An impressive set of corporate earnings. For those who haven't read The Straits Times (14 Aug2010), this is a scanned copy below.
Impressive. It seems that the downturn is going back North again.
Source: The Strait Times
Saturday, August 14, 2010
Top 20 New Quarter Results
Profits of Singapore Listed Firms Rise 24%
An impressive set of corporate earnings. For those who haven't read The Straits Times (14 Aug2010), this is a scanned copy below.
Impressive. It seems that the downturn is going back North again.
Source: The Strait Times
An impressive set of corporate earnings. For those who haven't read The Straits Times (14 Aug2010), this is a scanned copy below.
Impressive. It seems that the downturn is going back North again.
Source: The Strait Times
OUB
- UOB net profits came in at S$602mn, higher than our expectations of S$572mn and closer to consensus of S$610mn. The details were less promising, with beat largely due to higher income from associate (up 90% q/q, largely one-time) and lower tax rate of 16%. PPOP of S$726mn was 7% below our estimates. We expect stock to trade lower following these results.
- UOB emphasised its regional franchise and admitted that the Singapore market is mature and competitive. Its S$ loan market share appears to be slipping as its S$ loans only expanded 2.3% qoq in a quarter when system loans grew 3.6% qoq. Much of the loan growth came from regional markets with Malaysia, in particular, appearing to have done very well. Management sees revenue opportunities in regional loan growth and fee-based income.
- Balance sheet strength remains the key positive for UOB. We think UOB offers the strongest balance sheet in the sector. In particular, collective provision coverage appears to present a substantial earnings buffer for future periods. The $57m 2Q10 collective provision top up ($77m 1Q10) saw coverage remain broadly flat, implying a $250m surplus to the last cyclical trough (1Q08). Going forward, we expect UOB credit costs to remain very low, as reflected in our forecast.
Ratings: From HOLD to OUTPERFORM with target price from S$19.40 to S$23 from 11 Brokerage Firm
Source: CIMB, CL, CSFB, DAIWA, DB, DBS, GS, JPM, KIM ENG, OCBC, UBS
- UOB emphasised its regional franchise and admitted that the Singapore market is mature and competitive. Its S$ loan market share appears to be slipping as its S$ loans only expanded 2.3% qoq in a quarter when system loans grew 3.6% qoq. Much of the loan growth came from regional markets with Malaysia, in particular, appearing to have done very well. Management sees revenue opportunities in regional loan growth and fee-based income.
- Balance sheet strength remains the key positive for UOB. We think UOB offers the strongest balance sheet in the sector. In particular, collective provision coverage appears to present a substantial earnings buffer for future periods. The $57m 2Q10 collective provision top up ($77m 1Q10) saw coverage remain broadly flat, implying a $250m surplus to the last cyclical trough (1Q08). Going forward, we expect UOB credit costs to remain very low, as reflected in our forecast.
Ratings: From HOLD to OUTPERFORM with target price from S$19.40 to S$23 from 11 Brokerage Firm
Source: CIMB, CL, CSFB, DAIWA, DB, DBS, GS, JPM, KIM ENG, OCBC, UBS
Golden Agri-Resources
Golden Agri-Resources (GAR) reported its 2Q10 results yesterday. Revenue climbed 28.4% YoY to US$726.2m. Net profit also showed a 19.9% rise to US$66.0m, but fell 25.4% QoQ due to higher fertilizer cost from increased volume applied in 2Q10.
One reason for the shortfall was due to higher export taxes paid (US$26m in 1H10 versus US$3m in 1H09). We understand that GAR also had to incur slightly higher freight costs (US$28m in 1H10 versus US$17m in 1H09) as it is now shipping to more destinations.
Lower production growth. While total production (including palm kernel) showed a seasonal 12% pick up from the previous quarter, overall production was down 13% from the year-ago quarter; management notes that the trees are still experiencing a biological slowdown after a peak crop in 2H09. While GAR now expects to see up to 5% increase in production this year, it admits that the increase will mainly come from its increased acreage and yields could continue to remain relatively low in light of the uncertain weather conditions.
Easing fair value to S$0.655. This drops our fair value from S$0.72 to S$0.655 but we maintain our BUY rating as current balance sheet strength suggests that GAR is well-equipped to handle any turbulence.
