Saturday, May 14, 2011

Weekend Comment May 13: Unmoved by Genting

GENTING SINGAPORE HAS held on to its pole position in the local gaming market by delivering a set of robust 1Q2011 results. Analysts and investors, however, seem to doubt its ability to sustain such growth, with even the most bullish among stock watchers expecting the company to cede some market share in the months ahead to rival Las Vegas Sands as the latter ramps up operations at its Marina Bay Sands (MBS) integrated resort.

Between January and March, Genting Singapore generated record quarterly revenue of $922.6 million, 17% more than its 4Q2010 topline. Eighty-seven per cent, or $804.4 million, of that came from the casino. EBITDA from its Universal Studios Singapore (USS) integrated resort also reached a record high of $537.9 million, up 38% q-o-q. Overall net profit came to $305.4 million, more than triple the $91.7 million earned in 4Q2010.

Besides beating consensus estimates, the results were also markedly better than MBS’s, which earlier this month reported 1Q2011 gaming revenue of US$464.4 million ($571 million) and EBITDA of US$284.5 million. USS’s EBITDA margin of 59% was also higher than MBS’s 49%.

Still, the street seems reluctant to read too much into Genting Singapore’s numbers. Indeed, its share price fell as much as 4.1% in intraday trade on May 13, the day after the results were released, before ending the session 3.2% lower at $2.10. In contrast, the Straits Times Index gained 1.1% that day. To be sure, it wasn’t a case of selling into strength as the shares had lost 0.9% in the first four months of 2011, and had generally traded in a flat range since the start of May.

Why the negative reaction then? “Management admitted there was a quarter-on-quarter slowdown in VIP volume. If we remove the luck factor, results would have been a miss,” according to Citigroup, which downgraded its rating on the stock to “hold” from “buy” and trimmed its price target to $2.30 from $2.40. It expects Genting Singapore’s gaming volume to grow “at an unexciting” 10% annually. “If the school holidays, long weekends and F1 [motor race] in the 2H lead to more tourist arrivals and thus gaming revenue, we could get more positive. But until then, we recommend staying on the sidelines till we see signs of improvement.”

JPMorgan, which has a “neutral” rating with a $2.15 price target, expects Genting Singapore’s improved luck factor in 1Q2011 to “normalise” in the coming quarters. “The VIP luck factor could swing quite significantly going forward. Do recall that MBS’s disappointing numbers were, to a certain extent, luck-led.”

UOB KayHian says Genting Singapore’s EBITDA is likely to ease substantially in 2Q2011 and 3Q2011 before picking up in the final quarter on the back of the seasonal year-end effect. “We reckon VIP rolling chip volume has eased at both RWS [Resorts World Sentosa] and MBS in April, typically a slow month as the Chinese observe Qing Ming or ‘ancestors’ day’, and we continue to expect flattish trends at the mass-market segment.” UOB, which has a “hold” rating and a $2.05 price target, also expects expenses to increase for the rest of 2011 as RWS ramps up operations.

Genting Singapore’s warning of a potential delay in RWS’s second-phase rollout might also have contributed to the stock’s dismal post-results performance. The company cites “unforeseen difficulties” for the holdup but says it has allocated resources to catch up with the launch schedule. The second phase of RWS will comprise a 374-room hotel, a spa resort, beach villas, a water theme park and a marine life park.

Meanwhile, analysts remain mindful of government policy risks as the authorities continue to closely monitor the social implications of Singapore’s growing gaming market. “Our view remains that the Singapore government is unlikely to turn Singapore into a gambling hub,” says Nomura, which has a “reduce” call with a $1.59 price target.

Citigroup says investors still keen on Singapore’s gaming market can consider buying into parent company Genting Bhd for indirect exposure as its shares trade at a discount to its listed subsidiaries. “From a global gaming perspective, we suggest clients put fresh money into Macau.” Its top picks are Melco Crown, Galaxy Entertainment and Sands China.

Publish date:14/05/11

FBM KLCI to test 1,720 by year-end: Macquarie


The FTSE Bursa Malaysia KLCI (FBM KLCI) is expected to test the 1,720 points level, by year-end, on the back of sustained economic growth and a possible 12 per cent increase in corporate earnings, said Yeonzon Yeow, Head of Strategy, Macquarie Capital Securities (Malaysia) Sdn Bhd.

Last year, the FBM KLCI improved 19.3 per cent, supported by a 23 per cent growth in corporate earnings, buoyed by strong domestic news flow, which was well timed and carefully crafted with the government's announcement of the Economic Transformation Programme, New Economic Model, 2011 Budget and Tenth Malaysia Plan.

"Strong fundamentals positively drove the equity market in 2010. A move to keep inflation in check, a strong ringgit and improving foreign direct investment and domestic direct investment would attract foreign investors into the local stock market," Yeow said at the half-day "Invest in Malaysia, Invest in Kuala Lumpur" forum held today.

He anticipated that investors would pick up oil & gas, electrical and electronics, timber, construction, property and automotive stocks, due to its long-term gains, as a result of Japan's earthquake and Middle East unrest.

On the local bourse, the key barometer ended Friday at 1,540.74. -- Bernama

Publish date:14/05/11

就Putra Place禁令 高庭驳回Metroplex申请

2011/05/14 11:04:50 AM


Metroplex控股于今年4月29日通过高庭,向侨丰信托有限公司发出禁令解除(injunctive relieve),阻止后者担任双威产托的委托人,以行使其作为合法拥有者的权利。

根据文告,高庭已在今日驳回上述申请,表示合法登记者是委托人,他们有权力向Putra Place的租客发出声明,表明他们的拥有权以及行使他们的合法权利。

今年3月30日,侨丰信托代表双威产托,在公开招标活动购Putra Place,成交价5亿1394万5000令吉。


Source/转贴/Extract/: 南洋商报
Publish date:14/05/11


2011/05/14 5:31:32 PM


当初巴菲特花了265亿美元收购BNSF 77%的股权。当时美国经济正陷入衰退,消费者支出骤减,并创下25年来最高的失业率,这笔投资被视为相当大胆。







Source/转贴/Extract/: 南洋商报
Publish date:14/05/11

Singapore market still deemed healthy

Business Times - 14 May 2011

Singapore market still deemed healthy

It seems that high profit margins do not translate into high PE ratios


CO-FOUNDER and chief investment strategist of Grantham Mayo Van Otterloo, Jeremy Grantham, was in Singapore last week for the 30th anniversary conference of the Government of Singapore Investment Corporation.

I had the opportunity to have a chat with him after the conference. During our chat, Mr Grantham said the S&P 500 is worth only about 925 points. It's now about 1,350. 'It could go to 1,500. In fact, I thought it probably would by Oct 1,' he said. 'But too many things have gone wrong in Libya, in Japan and so on, plus the end of QE2 (the Federal Reserve's bond buying programme). Everything's going wrong. So I thought better throw in the towel and be a little more conservative.'

Then I asked, but in terms of price-earnings (PE) ratio, we have not gone beyond the normal historical range, right?

He asked: 'So PE is price times what? You can't take a spike in profit margin and look at the PE without taking into account that that's a spike, a peak. Because profit margins are more mean reverting, they have a stronger tendency to go back to normal than PEs do.

'So what you have to say is, fair price is a normal PE of normal profit margin. And today's market, there's more damage from profit margin going back than the risk from PE. So you have a moderately higher than it should be PE, and a much higher profit margin. Both of them working in the same direction means a badly overpriced stock market,' he said.

'You could have had a higher PE on lower profit margin and it would actually be cheaper. And that's the way to do it. That is truly the way to do it.

'People who talk about PE without normalising profit should be taken out and shot. They are just trouble makers. Profit margin now, relative to history, is very high. Think how strange that is in America,' he said.

'There is a lot of unemployment, and there is a lot of spare capacity. And yet you have pretty much peak profit margin. What's that? Tell you what it is? It's administered profit margin, administered by the Fed's deliberate behaviour, particularly pushing up financial profits, and the Treasury and the stimulus programme. All working to inflate profit margin on a temporary basis.'

So can we see this in the charts if we plot S&P 500's profit margins versus PE, and the subsequent performance of the index?

Well yes. From the S&P 500 charts, you can see that profit margins in 1999 at 15.6 per cent was at its highest point in the last 13 years. PE, at 30 times, was at its peak too. That, as it turned out, was one of the biggest stock market bubbles in recent memory.

In late 2001 and early 2002, profit margins sank to just under 9 per cent. PE at that time was relatively high, at 25-26 times. In the following 12 months or so, as the margins recovered, the PE got compressed. The margins recovered even further, and the market ran away after that.

That is until 2007, when again margins were peakish, having risen to above 14 per cent. PE at that time was moderate, at 16-17 times. This was soon followed by the global financial crisis.

Profit margins hit a low again at just over 8 per cent in September 2009. Since then, the S&P 500 has gained 29 per cent.

Today, the net profit margin for S&P is about 13 per cent - rather near the peak. PE, however, is not exorbitant, at about 15 times.

Return on equity and return on assets, which are also mean reverting, are at 24 per cent and 8.7 per cent respectively. That's again near the peak of 27 per cent and 10 per cent in the last 13 years. But to be fair, the market's profit margins and return on equity and assets are just slightly above the median of the last 13 years.

Only in price-to-book (PTB) is the S&P 500 now slightly below its 13 year median of 2.8 times. It is now trading at 2.3 times book. So on the whole, I think we are still not in an excessively overvalued territory.

The tendency of the market to value stocks higher when companies are enjoying fat profit margins is also observed in the Singapore market.

I averaged out the profit margins of the three banks here over the years, and plotted that against their average PE, and their stocks prices. The chart shows high stock prices coincided with periods of high margins.

The average net profit margin has risen from 35.5 per cent from 2009 to 37.4 per cent in 2010. But it's still some way to the peak of 49.9 per cent registered in 2006. For all the measures - from profit margin to ROE and ROA to PTB and also PE - our banks are now in the median of their various ranges in the last decade.

