ComfortDelgro – Lim & Tan
- Comfort Delgro reported 1Q ’13 net profit of S$57.7 million, up 7.9% y-o-y, which was above market expectations.
- The Group’s taxi business contributed positively to its bottom-line especially in Singapore, due to higher rentals from replacement taxis, a larger operating fleet and an increase in cashless transactions.
- But its bus and rail business in Singapore saw growth in revenue being offset by higher wages.
- The weakness in Australian dollar, Sterling pound and Chinese Renminbi relative to the Singapore dollar also negated revenue performance from its overseas operations.
- Even as net capex for 1Q ’13 rose to S$101.4 million, versus S$86.9 million in the same period last year, its balance sheet remains healthy given its net cash position.
- Looking ahead, management guided for higher revenue contributions from its overall bus business (except for UK market), as well as increase in top-line for its Singapore rail and bus units. But they also citied that they could face rising cost pressures going forward.
- Overall, the transportation company posted a decent set of quarterly earnings results, despite the headwinds from escalating salary costs and translation (forex) loss from its overseas business amid a strong Singapore dollar.
SingTel – Lim & Tan
- Fiscal 4Q ’13 net profits at Singtel came in at S$868 million, down 33% y-o-y, as a result of (1) a one-time loss of S$225 million from the divestment of Warid Pakistan and (2) an exceptional tax credit of S$270million in the same period last year. This is in line with consensus numbers.
- Excluding exceptional items, Singtel’s underlying quarterly net profit would have just declined 2% y-oy. The operating weakness came mainly from unfavourable foreign currency movements, as well as investments in network, digital initiatives and spectrum.
- Its overseas business registered just a 1% increase in pre-tax profits (S$514 million), as strong contributions from Telkomsel and AIS offset poorer performance from Bharti Airtel.
- The telecommunication company increased its dividend payout ratio, bringing its full-year dividends to 16.8 cents per share. This translates into a dividend yield of 4.2% for FY ’13.
- Looking ahead, Singtel foresees its revenue from its Group Consumer unit to decline by low single digit level due to lower anticipated contributions from Australia. Overall, consolidated revenue for the Group is expected to be stable, growing at low single digit, supported by productivity and yield management initiatives.
SingTel – Lim & Tan
- Fiscal 4Q ’13 net profits at Singtel came in at S$868 million, down 33% y-o-y, as a result of (1) a one-time loss of S$225 million from the divestment of Warid Pakistan and (2) an exceptional tax credit of S$270million in the same period last year. This is in line with consensus numbers.
- Excluding exceptional items, Singtel’s underlying quarterly net profit would have just declined 2% y-oy. The operating weakness came mainly from unfavourable foreign currency movements, as well as investments in network, digital initiatives and spectrum.
- Its overseas business registered just a 1% increase in pre-tax profits (S$514 million), as strong contributions from Telkomsel and AIS offset poorer performance from Bharti Airtel.
- The telecommunication company increased its dividend payout ratio, bringing its full-year dividends to 16.8 cents per share. This translates into a dividend yield of 4.2% for FY ’13.
- Looking ahead, Singtel foresees its revenue from its Group Consumer unit to decline by low single digit level due to lower anticipated contributions from Australia. Overall, consolidated revenue for the Group is expected to be stable, growing at low single digit, supported by productivity and yield management initiatives.
Starhub – Lim & Tan
- Starhub’s first quarter profits of S$91.2 million was up 3% y-o-y, in line with market expectations.
- Its broadband business contributed positively, with revenue growing 2% y-o-y, mainly attributable to a larger subscriber base and better plan mix.
- But this was partially offset by the decline in mobile revenue (-2% y-o-y) as a result of lower post-paid revenue from inter-connect operators and roaming services. Its Pay TV (-1% yo-y) also saw a small decline in revenue as a result of lower advertising revenue.
- The telecommunication company posted EBITDA margins of 33.3% in 1Q ’13, up from 32.2% in 1Q ’12 due to lower operating expenses from reduced cost of equipment sold and traffic expenses.
- For 1Q ’13, a cash dividend of 5 cents per share was declared. This translates into an annualized yield of 4.3%.
- Going forward, Starhub revised down its guidance for the Group’s operating revenue to grow in the lowsingle digit range y-o-y, with Group EBITDA margin expected to be about 31%. Likewise, its full year dividend guidance was maintained at 20 cents per share.
STEng – Phillip
Record order book, Positive guidance maintained
Company Overview
ST Engineering (STE) is an integrated engineering group with exposures to four key business segments: Aerospace, Marine, Electronics and Land Systems. The company is also a key contractor to Singapore’s defence force.
- Net income of S$134.0mn (-0.3%y-y).
- Record high order book of S$13.0bn.
- Positive full year guidance maintained.
- Maintain Accumulate with unchanged TP of S$4.50.
What is the news?
STE reported net profits of S$134.0mn in 1QFY13 on sales of S$1,544.7mn. Revenue was little changed on year as higher sales from other segments were offset by a 6% decline in sales for the Electronics division. Profit growth was the strongest at the Aerospace segment as the division benefitted from a 2.6% improvement in PBT margins. Management guided for higher revenue and comparable PBT in 1H2013 compared to 1H2012, while maintaining their full year guidance for higher revenue and PBT.
How do we view this?
While the results were slightly disappointing as compared to the same period last year, we believe that seasonal contributions from the biennial Singapore Airshow did create a higher basis for comparison. By maintaining their guidance of profit growth for the full year, management have implicitly guided for a strong set of 2HFY13 performance.
Investment Actions?
We expect a neutral stock reaction to the results and maintained our Accumulate rating and TP of S$4.50. With our assumption of a 90% dividend payout, we expect the stock of STE to yield an attractive 4.1% in FY13E.