Source: Carey Wong (OCBC)
One reason for the shortfall was due to higher export taxes paid (US$26m in 1H10 versus US$3m in 1H09). We understand that GAR also had to incur slightly higher freight costs (US$28m in 1H10 versus US$17m in 1H09) as it is now shipping to more destinations.
Lower production growth. While total production (including palm kernel) showed a seasonal 12% pick up from the previous quarter, overall production was down 13% from the year-ago quarter; management notes that the trees are still experiencing a biological slowdown after a peak crop in 2H09. While GAR now expects to see up to 5% increase in production this year, it admits that the increase will mainly come from its increased acreage and yields could continue to remain relatively low in light of the uncertain weather conditions.
Easing fair value to S$0.655. This drops our fair value from S$0.72 to S$0.655 but we maintain our BUY rating as current balance sheet strength suggests that GAR is well-equipped to handle any turbulence.
Source: Carey Wong (OCBC)
Singtel
1Q11 Results Mostly In Line
SingTel released its 1Q11 results this morning, with revenue up 11.5% YoY; but it fell 4.1% QoQ and was also about 3.8% below our estimate, mainly hit by seasonally lower IT and Engineering revenue.
Net profit eased 0.2% YoY to S$943.2m; however, it fell 7.1% QoQ, again due mainly to seasonal factors and lower associate contributions (down 17.8% YoY and 6.9% QoQ); but it was just 1.6% shy of our forecast, as overall EBITDA margin was relatively steady at 29.3%, versus 29.9% in both 1Q10 and 4Q10.
Going forward, SingTel maintains its previous guidance for the rest of FY11, although it continues to caution that its consolidated operating revenue and operational EBITDA will be impacted by AUD movements and the earnings contributions from its regional associates will be affected by regional forex movements as well.
Until then, we place our BUY rating and S$3.40 fair value under review.
Source: Carey Wong (OCBC)
SingTel released its 1Q11 results this morning, with revenue up 11.5% YoY; but it fell 4.1% QoQ and was also about 3.8% below our estimate, mainly hit by seasonally lower IT and Engineering revenue.
Net profit eased 0.2% YoY to S$943.2m; however, it fell 7.1% QoQ, again due mainly to seasonal factors and lower associate contributions (down 17.8% YoY and 6.9% QoQ); but it was just 1.6% shy of our forecast, as overall EBITDA margin was relatively steady at 29.3%, versus 29.9% in both 1Q10 and 4Q10.
Going forward, SingTel maintains its previous guidance for the rest of FY11, although it continues to caution that its consolidated operating revenue and operational EBITDA will be impacted by AUD movements and the earnings contributions from its regional associates will be affected by regional forex movements as well.
Until then, we place our BUY rating and S$3.40 fair value under review.
Source: Carey Wong (OCBC)
Friday, August 13, 2010
SembCorp Industries Ltd
2Q10 net profit of S$161m (+14% YoY) was in line with expectation. 1H10
net profit of S$320m accounted for 49% of our net profit forecast. 2Q10 net profit
growth was driven by its offshore marine unit (+26% YoY), utilities unit (+8%
YoY) and environmental unit (+71% YoY) while the industrial park unit reported
slight decline (-3% YoY). Overall earnings remain solid, and we maintain BUY on
the stock with an unchanged SOTP-derived TP of S$4.96. Valuation remains
attractive and we expect stock to re-rate on incremental utilities earnings growth.
Marine: Strong performance but orderbook depleting. 2Q10 Marine net profit
jumped +26% YoY despite lower revenue (-27% YoY) on higher margins. Marine
unit accounted for 61% of 2Q10 net profit. Outstanding orderbook as at 3 Aug 10
slipped to S$4.3b vs. S$7.9b last year. We believe earnings decline is inevitable
in FY11 as order outlook (ex-Petrobras) remains clouded by uncertainties.
New projects and expansions in the pipeline that will drive growth
acquisition to be earnings accretive in FY11. Cascal reported US$23.5m net profit for
the in their latest financial year ending Mar 2010.
(O&M) will be carried out by a 70% owned subsidiary.
agreement (WPA) by Apr 2011.
S$2.1b and the plant is expected to be ready for operations by end-2013. Operations
and maintenance (O&M) will be carried out by a 70% owned subsidiary.