How about industrial and commercial companies? For this, I averaged out the numbers of City Development, Fraser & Neave, Jardine Cycle & Carriage, Jardine Matheson, Keppel Corp, Neptune Orient Lines, Singapore Airlines, SembCorp Marine and Singapore Press Holdings.

For this group of companies, there appeared to be a counter-cyclical pricing. When the profit margins are high, the PEs are low, and vice versa. Currently, net profit margins for this group at 15 per cent is near the peak. PE, however, averaged 12 times. That's below the median.

Meanwhile, ROE and PTB are already at peak levels. But as mentioned, the market is not valuing them at peak pricing.

So all in all, the Singapore market appears to be still relatively healthy.

The writer is a CFA charterholder

Publish date:14/05/11

Golden Agri Q1 profit hits record US$230.7m

Business Times - 14 May 2011

Golden Agri Q1 profit hits record US$230.7m


PALM plantation owner Golden Agri-Resources has reported a 160.6 per cent year-on-year surge in net profit for its first quarter to a record high of US$230.7 million on the back of higher average selling prices for its products and a jump in sales volume.

Earnings per share for the firm, in turn, rose to 1.9 US cents from 0.73 of a US cent a year ago, when the firm earned US$88.5 million, it said in a mid-day announcement.

Revenue for the three months ended March 31, 2011, climbed 134.3 per cent to US$1.5 billion from US$624.5 million.

The Indonesia-based, Singapore-listed company noted that the operating environment in China remains challenging in view of volatile commodity prices and the government's move to curb rises in food prices as it fights inflation.

'Our priority remains in managing our costs and targeting our growth in the sale of various palm-based products through our extended distribution channels,' said the company.

Still, it intends to expand its presence in China by constructing soya bean crushing facilities and a new vegetable oil refinery in the country. It plans to up its annual refining capacity there by 396,000 tonnes to 776,000 tonnes, and increase crushing capacity by 1.3 million tonnes to 2.3 million tonnes annually.

It is also looking to further develop its distribution channels to enter new areas in China.

Overall, Golden Agri believes that the fundamentals of the industry will remain strong.

'The developing consumption of edible oils and fats particularly by the growing middle class in highly populated emerging countries such as China, India and Pakistan, as well as increasing popularity of substitute and alternative uses of palm oil, will support the long-term global demand of palm oil.'

The company has earmarked US$450 million for capital expenditure for fiscal year 2011, and is looking to expand its palm oil plantations by 20,000 to 30,000 hectares.

As at end-March, Golden Agri held cash and cash equivalents of US$300.4 million, compared with US$156.7 million a year ago.

Net asset value per share cam to 58 US cents, up from 56 US cents as at end-December last year.

Yesterday, Golden Agri shares closed 0.75 per cent up at 67 cents. It was the second-most actively traded stock, with 116.4 million shares changing hands.

Publish date:14/05/11

Fuel cost remains biggest challenge, says SIA chief

Business Times - 14 May 2011

Fuel cost remains biggest challenge, says SIA chief


UNPREDICTABLE and high fuel price remains the biggest challenge for Singapore Airlines as it heads into the new financial year, according to CEO Goh Choon Phong. Addressing analysts and reporters at his first results briefing since assuming the role of CEO from Chew Choon Seng, Mr Goh pointed out that jet fuel price had risen by some 25 per cent since the beginning of this year to a 21/2-year high of US$140 per barrel.

Fuel accounted for 37 per cent of expenditure for the fourth quarter last year, up from 34 per cent a year earlier. SIA has hedged 20 per cent of its needs at US$130 per barrel, and could increase this to up to 60 per cent if needed, Mr Goh said.

On Thursday, SIA unveiled full-year earnings of $1.09 billion on a 14 per cent rise in revenue to $14.53 billion. Though below analysts' estimates, this was a significant improvement over the $215.8 million profit it chalked up for the previous year ended March 2010. Mr Goh said that despite the improvement from 2010, SIA's operating numbers were at the similar levels of FY2006/07. He said that yield growth was flattening out, while forward loads were volatile amid the fragile global economic recovery.

The airline suffered a 30 per cent slump in travel demand to Japan following the March earthquake and tsunami, and has redeployed capacity accordingly. The unsettled political conditions in the Middle East is another cause for concern.

Mr Goh noted that revenue was sliding quarter on quarter, while expenditure was rising. Still, SIA is planning to add 6 per cent capacity in terms of available seat km (ASK), while SIA Cargo will add 11 per cent this year. SilkAir will add 12 per cent capacity as it takes delivery of more new A320s.

Publish date:14/05/11

NOL trims Q1 loss to US$9.7m

Business Times - 14 May 2011

NOL trims Q1 loss to US$9.7m

Revenue up 16% to US$2.4b; bottomline hit by rising fuel costs


NOL Group reported a net loss of US$9.7 million for the first quarter ended Apr 8, 2011, against a net loss of US$98.5 million for Q1 2010.

It saw a 16 per cent increase in revenue for the same period, from US$2.09 billion to US$2.44 billion, boosted by liner revenue from higher volumes and freight rates. Its core earnings before interest and taxes (Ebit) was US$13 million, compared to a core Ebit loss of US$74 million during the same period last year.

An unexpectedly soft Chinese New Year season and rising fuel costs, however, drew blood from the bottom line, turning it red. The group reported that cost of sales for the quarter increased by US$242 million - or 12 per cent - to US$2.25 billion, in part because of higher volumes, but also because of higher bunker costs.

The group said yesterday: 'Increased operating costs - particularly related to fuel cost increases - and competitive pressure on rates are expected to continue for the near term.'

It warned that its results will be 'negatively impacted' if these factors persist.

During the quarter, overall volumes rose 9 per cent, from 701,000 forty foot-equivalent units (FEUs) to 764,000 FEUs.

This drove revenue for APL - the liner shipping arm of NOL - 15 per cent higher to US$2.1 billion, for the quarter.

Average revenue per FEU, however, improved by 3 per cent to US$2,598.

This was due to improved freight rates on the Transpacific trade route, which were partially offset by falling rates on the Asia-Europe and Intra-Asia trade lanes.

'We lifted higher container volumes in the Asia-Europe and Intra-Asia trade lanes during the first quarter, and freight rates improved in the Transpacific,' said APL president Eng Aik Meng.

'But our emphasis must remain on operating efficiency, as well as slow-steaming our ships to conserve fuel and counteract the effect of rising fuel prices, which were 28 per cent higher per metric ton in the first quarter of 2011 than they were in 2010.'

On the logistics front, APL Logistics, NOL's supply chain management business, posted a first-quarter revenue of US$368 million - a 24 per cent increase from US$296 million - driven by higher volumes and unit rates.

'We've maintained a disciplined focus on cost of operations and are witnessing consistent growth in emerging markets - both in our international logistics business as well as in the contract logistics-automotive segments,' said APL Logistics president Jim McAdam.

Loss per share for the group stood at 0.38 US cents, compared to a loss per share of 3.82 US cents during the corresponding period a year ago.

Publish date:14/05/11

Qantas hopes to wing it in Asia with Changi-based carrier

Business Times - 14 May 2011

Qantas hopes to wing it in Asia with Changi-based carrier


FACED with hostile unions and high costs at home, but determined to push on with its pan-Asian ambitions, Australia's Qantas Airways is looking into setting up a Singapore-based subsidiary.

In a front page report yesterday, The Australian Financial Review (AFR) reported that Qantas would establish a new premium airline (possibly called Qantas Asia) based in Changi Singapore as part of chief executive Alan Joyce's strategy to drive growth in Asia and slash costs.

It added that an internal team at Qantas had already been tasked with revising a plan to set up a full-service subsidiary carrier in Asia as a way of bypassing the high cost base and the disadvantage it suffered due to the geographical isolation of Australia.

Qantas is known to have originally mulled a takeover or merger with Malaysia Airlines to established a Kuala Lumpur-based premium carrier. That plan appears to have been now abandoned in the face of regulatory hurdles in the way of M&As among Asia-Pacific carriers.

The move by Qantas comes after Jetstar Australia decided to establish its pan-Asian long haul hub at Changi late last year.

Qantas could also have been encouraged by the rapid turnaround of Jetstar Asia's operations.

For the 12 months ended March, Jetstar Asia's RPK (revenue passenger kilometre) grew 40.3 per cent against an ASK (available seat kilometre) rise of 43.6 per cent, resulting in a load factor of 77.8 per cent (compared with 79.6 per cent a year earlier). Total passenger numbers for the year came to 2.05 million, a 25.6 per cent rise from a year earlier.

If Qantas is indeed setting up operations here, it would mark the most significant strategic move by the Australian carrier since it set up Singapore-based Jetstar Asia in 2003.

Quoting unnamed sources, the AFR said the new airline will base as many as 20 aircraft in Singapore, operating under a new Aircraft Operator's Certificate (AOC).

While Qantas officials could not be contacted for comment, analysts here say besides the obvious cost savings, establishing a Singapore base would also give Qantas huge advantages in terms of hub-spoke connectivity. As an 'end-of-line' operator based in Sydney and Melbourne, the airline has been unable to compete against fast growing hub carriers in the Middle East and Asia-Pacific.

'Right now Qantas is at a tremendous disadvantage compared to hub operators in the Middle East and Asia,' observed Singapore-based Brendan Sobie of the Centre for Asia Pacific Aviation. 'The advantages for a Singapore-based Qantas premium carrier range from costs to crew deployment.'

On the cost front, cabin crew and other staff costs are some 40 per cent cheaper in Singapore compared to Sydney, while airport fees are also much lower at Changi compared to their Australian equivalents.

But how will a new Qantas premium upstart at Changi impact incumbent Singapore Airlines? SIA CEO Goh Choon Phong declined to be drawn into a discussion on the issue.

'Right now it looks like speculation, but even if it isn't, we are not about to reveal our strategy,' he said after a results briefing for analysts yesterday. 'In any case, we already deal with plenty of competition at Changi.'

Then in an obvious reference to SIA's long-standing, but unsuccessful, fight to operate trans-Pacific flights from Australia to the US, he added: 'We (in Singapore) have a liberal aviation regime, and we would hope others would reciprocate.'

