyond FY13.