Source: UBS
net profit of S$320m accounted for 49% of our net profit forecast. 2Q10 net profit
growth was driven by its offshore marine unit (+26% YoY), utilities unit (+8%
YoY) and environmental unit (+71% YoY) while the industrial park unit reported
slight decline (-3% YoY). Overall earnings remain solid, and we maintain BUY on
the stock with an unchanged SOTP-derived TP of S$4.96. Valuation remains
attractive and we expect stock to re-rate on incremental utilities earnings growth.
Marine: Strong performance but orderbook depleting. 2Q10 Marine net profit
jumped +26% YoY despite lower revenue (-27% YoY) on higher margins. Marine
unit accounted for 61% of 2Q10 net profit. Outstanding orderbook as at 3 Aug 10
slipped to S$4.3b vs. S$7.9b last year. We believe earnings decline is inevitable
in FY11 as order outlook (ex-Petrobras) remains clouded by uncertainties.
New projects and expansions in the pipeline that will drive growth
- US$208m acquisition of Cascal. Takeover nearly completed. Major cost of acquisition
acquisition to be earnings accretive in FY11. Cascal reported US$23.5m net profit for
the in their latest financial year ending Mar 2010.
- 60% owned US$1b Salalah independent water and power plant (IWPP) in Oman is
(O&M) will be carried out by a 70% owned subsidiary.
- US$200m expansion of desalination capacity in Fujairah. This will increase capacity
agreement (WPA) by Apr 2011.
- 1,320MW power plant in India. SCI signed a deal to acquire 49% equity stake in a
S$2.1b and the plant is expected to be ready for operations by end-2013. Operations
and maintenance (O&M) will be carried out by a 70% owned subsidiary.
Source: UBS
Wilmar
First Take: 2Q10 in line, seasonal weakness and one-off expenses
News
2Q10 net profit of US$344 mn was 17% below our US$414 mn estimate, dragged down by losses in the fair value of embedded derivatives in convertibles bonds. On an adjusted basis, we estimate that 2Q10 core net profit was only 8% below our quarterly estimate. On a YTD basis, 1H10 core net profit comprised 40% of our full year 2010E forecast, 42% of Bloomberg consensus. However, 1H tends to be a
seasonally weak period. Historically, Wilmar’s 1H has comprised between 37%-46% of the full year net profit (based on 2005-2009, excluding 2007 which was a merger year).
Analysis
Palm and Laurics margins and sales volumes were below expectations, we believe as the result of the weak industry-wide CPO (crude palm oil) production during the quarter (from yield stress, the lagged impact of
lower fertilizer application and as heavy rains hampered harvesting). With seasonally higher CPO production and stronger CPO prices in 2H, we believe Palm and Laurics volumes and margins may accelerate. This may
also benefit the Plantations division, which was seasonally weak in 1H. Oilseeds and Grains earnings performed in line with expectations, withstrong sales volumes, up 27% yoy in 2Q10, largely due to commencement of new plants for oilseeds crushing, flour and rice milling. The Consumer
Products division however did not perform well during the quarter, with sales and margins both below our expectations.
Implications
Overall we see the results as being in line with our expectations, but given the subjectivity in assessing Wilmar’s seasonal earnings trend, we believe there is a risk that the market may react negatively, but we maintain our Buy rating. No change to earnings or target price.
Rating: Neutral
Source: Goldman Sachs
News
2Q10 net profit of US$344 mn was 17% below our US$414 mn estimate, dragged down by losses in the fair value of embedded derivatives in convertibles bonds. On an adjusted basis, we estimate that 2Q10 core net profit was only 8% below our quarterly estimate. On a YTD basis, 1H10 core net profit comprised 40% of our full year 2010E forecast, 42% of Bloomberg consensus. However, 1H tends to be a
seasonally weak period. Historically, Wilmar’s 1H has comprised between 37%-46% of the full year net profit (based on 2005-2009, excluding 2007 which was a merger year).
Analysis
Palm and Laurics margins and sales volumes were below expectations, we believe as the result of the weak industry-wide CPO (crude palm oil) production during the quarter (from yield stress, the lagged impact of
lower fertilizer application and as heavy rains hampered harvesting). With seasonally higher CPO production and stronger CPO prices in 2H, we believe Palm and Laurics volumes and margins may accelerate. This may
also benefit the Plantations division, which was seasonally weak in 1H. Oilseeds and Grains earnings performed in line with expectations, withstrong sales volumes, up 27% yoy in 2Q10, largely due to commencement of new plants for oilseeds crushing, flour and rice milling. The Consumer
Products division however did not perform well during the quarter, with sales and margins both below our expectations.