SIA has a 35 per cent market share out of Changi in terms of seats, but this rises to 41 per cent if taken together with Silkair. Qantas has 4 per cent, and this rises to almost 9 per cent together with Jetstar. There is also the alliance angle: Oneworld, of which Qantas and British Airways are members, only has 8-9 per cent share at Changi, versus 41 per cent for Star Alliance to which SIA belongs. This could change if Qantas sets up shop here.

Meanwhile, Mr Sobie said competition would provide more choices for the traveller: 'This would be good for the Singapore consumer.'

Publish date:14/05/11

Saizen REIT (S&)

Saizen REIT
Price: SGD0.14

Investment Highlights
 Saizen REIT is the only listed REIT on the Singapore Stock Exchange that offers exposure to the rental residential property market in Japan. Saizen’s portfolio of 139 freehold properties, with a Net Lettable Area (NLA) of 195,127 sq m, is spread over 12 regional cities, but excluding Tokyo and Osaka, in Japan. Saizen’s portfolio has proven to be quite stable in terms of occupancy rates and rental rates. Its occupancy rate stayed at and slightly above 90% while the average rental rate has also been relatively stable at JPY1,546 to JPY1,523 per sq m since FY08 (Mar.), respectively.

 Saizen is expected to resolve its loan default problem by end May 2011 when it completes the full repayment of its TK Shintoku loan, which has a high interest rate of 7.07% and accounts for 21% of its portfolio. Upon completion of the loan repayment, Saizen will be in a healthier financial position to look into resuming its original expansion program.

 Going forward, Saizen is expected to face some challenges in terms of Japan’s poor economic conditions, which have been further dampened by the recent earthquake. Nevertheless, Saizen’s properties were not damaged by the earthquake, and normally the residential rental market is quite stable in terms of occupancy and rental rates, due mainly to the preference for rental rather than ownership of residential properties by the younger generation in Japan.

Key Investment Risks
A global epidemic such as SARS in 2003 or a global financial market meltdown such as the global financial crisis in 2008/2009 will have an adverse impact on Japan’s economy. In addition, natural disasters such as earthquakes and volcano eruptions may cause severedamage to Saizen’s buildings as Japan is located along the Pacific Ring of Fire, which is the world’s most active earthquake belt. Japan has 10% of the world’s active volcanoes.

 Saizen naturally faces a certain degree of currency risk, given that its income is in JPY while distribution to shareholders is in SGD. Sharp foreign exchange fluctuations may impact the amount of dividends paid.

 Saizen has to continually search for new yield accretive properties to add to its portfolio to ensure continuous growth. Saizen is likely to face competition from other residential REITS in acquiring good quality properties in Japan, in terms of yields and market value.

 While Japan’s rental residential market has been relatively stable in terms of occupancy and rental rates, any downturn in the residential property market will put Saizen’s existing leases under pressure. Saizen’s operations are vulnerable to Japan’s economic conditions, which have been further dampened by the recent earthquake.

Saizen REIT (Saizen) was listed on the Singapore Stock Exchange in November 2007. Saizen is the first REIT listed in Singapore to offer investors exposure to purely Japanese regional residential properties. Saizen’s principal investment objective is to invest in a diversified portfolio of income-generating real estate in Japan, which is used primarily for residential and residential-related purposes.

However, due to the global financial crisis in 2008 and 2009, Saizen was hit by: (i) refinancing problems; and (ii) a decline in market values of its properties. At time of its listing in 2007, all of Saizen’s loans were CMBS loans, which were arranged solely by two lenders, Morgan Stanley and Credit Suisse, with maturity dates from early 2009 to early 2010.

As a result of the financial crisis, the Japanese CMBS market and their arrangers abruptly shut down in early 2008, and, in turn, caused uncertainty over Saizen’s ability to refinance its CMBS loans.

Concurrently, the Japanese real estate market took a drastic downturn, and the aggregate valuation of Saizen’s portfolio properties was estimated to have declined by about JPY6.4 bln (or 13%) to JPY42.7 bln as at June 30, 2009, from JPY49.1 bln as at June 30, 2008.

Saizen halted distribution of dividends, carried out a 11-for-10 rights issue of 497.2 mln new shares at SGD0.09 each with 497.2 mln new warrants to raise funds and scrambled to refinance as much of its CMBS loans as possible during this critical period. Despite its efforts, Saizen could not avoid the default of one of its loans - the YK Shintoku loan in November 2009. Nevertheless, Saizen has so far managed to avoid foreclosure.

As the YK Shintoku loan is non-recourse in nature and is not crosscollateralized with Saizen’s other portfolios, Saizen managed to resume distribution of dividends in FY10. More importantly, Saizen indicated that distributions are expected regardless of the outcome of the YK Shintoku loan, and future distributions are underpinned by the stability of the operations of its assets not tied to the YK Shintoku loans.

As at December 2010, assets tied to the YK Shintoku loan comprised 21% of Saizen’s portfolio and only 9% of NAV of its portfolio but it has a high interest rate of 7.07% and a loan-to-value ratio of 79.8%. Saizen considers 79% of its assets, accounting for 91% of its NAV, to be financially “healthy”.

Saizen has recently announced its repayment schedule for its YK Shintuku loan. Saizen expects to fully repay the YK Shintoku loan by the end-May 2011. As at April 21, 2011, the net outstanding amounted to about JPY0.7 bln (SGD10.5 mln).

TK Arrangements
Saizen invests in properties by entering into Japanese tokumei kumiai arrangements (TK arrangements) as a tokumei kurniai investor (TK investor) with Japanese limited liability companies known as tokumei kurniai operators (TK operators). The TK arrangement is a common method of investing and holding real estate in Japan.

The relationship between the TK operators and the TK investors is governed by TK arrangements, whereby the TK investors (Saizen) provide funds to the TK operators in return for income derived from the investments in real estate held by the TK operators.

The TK investor can enter into TK arrangements with TK operators through: (i) acquisition from other TK investors of all rights and obligations under their respective TK agreements with TK operators; or (ii) entering into new TK agreements with TK operators.

Sponsor and Manager
Japan Regional Assets Manager Ltd. (JRAM Cayman) is the sponsor while its wholly owned subsidiary, Japan Residential Assets Manager Ltd. (JRAM) is the Manager of Saizen. JRAM is an investment management company that is one of the largest operators in the Japanese regional residential property markets with a combined portfolio of over 200 properties. JRAM has since 1999 established a strong track record and network for investing in the Japanese residential real estate market. JRAM, the manager, is responsible for Saizen’s investment and financing strategies, asset acquisition and divestment policies, and the overall management of Saizen’s real estate and real estate-related assets. The management team has an established network of local brokers, agents and property managers across Japan, and has created a scalable methodology and platform for evaluating and acquiring properties using information gathered over its years of experience in Japan.

Asset Manager
KK Tenyu Asset Management (KK Tenyu) is the asset manager of Saizen’s properties in Japan. KK Tenyu has offices in Tokyo, Sapporo and Fukuoka and has a total of 11 employees and more than 10 years of experience in property management. It is currently managing 150 properties which are located in 13 cities in Japan. Of these, 139 properties belong to Saizen.

KK Tenyu is responsible for: (i) advising on the selection of property managers and the daily management of managers and service providers; (ii) developing leasing strategies and engaging in leasing activities; (iii) reviewing renovation plans and quotations; (iv) establishing operating budgets and annual plans for the operation, management, marketing and maintenance of properties; and (v) providing administrative services in relation to financing arrangements and also the acquisition and disposal of properties.

Board Independence
Saizen’s board composition is fair with three of its eight members being independent directors. We take comfort that the board has established various committees that comprise a majority of independent directors i.e. Audit Committee (two of three). However, there is no Nominating and Remuneration Committee (one of three) as Saizen is externally managed by the Manager and has no personnel of its own.

Key Subsidiaries & Associates
Saizen has a total of nine special purpose entities (SPCs) (as at June 30, 2010) incorporated in Japan under the TK arrangements. Saizen bears the risks and also enjoys the benefits of the investments held by these SPCs.

Business Segment/Key Revenue Streams
Saizen has a portfolio of 139 freehold properties, with a Net Lettable Area (NLA) of 195,127 sq m in Japan. They are composed of 5,310 residential units, 97 commercial units and 1,684 car parking spaces. Saizen’s portfolio of properties is spread over 12 regional cities, but excluding Tokyo and Osaka, in Japan. Saizen did not acquire any properties in Tokyo or Osaka because the other major regional cities offer higher rental yields compared to similar properties located in Tokyo and Osaka. The average net operating yield spread between regional cities such as Sapporo, Sendai and Hiroshima compared to Tokyo is about 1.0%-1.5%.

Residential Units Distribution by Size
Saizen’s three main target tenant markets are: (i) families; (ii) working singles; and (iii) students. As such, Saizen’s portfolio of rental properties is made up of those that are mainly located in good residential neighbourhoods and/or near business districts and transportation hubs. Rental Contribution by Regions

Saizen has a well-diversified portfolio of properties in terms of locations and also number of properties. Saizen’s properties are located across 13 regional cities in Japan, and no single city and single property account for more than 25% and 3% of its portfolio’s total rental income respectively. Moreover, Saizen’s portfolio enjoys a large and diversified tenant base of 5,000 tenants.

Given its diversified portfolio, the recent earthquake did not have much of an impact on Saizen. All its 146 properties were reported to be intact while the 28 properties in the earthquake areas, Sendai, Morioka and Koriyama appear to have sustained only minor damage, and none of these properties have been vacated by tenants. Saizen estimated that the repair costs on the affected properties to be no more than JPY200 mlm.

Meanwhile, none of its properties are affected by the nuclear power plant in Fukushima as its nearest properties to the nuclear power are more than 50 km away.

Occupancy Rate by Geographical Distribution
Saizen’s portfolio has proven to be quite stable in terms of occupancy rates and rental rates, with its occupancy rate being at slightly above 90% while its average rental rate has also been relatively stable at between JPY1,546 and JPY1,523 per sq m since 2008.

Saizen REIT’s Fee Structure
In line with all trusts set up, there are certain fees and charges payable to Saizen’s manager and asset manager, for the management and operation of the assets. The primary charges can be broadly categorized under:

Manager’s Management Fee - 0.5% p.a. of the monthly weighted average value of all property assets

Trustee’s Fee - 0.03% of the value of the Deposited Property

Asset Management Fee - 3% of the net profits (after deducting interest expenses and depreciation) of the propertyholding business

Divestment Fee - 0.3% of the sale price of any authorized investment sold or divest

Acquisition Fee - 1.0% of the acquisition price of any authorized investment

TK Operator’s Fee -JPY150,000 p.a. In our opinion, the fees charged are in line with market practice and not unusually high.

Industry Landscape
Japan : Residential Properties
Japan’s real estate was badly hit by the global financial crisis in 2008/2009. Bankruptcies in the real estate industry rose by 14.4% YoY in 2008 and 13.8% YoY in 2009 before declining by 27.7% YoY in 2010. The sales volume of new condominiums in Tokyo and Osaka Metropolitan Areas (MA) declined by 35.6% YoY and 33.2% YoY in 2008, and 7.5% YoY and 11.7% YoY in 2009 respectively.

New Condominium Sales in Tokyo & Osaka Metropolitan Area
The urban residential land price index for Tokyo declined from a recent high of 84.0 in March 2008 by 9.5% to 76.0 in September 2010 The main reasons for the relatively more stable rent yield as compared with capital value in Japan’s residential property market are: (i) high housing prices in Japan plus declining median household monthly income make homes less affordable to the average Japanese; (ii) changing demographics with a rising number of singles and nuclear families without children; (iii) rising migration trends from rural to urban areas due to better employment opportunities, and also better educational and medical services; and (iv) difficulty in obtaining home purchase loans for singles and young couples, especially for those rural-urban migrants. As a result, there is strong demand for rental properties in regional cities.

Meanwhile, supply of new homes over the last few years has been affected by the implementation of new building regulations in 2007 and 2008, which require: (i) developers to put in higher funds to cover property defects; and (ii) more stringent safety inspection and certifications and also a longer building confirmation period.

As a result of the new regulations and the global financial crisis, construction of new dwelling units started to decline from 1.285 mln units in 2006 to 1.035 mln units in 2007, 1.039 mln units in 2008 and 0.775 mln units in 2009.

New dwellings started for sales and rental have dropped by 57.2% and 42.1% to 163,590 units and 311,463 units in 2009 from 2006 (from 382,503 units and 537,943 units respectively). Given declining housing construction starts of new residential properties and relatively firm demand, the rental residential market in Japan should remain relatively stable in terms of occupancy and rental rates over the next few years.

Growth Strategy
Saizen has been preoccupied by its efforts to resolve the YK Shintoku loan. As such, it divested a total of 19 properties in the past 13 months. Nevertheless, the divestment has helped Saizen to improve its financial liquidity and flexibility. Funds raised are mainly to be used to resolve the YK Shintoku loan default issue.

Nevertheless, the divestment exercise is also part of its portfolio rebalancing exercise which will also enhance the quality and growth potential of its portfolio in the longer term. Saizen is looking for opportunities to acquire properties in Tokyo in the longer term. Upon full repayment of the YK Shintoku loan, Saizen will be able to resume its original expansion plan, whereby it plans to capitalize on acquisition growth opportunities in Japan through its established extensive network and expertise in the property market.

Saizen will continue to focus on its key investment strategies: (i) to improve the value of its assets through capitalizing on acquisition growth opportunities; (ii) leveraging on its Asset Manager’s established network in Japan to search for good quality assets; and (iii) effective capital management strategies to lower its cost of funds and achieve competitive rate of return on its investments. Saizen intends to maintain a leverage of up to 45%.

Saizen intends to hold its properties for long-term investment purposes and emphasizes regular maintenance, periodic renovation and capital improvement to ensure its properties remain attractive and marketable.

SWOT Analysis
 The only listed REIT on the Singapore Stock Exchange that offers exposure to the Japanese residential property market.

 Having a well-diversified residential property portfolio in terms of location helps to lower the location risk (e.g. a natural disaster in a specific location).

 It has an established asset management team in Japan with an extensive network of industrial professionals in Japan’s regional residential property markets.

 Saizen has to continually search for new yield accretive properties to add to its portfolio to ensure continuous growth. As there are a number of residential REITs in Japan, Saizen has to compete with other residential REITS for good quality properties in terms of location, rental yield and good tenants.

 Saizen’s financial position may not be large or strong enough to compete with major residential REITs or investors in Japan for good quality properties in terms of good location, high rental yield or building quality.

 Good growth potential opportunities in the residential property investment industry as most young Japanese prefer to rent rather than own their homes.

 A global epidemic such as SARS in 2003 or a financial market meltdown such as the 2008/2009 global financial crisis will have an adverse impact on Japan’s economy.

 Japan’s economic condition remains uncertain. The Japanese economy had already been struggling to come out of the global financial crisis before the earthquake and tsunami hit on March 11. Japan estimates rebuilding will cost up to JPY25 tln (USD295 bln).

 Natural disasters such as earthquakes and volcano eruptions that may cause severe damage to Saizen’s buildings. Japan is located along the Pacific Ring of Fire, which is the world’s most active earthquake belt, and also at the junction of four tectonic plates, i.e., Pacific, Philippine, Eurasian and North American.

Japan has 10% of the world’s active volcanoes.
Recent Key Developments
Apr. 2011: Announced a repayment of JPY450 mln (SGD6.7 mln) on the YK Shintoku loan

Apr. 2011: Completed divestment of Escort South 11 for JPY45.52 mln (SGD0.7 mln)

Apr. 2011: Announced a repayment of JPY2.1 bln (SGD31.2 mln) on the YK Shintoku loan

Apr. 2011: Announced its repayment plan/schedule for YK Shintoku loan

Apr. 2011: Completed divestment of Global Matsukawa Building for JPY201.0 mln (SGD3.0 mln)

Mar. 2011: Completed divestment of Wealth Meinohama for SGD0.9 mln

Feb. 2011: Completed divestment of K1 Mansion Morioka for SGD0.1 mln

Management Guidance
Saizen indicated that its property operations remain stable with average tenant turnover at 20% in FY10 vs. 22% in FY09. Despite Japan’s poor economic conditions, the overall rental reversion of new contracts entered into in 3QFY11 was only marginally lower by about 3.6% from previous contracted rates.

There have been minimal changes in overall rental rates throughout the country’s economic downturn, with average rental rate declining only by JPY23 per sq m to JPY1,523 per sq m as at June 30, 2010 (from JPY1,546 as at June 30, 2008). Similarly, occupancy stayed above 90% during the global financial crisis and Japan’s economic recession.

Going forward, Saizen does not expect much change in terms of rental rates and occupancy for its portfolio of properties, as demand for rental residential properties remains relatively stable.

More importantly, with the YK Shintoku loan problem expected to be resolved by end-FY11, Saizen is likely to resume its expansion program. Saizen will continue to focus on investing in rental residential properties in Japan. Saizen indicated that the location which it believes to have acquisition opportunities in terms of quality properties at good value is Tokyo, where Saizen does not have any properties yet.

Earnings Outlook
Saizen indicated that the net loss attributable to the divestment of 19 properties would amount to JPY96.1 mln or SGD1.4 mln in FY11. In addition, Saizen will see no more contributions from the 19 properties sold from FY12. Nevertheless, the impact of the divestment of the 19 properties on its earnings in FY12 will be partially offset by the interest savings as a result of the full repayment of its YK Shintoku loan, which has a high interest rate of 7.07%.

Despite the relatively stable rental residential market in terms of occupancy and rental rates, Saizen is expected to face challenges in terms of Japan’s poor economic conditions, which have been further dampened by the recent major earthquake. We forecast a decline in FY12 earnings, due mainly to the loss of rental income from the 19 properties disposed of in FY11, and also some weakness in rental rates. We did not forecast any new acquisition in the coming year.

Dividend Policy
The Manager’s distribution policy is to distribute at least 90% of its distributable income. The actual level of distribution will be determined at the Manager’s discretion and may be greater than 90% of Saizen’s distributable income.

Source/转贴/Extract/: Standard & Poor’s Equity Research
Publish date:13/05/11

Genting Singapore Dealing the good luck cards (CIMB)

Genting Singapore Plc
OUTPERFOR Maintained
S$2.17 Target: S$2.79

Dealing the good luck cards

• Above; reiterate OUTPERFORM.
1Q11 core net profit, at 29% of our full-year forecast and 26% of consensus, is above expectations. The main discrepancy was stronger-than-expected gaming revenue from the VIP segment, which significantly bumped up EBITDA margins. Although 1Q11 VIP revenue was driven by abovetheoretical win rates, we were previously too conservative in our topline estimates. Factoring in higher revenue assumptions, we raise our FY11-13 earnings estimates by 8-26%. Our earnings upgrade nudges up our end-CY11 SOP-based target price from S$2.70 to S$2.79, with an unchanged CY12 EV/EBITDA of 16x for its gaming operations. We see re-rating catalysts from: 1) sustained market leadership; 2) increased patronage from the opening of amenities; and 3) the licensing of junkets, which should further boost VIP volume and margins.

• Strong VIP revenue driven by very good luck factor.
RWS’s 17% qoq surge in gross gaming revenue (GGR) from the VIP segment seemed to have thumped its competitor, MBS’s disappointing 2.5% qoq growth. But this outperformance was largely driven by a higher-than-normal win rate of 3.8% vs. MBS’s 2.56%. Looking at rolling chips volume growth, we are disappointed that while MBS posted a 24.5% qoq increase, RWS actually saw a 12% qoq decline. Also due to the good luck factor, GS’s 1Q11 EBITDA margins expanded from 4Q10’s 48% to 54%. If we normalise the VIP win rate to 2.9%, RWS’s revenue and EBITDA would have been slashed by S$160m and S$90m respectively. Its 1Q11 EBITDA would then come in largely in line with consensus and our estimates.