Implications
Overall we see the results as being in line with our expectations, but given the subjectivity in assessing Wilmar’s seasonal earnings trend, we believe there is a risk that the market may react negatively, but we maintain our Buy rating. No change to earnings or target price.
Rating: Neutral
Source: Goldman Sachs
Ezion
Ezion: BUY S$0.64; Bloomberg: EZI SP
Lifting up to expectations;
Price Target : S$ 0.86
At a Glance
· Stellar 2Q10 results were within our expectation
· Signed LOI worth AUD70m for marine logistics work
· Near term catalysts include more contract wins and further updates on
its liftboats
Comment on Results
Robust operating profits boosted by disposal gains. Ezion posted another
quarter of strong growth in 2Q10. Recurring net profit surged 103% yoy and
20% qoq to S$9.2m on revenue of S$32.9m (+55% yoy, +29% qoq), attributable
to a larger vessel fleet. The sequential improvement, we believe, came
largely from the progressive deployment of vessels to the Gorgon project,
with all 8 deployed by mid-2010 (from 4-5 vessels in 1Q). In addition,
Ezion made a disposal gain of S$7.5m from the divestment of a 51% stake in
a subsidiary that owned the Group's first multi-purpose self-propelled jack
up, which lifted its net profit to S$16.5m (+305% yoy, +114% qoq). EBIT
margin held up well at c. 26%.
Signed LOI worth AUD70m. Together with the results, Ezion announced that
its Australian operation has received a letter of intent (LOI) for marine
logistics work from a Multi-National Oil Major with an estimated contract
value of AUD 70m. The work is expected to be carried out over four years
from 2011 to 2014.
Recommendation
Expect sequential improvement. While 1H10 has accounted for only around 39%
of our FY10F, we are keeping our forecasts unchanged. We expect the group
to post sequentially stronger quarterly results with the delivery and
charter of its third and fourth liftboats in 3Q10 and 4Q10.
Maintain BUY, TP unchanged at S$0.86. TP is pegged to 12x blended FY10/11
EPS. We believe further near term catalysts could include more contract
wins and further updates on its liftboats. Ezion could potentially invest
in another 2 liftboats using cash proceeds raised from liftboat divestments
in 1H10.
By: Jeremy Thia (DBS Vickers)
Lifting up to expectations;
Price Target : S$ 0.86
At a Glance
· Stellar 2Q10 results were within our expectation
· Signed LOI worth AUD70m for marine logistics work
· Near term catalysts include more contract wins and further updates on
its liftboats
Comment on Results
Robust operating profits boosted by disposal gains. Ezion posted another
quarter of strong growth in 2Q10. Recurring net profit surged 103% yoy and
20% qoq to S$9.2m on revenue of S$32.9m (+55% yoy, +29% qoq), attributable
to a larger vessel fleet. The sequential improvement, we believe, came
largely from the progressive deployment of vessels to the Gorgon project,
with all 8 deployed by mid-2010 (from 4-5 vessels in 1Q). In addition,
Ezion made a disposal gain of S$7.5m from the divestment of a 51% stake in
a subsidiary that owned the Group's first multi-purpose self-propelled jack
up, which lifted its net profit to S$16.5m (+305% yoy, +114% qoq). EBIT
margin held up well at c. 26%.
Signed LOI worth AUD70m. Together with the results, Ezion announced that
its Australian operation has received a letter of intent (LOI) for marine
logistics work from a Multi-National Oil Major with an estimated contract
value of AUD 70m. The work is expected to be carried out over four years
from 2011 to 2014.
Recommendation
Expect sequential improvement. While 1H10 has accounted for only around 39%
of our FY10F, we are keeping our forecasts unchanged. We expect the group
to post sequentially stronger quarterly results with the delivery and
charter of its third and fourth liftboats in 3Q10 and 4Q10.