• Normalisation expected.
We do not think the above-theoretical win rate is sustainable and normalisation at RWS is expected in the coming quarters. Taking into consideration this set of luck-driven figures and normalised win rates going forward, we lift our FY11-13 revenue estimates by 0.5-10%. Together with estimates for MBS, our revised projections imply that the Singapore gaming market could grow at 44% to reach S$7bn in 2011, up from S$6.3bn forecast previously.

Conference call highlights
RWS still dominated in GGR market share.
Despite the sequential dip in rolling chips volume, RWS was still the GGR market share leader with 61% of the gaming pie, up from 58% in 4Q10. Although its dominance was skewed by a high VIP win rate, management attributed its outperformance to: 1) better service quality offered by the casino; and 2) effective marketing schemes. The casino operator also clarified that it did not purchase the VIP business by aggressively extending more credits or paying higher commissions to VIP customers. Instead, commission rates in 1Q11 were even lower than the last quarter. Although we generally concur with management’s view on its prominence in the high-rolling segment and expect RWS to remain in pole position, we are projecting diminishing dominance over FY11-13 as the MBS brand becomes more widely accepted by the South-East Asian gambling community.

Continued to optimise utilisation of gaming space.
The casino operator operated 589 of gaming tables as at Mar 11, up from 560 in 4Q10. Although still lagging MBS’s 615 tables, we were positively surprised by the speedier ramp-up as this quarter’s table count surpassed our estimate of 550 by year-end. According to management, it has used up 90% of its gaming floor space but will continue to rearrange tables and slot machines to optimise utilisation of its limited floor area. Taking cue from this, we raise our FY11-12 table count assumptions by 3-7%. RWS currently has a VIP:mass market table mix of 30:70 but we figure that it will reshuffle the tables if the VIP segment continues to outpace the mass market. Revenue mix-wise, we gather that the VIP:non-VIP ratio was tilted to 61:39 from 4Q10’s 59:41.

Scanty updates on approval of junket operations.
We were not entirely surprised that management remained tight-lipped on the junket licensing process. It did not shed light on either the possible timeline of approval or the number of junkets RWS has applied for. Management also dismissed its competitor’s claim that 30-50 junket operators are currently under review by the Casino Regulatory Authority (CRA). Judging from the solid direct VIP chips volume raked in by RWS in the first quarter, we believe that GS’s gaming numbers could be further boosted by the facilitation of junkets. Our revised earnings estimates have yet to fully reflect the true potential of junket operations in the Singapore gaming market.

Receivables in healthier position than last quarter.
Compared with last quarter, management had managed to collect a considerable amount of trade receivables. In the first quarter, receivables amounted to 71% of total revenue, down from 75% in 4Q10. Although this figure is high compared with its Macau and Malaysia casino peers, we think that extending credits is inevitable in the Singapore casino business to secure businesses from high rollers. We are not overly concerned on this front and expect receivables/revenue to trend down once the junkets come into play.

Updates on non-gaming operations and coming attractions.
RWS’s four hotels continued to perform satisfactorily with occupancy rate maintained at 79%. However, average room rate dipped to S$280 from S$295 in 4Q10. Meanwhile, visitor arrivals at Universal Studios Singapore (USS) increased from the FY10 average of 6,700/day to 7,400/day in 1Q11. With Journey to Madagascar to be launched in mid-May and USS to be opened at end-May, management remained upbeat on the attractiveness of USS to draw in more visitors, which in turn could translate into higher casino patronage and gaming revenue. On the negative side, the operator cautioned that there could be a 2-month delay in the launch of its amenities in the West Zone due to design enhancement efforts.

Singapore gaming growth still intact.
While the slight sequential drop in RWS’s rolling chips volume is disappointing, we think that the secular growth of Singapore’s gaming sector should not be called into question as the regional appetite for casino gambling is still good. Having said that, we caution that the seasonal effect could be more pronounced for Singapore casinos than their Macau peers, resulting in more volatile quarterly earnings. In addition, the duopolistic competition could be more intense than expected as we figure that both operators are eying the coveted high-end players.

Source/转贴/Extract/: CIMB Research
Publish date:14/05/11

SIA The beginning of a new capital-efficient era? (CIMB)

Singapore Airlines Ltd
.S$14.26 Target: S$16.20

The beginning of a new capital-efficient era?

• Below; maintain OUTPERFORM.
SIA’s 4Q core net profit came in at S$169m, 27% below our preview of S$230m, mainly because the expected yield uplift did not yet materialise in the face of a spike in fuel costs since the start of 2011. Both the parent airline and the cargo business experienced a significant squeeze in operating profits from a year ago. Nevertheless, the key story is that SIA unexpectedly paid a special dividend of S$0.80, on top of the S$0.40 final dividend, which we had forecast. This takes the full-year dividend to S$1.40, or a net yield of 10%. Our forecasts and target price of S$16.20, based on 11x CY12 P/E, remain unchanged pending today’s analyst briefing. We maintain our OUTPERFORM call because the surprise dividend may herald a new era of capital management that promises sustained future payouts.

• A special dividend surprise.
To put things in perspective, the S$1.40 DPS declared for FY11 is the highest cash dividend that has ever been paid by SIA, exceeding even the S$1 that was paid for both FY07 and FY08. Net profit reached S$2bn in each of those two years but, in contrast, the FY11 net profit was only S$1bn. Given the stress of high fuel prices and the ongoing squeeze in profitability, it seems uncharacteristic of SIA to pay special dividends. The new CEO Goh Choon Pong may be moving SIA away from the over-conservatism of the past and towards a new era of capital efficiency and higher ROEs. With S$4.50/share in net cash at the end of Mar, SIA will still have a massive net cash pile of S$3.30/share after the payment of the final and special dividends. If we are right about the new capitalmanagement philosophy that the new CEO is bringing with him, then we can expect dividend payments to stay elevated for years to come. This could be a major share price re-rating catalyst.

• Cautious operating guidance but so what?
SIA noted that “near-term weakness in load factors and high fuel prices” are the greatest challenges ahead. However, this is known and already reflected in the sell-down of SIA’s shares since December. We highlight that SIA has been very quick to implement fuel surcharges and is also one of the least-sensitive airlines to unexpected fuel price increases. Because of this, SIA remains our top pick in the aviation sector and now the added promise of sustained higher dividend flows could make it even more attractive.

Source/转贴/Extract/: CIMB Research
Publish date:13/05/11

Singtel Muted tone (CIMB)

Singapore Telecommunications
S$3.16 Target: S$3.19

Muted tone
Takeaways from 4QFY11 results conference call Still cautious.
In the aftermath of SingTel’s results conference call, we raise our FY12-13 core net profit estimates by 3-5% after: 1) updating consensus forecasts for Bharti and Globe; 2) raising our assumptions for A$; and 3) lowering FY12-13 EBITDA margin estimates by 1-1.5% pts to account for mioTV content and installation costs and be consistent with SingTel’s guidance. We also introduce FY14 estimates. Nevertheless, we maintain our UNDERPERFORM on SingTel with a lower SOPbased target of S$3.19 from S$3.29 as its fortunes are not likely to change substantially in FY12. In our view, Singapore margins will continue to be under pressure from content costs and mioTV’s expansion, while competition is likely to escalate in Australia and Telkomsel’s performance would be lacklustre. These are likely to catalyse a de-rating. We continue to prefer M1 among Singapore telcos as it is the biggest beneficiary of NGNBN and a direct play on rising roaming revenues. For exposure to regional telcos, we like Axiata.

The details
SingTel held a results conference call, hosted by the CEO and CFOs of its group, Singapore and Australia operations. Apart from detailed questions on Optus by Australian-based analysts, the other questions focused on SingTel’s dividend policy, commitment to its associates, and competition and strategy in Singapore.

More muted guidance.
FY12 guidance appears more muted but broadly in line with our forecasts. SingTel expects both Singapore and Australian revenues to rise in the low single digits (Figure 1), with flat EBITDA in Singapore and slow single-digit growth in Australia. Singapore’s FY12 EBITDA margin guidance is a little weaker than our expectation, dragged down by mioTV-related costs.

Optus’s fairly conservative guidance is a reflection of the increased competitiveness in the market due to Telstra’s more aggressive behaviour and willingness to sacrifice A$1bn in profits. Optus believes this will inevitably have an impact on industry growth and Optus will be focused on protecting its revenue market share.

That said, SingTel surpassed its FY11 guidance, we believe aided by: 1) a very strong economy, coming from a low base; and 2) a surging A$, both of which are unlikely to repeat this year.

It expects FY12 FCF growth (operating cash flow less capex) to be slower after surging an impressive 19% in FY11. It expects Singapore’s FY12 FCF to be S$1.3bn vs. S$1.4bn in FY11 while that of Australia should be above A$1bn vs. A$1.2bn in FY11.

3-yearly review of cash needs.
SingTel maintains its dividend payout policy of 55- 70% but adds that it will review its cash needs for “operations and growth, as well as strategic initiatives with a view to returning surplus cash to shareholder, every three years”. Its CEO said that three years is a reasonable time for cash to build up again assuming the telco does not undertake a substantial acquisition. Figure 2 illustrates SingTel’s capital management when its net debt/EBITDA falls to 0.8x. Based on this metric and our forecasts, we believe SingTel may dish out another special dividend in FY13 as we expect its net debt/EBITDA then to fall to 0.75x, assuming payouts of 70% in FY12-13.

Long-term investor in associates.
SingTel reiterated that it is a long-term investor in its associates, dispelling market talk that it may sell its 35% stake in Telkomsel. It is upbeat on the potential of the mobile data market in Indonesia.

Competition heating up in prepaid.
Competition has been intense in the prepaid space as telcos jostle for users from workers employed in the integrated resorts and construction sites. SingTel observes that M1 has been the most aggressive. In the postpaid space, competition has been moving towards value. For business customers, SingTel believes that telcos must compete on the ability to deliver mobile business applications, data and email and reckons that SingTel and StarHub are the best positioned.

NBN yet to gather momentum.
There were only 18k-20k fibre customers nationwide or only 2% of total fixed broadband subscriptions as at Feb 11. It claims to have a market share similar to that of its ADSL, which is 55%. This surprises us as M1 claims to be adding its equal share or about 30-35%. This implies that StarHub’s share may only be around 10-15%.

Subsidising iPad2.
SingTel is subsidising the iPad for the first time. It reckons this is in line with its aspiration to become a multimedia operator and the iPad is another platform its customers choose to be on. It also illustrates SingTel’s aggression to establish itself as a leader in iPad penetration.

Prepaid market is soft.
The prepaid market is rather soft in Australia with subscribers chasing after more attractive plans or better handset deals. Optus had been adversely affected by higher churns from one of its international call rate plans which resulted in higher churns than the average prepaid base. Optus lost 47K prepaid subscribers in 4QFY11 vs. Telstra’s 39K loss.

Willing to spend on SACs.
Optus’s SAC has been S$190-250 per subscriber over the last two years from S$116-150 in prior years due to a higher smartphone mix in its base. Optus’s strategy has been largely successful as it has been generating strong postpaid net adds due to this smartphone investment and will be willing to incur higher SACs going forward to secure higher-value customers. Separately, Optus is also 􀙛 enefiting from the strong A$ and will hedge those positions on a regular basis.

4QFY11 results
FY11 core net profit is in line with CIMB and market expectations with variances of 0.7% and -0.3% respectively. The key highlight was a surprising 9ct final and 10ct special DPS to bring FY11 dividend to 25.8cts for a 108% payout vs. 14.2cts or 58% in FY10.

Seasonal weakness in Singapore.
Singapore telco revenue was seasonally weaker qoq but was offset by higher IT and Engineering revenues. EBITDA margins fell 2% pts due to continued pressure from mioTV content and installation costs. SingTel’s FY11 core net profit was unchanged, with higher contributions from rolling out Open Net and mobile services offset by higher mioTV costs.

Higher margins in Australia.
Optus’s 4QFY11 revenue fell 2.6% qoq due to a shorter quarter but EBITDA margins surged 5.7% pts qoq due to seasonal factors such as lower subscriber acquisition and retention costs. It had an excellent FY11 with 18% net profit growth, thanks to moderate revenue growth and higher margins.

Fairly resilient associate contributions.
Contributions from Bharti were weaker due to losses from Africa and higher interest expense related to the acquisition of Bharti Africa and 3G spectrum. Telkomsel’s contribution weakened due weaker margins. However, the weakness at its two largest associates was largely offset by stronger contributions from AIS and Globe.

Forecasts and assumptions
We raise our FY12-13 core net profit estimates by 3-5% after: 1) updating consensus forecasts for Bharti and Globe; 2) raising our assumptions for A$; and 3) lowering FY12-13 EBITDA margin estimates by 1-1.5% pts to account for mioTV content and installation costs and be consistent with SingTel’s guidance. We also introduce FY14 estimates.

All in all, we expect core net profit to grow 10% yoy in FY12 after contracting 3% in FY11 on the back of higher A$ assumptions, an anticipated earnings recovery at Bharti and growth at Telkomsel. However, we expect Singapore earnings to contract 7% due to margin pressures. There could be downside risks to our Optus estimates should competition intensify significantly.

Valuation and recommendation
Despite our higher earnings forecasts, we lower our SOP-based target price by S$0.10 to S$3.19 due to our lower forecasts for Singapore.

Maintain UNDERPERFORM with likely de-rating catalysts from margin pressure in Singapore on content costs and mioTV’s expansion, rising competition in Australia and lacklustre growth at Telkomsel. We continue to prefer M1 among Singapore telcos as it is the biggest beneficiary of NGNBN and a direct play on rising roaming revenues. For exposure to regional telcos, we like Axiata.

Source/转贴/Extract/: CIMB Research
Publish date:13/05/11

SingTel Still no catalyst despite special dividend (KE)

Price $3.16
Target $3.50

Still no catalyst despite special dividend

 SingTel’s 4QFY Mar11 results were generally in line with our expectation and do not change our fundamental view of the company. The special dividend of 10 cents a share on top of a final dividend of 9 cents a share was a pleasant surprise. However, as this is not going to be a regular occurrence, the stock is unlikely to be re‐rated though there will probably be some support until it goes ex‐dividend sometime in August. Maintain HOLD.

Our View
 SingTel reported fourth‐quarter net profit of $992m, down 2% YoY. This brought full‐year net profit to $3825m, in line with our forecast as well as consensus. Excluding the negative effects of Bharti Africa due to operational losses as well as acquisition financing and transaction costs, net profit would have grown 1% YoY to $1,030m.

 The results were nothing exciting. The strong Singapore performance of the first three quarters had moderated by yearend. Data continued to drive the strong growth of mobile, but Singapore growth was let down by weak national telephone and IT and Engineering businesses. Optus remained the better performer with margins expanding in 4QFY Mar11 on improved business and wholesale margins. At the group level however, associates (‐11%) dragged down overall results.

 The focus will be on the special DPS of 10 cents. Full‐year ordinary DPS of 15.8 cents (interim 6.8 cents, final 9 cents) represents a payout ratio of 66%, in line with guidance. However, management said this is a return of surplus cash not needed for investment and such payout will only be reviewed every three years. This suggests a dearth of catalysts, whether with regard to M&A or expectations of further handouts after the latest special dividend.

Action & Recommendation
We maintain our HOLD call on SingTel. Our target price of $3.50 is based on 14x FY Mar12 PER, slightly below the average for regional peers at 14.6x.

Source/转贴/Extract/: Kim Eng Research
Publish date:14/05/11

Qantas looking at options

The Star Online > Business

Saturday May 14, 2011

Qantas looking at options


PETALING JAYA: Qantas said it is looking at a range of options to strengthen its struggling international operations but would not comment if it was setting up a new premium carrier in Asia.

Experts say the proposal to set up a new premium carrier in Asia could be the best move for the airline to try and recover its dwindling international market share. They said the proposed plan would allow Qantas to take advantage of lower cost and give it access to a bigger market by being right smack in South-East Asia.

Even if it only considers setting up a hub in one of the two countries (Malaysia or Singapore) it would prove to be a better option than operating international routes from Australian destinations.

“At this point we don't know what the plan is. There is speculation but there is also a task force working on it. Either way (hub or setting up of a new premium carrier in Asia) would be viable (proposition),'' Standard & Poor's aviation analyst Shukor Yusof said from Singapore.

However, it would need to get local partners in both countries to enable it to get the air operator's certificate (AOC) and the local partners need to hold at least 51% stake in any outfit.

The possible locations identified in reports out of Australia for the setting up of the new premium carrier are Malaysia and Singapore.

Currently Qantas holds a 49% stake in low cost carrier JetStarAsia and two Singaporeans hold the balance 51% .

Yesterday the Sydney Morning Herald said Qantas was looking at setting up a premium airline in Malaysia and cited speculation the airline had applied for an AOC in Malaysia, which the airline denied.

Transport Minister Datuk Kong Cho Har also denied that Qantas had applied for an AOC.

In a separate report, the Australian Financial Review said Qantas was looking at establishing a full-service subsidiary in Singapore with up to 20 aircraft to take advantage of lower cost. The newspaper said Qantas might use the Singapore subsidiary to build up its network in Europe. The immediate focus was not to challenge Singapore Airlines and Cathay Pacific's market share, it added.

But the move could anger unions which are threatening industrial action on the carrier. Aircraft engineers on Thursday called off plans to strike on Friday but there are plans for further industrial action next week. Late yesterday the pilots' association criticised the proposed plan.

Qantas has created an internal taskforce led by executive Lesley Grant to review its international operations which have lost market share and struggled for profitability in recent times.

“There is an international review that's on and we're looking at everything products, new routes, existing markets, new markets etc. Everything is on the table, but it's very embryonic and we will not have anything concrete to announce until the end of the year,” Qantas spokesperson Olivia Wirth said in a report in The Australian.

Qantas is the world's second oldest airline founded in 1920. It employs 32,500 people and offers services across a network spanning 182 destinations in 44 countries (including those covered by codeshare partners) in Australia, Asia and the Pacific, the Americas, Europe, the Middle East and Africa.

Source/转贴/Extract/: The Star Online
Publish date:14/05/11






  摩根大通资产配置主管洛伊斯(Jan Loeys)本周在研究报告中说:“中国决策者已明确表示,控制通胀的措施‘不存在绝对的限度’,这让人担心中国的政策对大宗商品需求增长将造成影响。”





  高盛资产管理的主席奥尼尔(Jim O’Neill)在研究报告中说:“大宗商品市场上周的遭遇毫不令人意外,短期再跌的话也不稀奇。”





  巴克莱财富研究部门主管盖蒂纳(Kevin Gardiner)说:“我们的结论是,此次暴跌或不会对大宗商品市场前景造成太大的影响,这不同于去年5月股市闪跌对市场前景所造成的影响。”


  美林首席全球股票策略师哈尼特(Michael Hartnett)在报告中写道:“我们将等待更好的入场时机,我们认为股票的周期性涨势没有结束,将会买入在夏季表现疲弱的股票。”



Source/转贴/Extract/: 《联合早报》
Publish date:14/05/11



  该集团现财年第一季的营收增加16%至24亿4300万美元。在扣除利息和税务前盈利(Core EBIT)方面,海皇轮船第一季转亏为盈,取得1300万美元盈利,一年前同季在扣除利息和税务前则面对7400万美元的亏损。

  海皇轮船集团总裁魏龙(Ronald Widdows)说:“虽然运载量同比取得增长,农历新年期间生意比预期的少以及燃油成本的上升,已经干扰了我们业务的增长势头。”


  供应链管理业务方面,旗下APL Logistics公司的第一季营收增24%至3亿6800万美元,扣除利息和税务前的盈利增加40%至2100万美元。


Source/转贴/Extract/: 《联合早报》
Publish date:14/05/11

新电信下财年设商业信托 注入新一代全国宽网资产

新电信将在下财年设立一个商业信托(business trust),把新一代全国宽网(NGNBN)的有关基础设施资产转移到该信托,并且在2014年4月以前把在该信托的股权减少到25%以下。










Source/转贴/Extract/: 《联合早报》
Publish date:14/05/11

新航为今年20%燃油 进行每桶130美元对冲













  新加坡航空货运公司(SIA Cargo)昨天宣布,从5月13日至10月29日期间,每周将增加两次经香港到日本关西机场的货运服务。



Source/转贴/Extract/: 《联合早报》
Publish date:14/05/11

SIA advances most in month on special dividend

Singapore Airlines, the world’s second-largest carrier by market value, rose the most in a month on the city’s stock exchange after pledging to pay S$1.20 a share in special and final dividends.