Maintain BUY, TP unchanged at S$0.86. TP is pegged to 12x blended FY10/11
EPS. We believe further near term catalysts could include more contract
wins and further updates on its liftboats. Ezion could potentially invest
in another 2 liftboats using cash proceeds raised from liftboat divestments
in 1H10.
By: Jeremy Thia (DBS Vickers)
Noble
Ratings: Still maintaining OVERWEIGHT
2Q10 earnings miss on lower margins, expansion costs
Noble reported 2Q10 ‘recurring’ net profit of US$47 million versus our estimate of US$140 million (as highlighted in our July 16, 2010 report, we thought 2Q10 would be weaker than expected
but closer to US$105-110 million), down 50% y/y. Key reasons for the variance were:
(a) lower dollar margins seen in agriculture (weak soy
crush margins), MMO and logistics, and
(b) substantial increase in SG&A costs mainly on start up costs on oil & gas expansion and other
segments (stands at 63% of gross profit with historical average being 44%). As a result we reduce 2010E/2011E earnings by 13.5%/5% and lower our SOTP-based Jun-11 PT from S$2.00 - S$2.50 to S$2
Management guided to a 15% RoE (down from 20% previously) for the current period given the challenging
operating environment and low-cost debt environment. However, the CEO, Ricardo Leiman, did highlight that he had never been “more optimistic” about the company, and reiterated goals of doubling earnings in the next 3-5 years.
Coal business remains the catalyst to watch out for; more investments likely, in our view: While we expect the stock to correct in the near term (on back of weak results), with over US$2 billion potentially available for investment, we believe we could see cash being invested in this regard, with a potential focus on coal investments (given the cash unlocking being undertaken within its GCL business).
Source: Bloomberg and JP Morgan
2Q10 earnings miss on lower margins, expansion costs
Noble reported 2Q10 ‘recurring’ net profit of US$47 million versus our estimate of US$140 million (as highlighted in our July 16, 2010 report, we thought 2Q10 would be weaker than expected
but closer to US$105-110 million), down 50% y/y. Key reasons for the variance were:
(a) lower dollar margins seen in agriculture (weak soy
crush margins), MMO and logistics, and
(b) substantial increase in SG&A costs mainly on start up costs on oil & gas expansion and other
segments (stands at 63% of gross profit with historical average being 44%). As a result we reduce 2010E/2011E earnings by 13.5%/5% and lower our SOTP-based Jun-11 PT from S$2.00 - S$2.50 to S$2
Management guided to a 15% RoE (down from 20% previously) for the current period given the challenging
operating environment and low-cost debt environment. However, the CEO, Ricardo Leiman, did highlight that he had never been “more optimistic” about the company, and reiterated goals of doubling earnings in the next 3-5 years.
Coal business remains the catalyst to watch out for; more investments likely, in our view: While we expect the stock to correct in the near term (on back of weak results), with over US$2 billion potentially available for investment, we believe we could see cash being invested in this regard, with a potential focus on coal investments (given the cash unlocking being undertaken within its GCL business).
Source: Bloomberg and JP Morgan
Genting Singapore
Strongest Quarter With or Without Luck
Why Overweight (S$1.06 - S$1.60)
Based on 2Q EBITDA of S$514 million, we have raised our EPS and EBITDA estimates by 57-88%. That
implies 2011e EV/EBITDA of 9.5x – attractive in our view. Lower operating costs and better understanding of local market should help company maintain market share Potential disposal of UK asset at a reasonable price (despite registering losses) is positive too. Our EBITDA estimates are 45-60% higher than consensus We remain wary of sustainability of such a high margin following increased competition from MBS.
Key Value Drivers
• Visitor arrival growth
• Full opening of Universal Studio
attraction and aggressive market
thereafter
• Issuance of junket license and
expansion of VIP business
• GENS’ gaming market share
• EBITDA margin
Potential Positive Catalysts
• Sustained market share and margin in
3Q could move consensus
expectations up
• Introduction of junkets could increase
VIP volume
• Introduction of new rides at USS
should drive the traffic
Risks
• Competition intensifies as gaming
industry in the region is liberalized.
• Cannibalization as MBS opens in
phases.
View what other broker's thought here.