The airline climbed 2.8% to $14.66, the biggest gain since April 13. The benchmark Straits Times Index advanced 1.1%.

Singapore Air announced the dividends yesterday after rebounding travel demand following the end of the global recession helped boost annual profit fivefold. Net income in the fourth quarter declined a worse-than-expected 38% because of higher fuel costs.

“The key positive surprise is the big special and final dividend,” Credit Suisse Group AG analyst Sam Lee said in a research note today. “SIA’s valuation is not excessive, but we do not see short-term company-specific catalyst after the big cash dividend.”

Credit Suisse has an “outperform” rating and $18.50 target price for the carrier. Its forecasts are under review pending an analyst briefing today, Lee said.

The carrier’s 40 cent final dividend compares with 12 cents a year earlier. The special dividend totals 80 cents. The carrier had net cash, including investments, of $5.6 billion or about $4.70 a share, as of the end of March, Citigroup Inc. analysts led by Robert P. Kong said in a May 12 note.

The airline reported net income of $1.1 billion for the year ended March, compared with $216 million a year earlier. Fourth-quarter profit fell to $171 million, missing the $244 million average of four analyst estimates compiled by Bloomberg in the preceding 28 days.

The airline has hedged about 20% of this year’s fuel need at about US$130 per barrel, Chief Executive Officer Goh Choon Phong said at a press briefing in Singapore today.

In the three months ended March, the carrier filled 75.5% of total available seats, down from 80% a year earlier as capacity expansion outpaced demand, it said in a statement yesterday. Passenger numbers were little changed at 4.1 million. Yield, the average price a traveler pays to fly one kilometer, was 12.1 Singapore cents, compared with 11.1 cents a year earlier.

The airline intends to boost capacity 6% in the fiscal year started April 1. It expects to add eight Airbus SAS A380s, while retiring five Boeing Co. 777s and all seven of its 747-400s.

Singapore Air’s fuel bill, its biggest expense, jumped 24% to $1.24 billion in the quarter ended March 31. Jet- fuel prices averaged US$121.2 per barrel in the quarter in Singapore trading, 42% higher than a year earlier.

“The twin challenges of near-term weakness in load factors and high fuel prices will adversely affect operating performance,” Singapore Air said. “While there has been some respite in the past week, jet-fuel prices are likely to remain high and volatile in the near term.”

Publish date:13/05/11

NOL reports first loss in year on fuel, cargo rates

Neptune Orient Lines, Southeast Asia’s biggest container-shipping line, posted its first quarterly loss in a year as rising fuel prices and global overcapacity offset increasing demand.

The company made a US$9.7 million ($12 million) loss in the three months ended April 8 compared with a US$98.5 million loss a year earlier, it said in a statement to the Singapore stock exchange today. Sales rose 16% to US$2.44 billion.

Average revenue per box rose 3% in the period, trailing a 28% jump in fuel prices, as the introduction of more ships on Asia-Europe routes sapped rates. China Cosco Holdings Co. also reported a loss in the first quarter, while Evergreen Marine Corp. had its smallest profit in a year.

“Too much new capacity has entered the market this year,” said Jee Heon Seok, an analyst at NH Investment & Securities Co. in Seoul. “It should get better as we go into the peak season in the third quarter and fewer new ships enter service.”

APL, Neptune Orient’s container-shipping unit, boosted volumes 9% to 764,000 40-foot equivalent containers in the reporting period, according to the statement. Average revenue per box was US$2,598. The unit’s sales rose 15% to US$2.1 billion. Sales at Singapore-based Neptune Orient’s logistics business jumped 24 percent to US$368 million.

“A softer than expected Lunar New Year period and rising fuel costs have interrupted our momentum,” Chief Executive Officer Ron Widdows said in the statement.

Widdows will step down at the end of the year and be succeeded by Ng Yat Chung, a former Singapore army chief and manager at Temasek Holdings, Neptune Orient’s controlling shareholder. Widdows will stay at the company as a senior adviser.

The shipping line closed unchanged at $1.90 in Singapore today before the earnings announcement. It has fallen 13% this year, the third-worst performance amongst the 30 stocks in the city-state’s benchmark Straits Times Index.

“Increased operating costs -- particularly related to fuel cost increases -- and competitive pressure on rates are expected to continue for the near term,” the company said. “Should these conditions persist, our results will be negatively impacted.”

The price of 380 Centistoke marine bunker fuel, used by ships, averaged US$600.02 per metric ton in the first quarter in Singapore trading compared with US$469.19 a year earlier, according to data compiled by Bloomberg. It rose 2.4% to US$642.50 today.

Container rates will likely increase this quarter and into the second half as some lines “definitely” need higher fees, A.P. Moeller-Maersk A/S Chief Executive Officer Nils Smedegaard Andersen said this week. Maersk, owner of the world’s biggest container shipping line, boosted first-quarter profit 85%.

APL operated 147 vessels with a combined capacity of 593,542 20-foot boxes as of March 6, according to Neptune Orient’s website. It is scheduled to receive 10 ships next year, 10 in 2013 and two in 2014. It placed orders for 12 ships able to carry 105,400 20-foot containers last year. The vessels will cost about US$1.2 billion.

Publish date:13/05/11

SIA sees fuel, load factor challenges

by Millet Enriquez
10:40 PM May 13, 2011

Singapore Airlines (SIA) on Friday said it would continue to face two major challenges in the near term - oil prices which have soared more than 25 per cent since January and the weakness in passenger load amid global economic uncertainty.

The surge in oil prices had already taken a toll on SIA's performance for its fiscal fourth quarter ended March 31, with fuel accounting for 36.8 per cent of its total expenditure. To mitigate the impact, SIA plans to strengthen its fleet with more fuel-efficient planes and is investing up to S$2.1 billion on these for financial year 2011/2012.

Meanwhile, passenger load, which has been affected by the earthquakes in Japan and New Zealand and the uprising in the Middle East, is likely to stay weak. SIA has since adjusted its capacity by reducing flights and frequencies to Japan, in particular.

Still, analysts say SIA remains a defensive stock among Asian airlines and they see a healthy outlook for the counter.

SIA shares rose 40 cents, or 2.8 per cent, to S$14.66 on Friday after it announced on Thursday a generous total dividend payout of S$1.40 for FY2011 despite its challenging outlook.

Referring to the payout, SIA chief executive Goh Choon Phong, said: "We do a very thorough review of our net cash requirements and also factor in whatever, not just capital expenditure but also potential future scenarios where we might require a lot of cash if things were to deteriorate very rapidly."

Asked about reported plans that Qantas may set up an airline subsidiary here, he said, "We're not new to competition. You still see a lot of capacity has been added to Singapore. We are very liberal and that's good. We want both sides to be liberal as well so that we can also have the opportunity to go to other destinations and to other places and to better serve our customers." MILLET ENRIQUEZ

Publish date:14/05/11

Golden Agri Q1 net profit up 161%

02:20 AM May 14, 2011
Singapore-listed palm oil firm Golden Agri-Resources said on Friday its first quarter net profit rose 161 per cent from a year earlier, lifted by higher sales volumes and crude palm oil prices.

The company reported net profit of US$230.7 million (S$283.7 million) in the three months ended March 31, compared with US$88.5 million a year ago, and said the outlook for the palm oil industry remains positive due to strong demand.

Crude palm oil prices were about 54 per cent higher in this quarter compared to a year ago, the company said.- REUTERS

Publish date:14/05/11

NOL posts Q1 loss despite revenue growth

02:20 AM May 14, 2011
Neptune Orient Lines (NOL) , the world's seventh largest container shipping firm, reported a first quarter net loss on Friday, hurt by a soft Lunar New Year period and rising fuel costs.

The company, around two-third owned by Singapore investor Temasek Holdings, posted a net loss of US$10 million (S$12 million) compared to a net loss of US$98 million a year ago, missing market expectations of a net profit of US$31.33 million.

The firm's first quarter revenue was up 16 per cent to US$2.4 billion, as compared to US$2.1 billion in the year-ago period.

APL, the liner shipping unit of NOL, reported a 9 per cent increase in first quarter shipping volume year-on-year, with vessel utilisation rates of 92 per cent.

"But our emphasis must remain on operating efficiency, as well as slow-steaming our ships to conserve fuel and counteract the effect of rising fuel prices," said APL President Eng Aik Meng in a statement. Slow-steaming is an industry practice that refers to cutting travelling speed to save fuel and emissions.

Looking ahead, NOL expects increased operating costs and competitive rate pressures to continue for the near term on uncertain market conditions.

However, the firm will continue to focus on operating efficiency, cost reduction and high vessel utilisation, it said in a statement.

Global container shipping firms were squeezed by a sharp fall in rates, driven by over-capacity and limited demand, since the start of the year and rising fuel charges. However the sector is expected to rebound later this year.

Bunker fuel prices, which can make up anywhere from 10 to 70 per cent of operating costs depending on the type of vessel, climbed to 2-1/2 year highs in April although the recent rout in oil prices had helped ease the pressure a bit.

The global shipping industry has rebounded strongly from the worst downturn in history in 2009 as the recession hit global trade and forced many companies to lay up ships and cut jobs. - REUTERS

Publish date:14/05/11

8 Yield Stocks to Outpace Inflation

8 Yield Stocks to Outpace Inflation

􀂃 Inflation continues to be a clear and present danger

􀂃 Buy yield stocks to outpace inflation. Our picks :- MobileOne, Mapletree Logistics Trust, CDL Hospitality Trust, Venture Corporation, Frasers Centrepoint Trust, Parkway Reit, ST Engineering, SIA Engineering

Inflation continues to be a clear and present danger
Rising oil, food, housing and transportation costs drove Singapore’s March CPI by 5% YoY, significantly higher than the average inflation of 1.3% over the past two decades. In China, the latest April CPI advanced a stronger-than-expected 5.3% YoY and the country’s rural inflation is rising at a much faster 5.8% rate compared to 5.2% for urban areas. Our HK/China economist foresees more pressure for both the RMB and interest rates to increase. Even in Europe where the recovery has lagged behind Asia, the Bank of England signaled the need to hike rates later this year due to ‘uncomfortably high’ inflation, even as their economy struggles to regain momentum.

Higher rates and sustain economic growth don’t mix
Our economist foresees a total 61 rate hikes for Asia and this tightening cycle is only half-way through the rate hike count. Inflation and sustain economic growth do not blend well. Concerns are rising that continued tightening stance by central banks will impact growth going forward. Already, oil and commodity (e.g. metals) prices have declined in recent weeks on this concern.

Buy yield stocks to outpace inflation
Dividend yield stocks offer a hedge against the uncertainty of rising inflation. We like yield stocks that offer at least 5% yield for FY11F with opportunities for capital appreciation. Our 8 picks are: MobileOne, Mapletree Logistics Trust, CDL Hospitality Trust, Venture Corporation, Frasers Centrepoint Trust, Parkway Reit, ST Engineering, SIA Engineering.

Source/转贴/Extract/: DBS Vickers Research
Publish date:13/05/11

Commodities crash causes jitters

Business Times - 13 May 2011

Top Stories for Front Page
Commodities crash causes jitters

The STI snapped a three-session winning streak, ending 46.73 points down - its biggest fall in almost 2 months


AN overnight commodities market crash caused jitters to ripple across equity markets, with stocks across the world recording one of their sharpest single session retreats in weeks.

In Singapore, the Straits Times Index (STI) snapped a three-session winning streak to end the day 46.73 points down at 3,130.45 points - its biggest fall in almost two months.

This came in the wake of a 1.02 per cent drop by Wall Street's key Dow Jones index overnight as commodities chalked up their biggest single day drip in almost two months. Other metals such as copper and zinc also got thrashed down. The broader S&P500 fell 1.1 per cent - its sharpest drop in two months.

The selling was prompted by concerns of a potential softening in demand if China tightens monetary policy to rein in inflation. But the bearishness, especially towards oil, intensified after a US Energy Department weekly inventory report suggested stockpiles were much higher than anticipated by the market.

However, there were signs of reversals in the commodity market during midday trading time across Asia. But nerves in equity markets remained too frayed for any real recovery.

Some 1.15 billion units worth some $1.18 billion changed hands as losers outnumbered gainers by 364 to 115 issues.

Weighing the benchmark index down was DBS Bank which shed 62 cents to $14.48, and UOB lost 54 cents to $19.02.

City Developments fell 46 cents to $11.14, while Singapore Airlines gave up 32 cents to $14.26 ahead of its results release after the market's close.

SGX fell five cents to $7.54 despite market plans to cut minimum bid size - a move which market analysts say will significantly boost volumes. The exchange is reportedly looking to reduce minimum bid size of 0.1 of a cent for stocks priced below 20 cents, while stocks priced from $1-1.99 will have their minimum bid size cut from one cent to half a cent. The minimum bid size for stocks $10 and above will be cut from two cents to one cent.

The plans could come into effect by early second half.

So after three positive sessions which saw the index rising almost 78 points, the market has given back more than half its gains.

Yet, many market analysts insist that this is a bull market correction, rather than a bear market.

Phillip Securities reckons the outlook for the STI 'remains unchanged: we are in a bull-market and corrections are buying opportunities'.

The house says the 3,150-point level is an important level to watch, with light support at 3,170, key support at 3,155/3,150 and resistance at 3,180, then 3,200.

The major risks for the market continue to be the same suspects as in recent months: the Greek debt crisis, the overheating Chinese economy, US deficit and a potential slowdown of global economic growth.

How the markets perform and where they are headed in the weeks ahead will depend largely on how these factors play out on the psyche of the investor, say market analysts.

Source/转贴/Extract/: Business Times
Publish date:13/05/11

Frasers trust sells stake in fund for A$22.2m

Business Times - 13 May 2011

Frasers trust sells stake in fund for A$22.2m


FRASERS Commercial Trust (FCOT) has sold its stake in an Australian property fund for A$22.2 million (S$29.11 million) and will use the net proceeds of A$22.04 million to reduce its debt liabilities.

FCOT had a 39 per cent indirect interest in the Australian Wholesale Property Fund (AWPF). The fund is invested in several properties in Sydney and Fairfield.

'The divestment is in line with the manager's objective to reshape the portfolio of FCOT as the investment in AWPF is considered non-core,' FCOT said in an announcement yesterday, adding that AWPF has not paid any distributions since March 2008.

'The manager is of the view that the divestment is in the interests of the unitholders of FCOT as the net proceeds from the divestment will be utilised to reduce debt liabilities of FCOT.'

After deducting costs, net proceeds come up to around A$22.04 million. Given that the book value of FCOT's investment in AWPF was A$24.94 million as at March 31, the deal leads to a slight loss of A$2.9 million.

Assuming that the divestment took effect on Sept 30 last year - the end of the most recently completed financial year - there would have been no material effect on FCOT's net tangible assets per unit.

Assuming that the divestment took place on Oct 1, 2009, and that FCOT had used all of the net proceeds to partially prepay a term loan facility, distributable income per unit would have increased by 0.26 cents or 4.68 per cent for the financial year ended Sept 30, 2010.

FCOT lost one cent on the stock market yesterday to close at 79.5 cents

Publish date:13/05/11

SIA Some goodies handed out (DBSV)

Singapore Airlines
BUY S$14.26
Price Target : 12-Month S$ 17.00 (Prev S$ 17.30)

Some goodies handed out

• FY11 core earnings of S$1.3bn below our expectation of S$1.4bn due to weak 4Q.

• Final dividend of S 40cts and special dividend of S 80cts declared as net cash ballooned to >S$5bn.

• Balance sheet still strong, with decent earnings outlook and attractive valuations.

• Cut EPS by 15% to 16% on lower yield and load factors, maintain BUY with lower TP of S$17.

Firm rebound in earnings for FY11. Excluding fines on SIA Cargo of S$202m, SIA’s core profit of S$1.3bn for FY11 grew by over 500% yoy, with better results across all segments. This was driven by a 12.2% improvement in overall yield and a 4.6% increase in overall load. SIA’s 4Q numbers missed our expectations, due to the unexpected events in Japan and the Middle East and North Africa region deflating passenger load factor and carriage during 4Q10.

Cash bonanza for shareholders. Along with an interim dividend of 20 Scts, SIA declared final ordinary and special dividends of S$1.20, which will be welcomed by shareholders. Nonetheless, SIA is projected to still have over S$4bn net cash after paying out the dividends, and still has plenty of options to improve its ROE such as through acquisitions or handing out more cash.

Healthy outlook. Despite higher fuel prices, we believe SIA will remain fairly profitable as planes remain full and prices stay firm. We have adjusted our FY12 and FY13 EPS forecasts down by 15% and 16% respectively, factoring in a more conservative demand outlook and lowering our yield assumptions, which we expect to improve, albeit at a slower pace. We still project SIA to earn at least S$1 EPS per year.

Inexpensive valuation. With over S$4 net cash per share, SIA trades at ex-cash PE of 10x and 1.2 P/BV. Based on a normalized DPS of S$0.60 per annum, the yield of 4.1% is also decent. Our TP of S$17 is based on 1.4x FY12 P/BV (S$16.20) plus the special dividend of S 80cts.

Source/转贴/Extract/: DBS Vickers Research
Publish date:13/05/11

SIA Bumper FY Mar11 dividend of $1.40 or 9.8% yield (KE)

Singapore Airlines (SIA SP):
Bumper FY Mar11 dividend of $1.40 or 9.8% yield
Previous day closing price: $14.26
Recommendation: Under Review
Target price: Under Review

For FY Mar11, SIA has declared a final dividend of 40 cents per share, plus a special dividend of 80 cents per share. Including the 20 cents interim dividend, this is a total of $1.40 per share for the full year. It is the highest on record, handily surpassing the $1.00 per share paid in the “good” years of 2007 and 2008. Dividend yield translates to 9.8%, based on SIA’s last closing price. While we were already expecting a rather generous dividend payout, the final figure completely surpassed our expectations.

Total final and special dividend expense of around $1.4b represents just 19% of its cash balance of $7.4b. Cash generated this year totalled $3b, another record. Aside from cash from operations, SIA also raised $800m from the issuance of bonds.

Critically, aircraft expenditure was down by $300m. While this can be attributed to the lack of aircraft available for purchase, ie, the delay of the 787 Dreamliner, SIA’s willingness to give out cash to shareholders rather than retain a higher amount for significant capex may indicate that long-term growth opportunities may be tailing off.

As for the results, net profit came in at $1.1b for the full year. Though this is below our expectation of $1.3b, it is still outstanding compared to other airlines. The lower-than-expected results were due to weaker passenger yields that we had forecast in the fourth quarter. All cost items, especially volatile jet fuel costs, were in line with our estimates.

We will adjust our official forecasts, target price and recommendation following this afternoon’s briefing. We will also query management on its outlook for growth prospects, in light of the cash argument above. Book closure date for the $1.20 in final and special dividends is 4 August 2011.

Source/转贴/Extract/: Kim Eng Research
Publish date:13/05/11
Warren E. Buffett(沃伦•巴菲特)
Be fearful when others are greedy, and be greedy when others are fearful
别人贪婪时我恐惧, 别人恐惧时我贪婪
投资只需学好两门课: 一,是如何给企业估值,二,是如何看待股市波动
吉姆·罗杰斯(Jim Rogers)

乔治·索罗斯(George Soros)



高估期间, 卖对, 不卖也对, 买是错的。
低估期间, 买对, 不买也是对, 卖是错的。

Tan Teng Boo

There’s no such thing as defensive stocks.Every stock can be defensive depending on what price you pay for it and what value you get,
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