Source: Morgan Stanley
Why Overweight (S$1.06 - S$1.60)
Based on 2Q EBITDA of S$514 million, we have raised our EPS and EBITDA estimates by 57-88%. That
implies 2011e EV/EBITDA of 9.5x – attractive in our view. Lower operating costs and better understanding of local market should help company maintain market share Potential disposal of UK asset at a reasonable price (despite registering losses) is positive too. Our EBITDA estimates are 45-60% higher than consensus We remain wary of sustainability of such a high margin following increased competition from MBS.
Key Value Drivers
• Visitor arrival growth
• Full opening of Universal Studio
attraction and aggressive market
thereafter
• Issuance of junket license and
expansion of VIP business
• GENS’ gaming market share
• EBITDA margin
Potential Positive Catalysts
• Sustained market share and margin in
3Q could move consensus
expectations up
• Introduction of junkets could increase
VIP volume
• Introduction of new rides at USS
should drive the traffic
Risks
• Competition intensifies as gaming
industry in the region is liberalized.
• Cannibalization as MBS opens in
phases.
View what other broker's thought here.
Source: Morgan Stanley
Genting Singapore
2Q10 results beat all expectations: Genting Singapore’s (GENS) 2Q10
results beat all expectations (we were in line with consensus). The
Singapore resort contributed 2Q10 revenue of S$861 mn and EBITDA of
S$503.5 mn, reflecting a full quarter of casino and theme park contributions.
We expect consensus upgrades on the back of these stellar results.
Raise target price to S$1.68; upgrade to OUTPERFORM: We have raised
our FY10E-FY11E EBITDA by 68-69% to reflect higher casino revenues and
higher EBITDA margins. We raise our target price on Genting Singapore to
S$1.68 and upgrade our rating to OUTPERFORM (from Underperform
previously).
UK proposal goes to vote next week: GENS has proposed to sell its UK
casino estate to Genting Malaysia for S$689 mn. This is equivalent to a
FY10E EV/EBITDA of 13.3x and 11.2x for FY11E, a 60-78% premium to UK
peer, Rank Plc. If this proposal goes ahead, Genting Singapore will book a
net loss of S$235 mn (due to exchange losses of S$339 mn)
Upgrade to OUTPERFORM/BUY from previous quarter.
View what other broker's thought here.
Source: Credit Suisse
results beat all expectations (we were in line with consensus). The
Singapore resort contributed 2Q10 revenue of S$861 mn and EBITDA of
S$503.5 mn, reflecting a full quarter of casino and theme park contributions.
We expect consensus upgrades on the back of these stellar results.
Raise target price to S$1.68; upgrade to OUTPERFORM: We have raised
our FY10E-FY11E EBITDA by 68-69% to reflect higher casino revenues and
higher EBITDA margins. We raise our target price on Genting Singapore to
S$1.68 and upgrade our rating to OUTPERFORM (from Underperform
previously).
UK proposal goes to vote next week: GENS has proposed to sell its UK
casino estate to Genting Malaysia for S$689 mn. This is equivalent to a
FY10E EV/EBITDA of 13.3x and 11.2x for FY11E, a 60-78% premium to UK
peer, Rank Plc. If this proposal goes ahead, Genting Singapore will book a
net loss of S$235 mn (due to exchange losses of S$339 mn)
Upgrade to OUTPERFORM/BUY from previous quarter.
View what other broker's thought here.
Source: Credit Suisse
Thursday, August 12, 2010
Tiger Airways
Maintain HOLD with target price $1.95
Tiger Airways reported S$1.9m earnings in 1Q11, a turnaround from a S$6m loss in 1Q10 but significantly lower than both consensus and our expectations. Stripping out the forex loss would lead to S$7.6m in profits, but even that number pales in comparison to consensus expectation of S$78m earnings in FY11.
-Revenue in line with consensus expectations. Tiger’s revenue grew 45% yoy in 1Q11, thanks to 18% yoy growth in RPK (revenue passenger kilometre, a measure of sales volume) and 23% yoy growth in yield (price). The latter is impressive, in our view, given stiff competition in Australia where Tiger operates nine of its 19 aircraft. 1Q11 revenue of S$145m amounts to 21% of full-year Bloomberg consensus estimate, which we would describe as ‘in line’, given the April-June quarter is typically the weakest for Tiger (it is winter time in Australia, resulting in less travel).
-Costs are racing up. However, Tiger’s operating cost in 1Q11 was substantially higher than we expected. Cost per ASK (a measure of unit costs) increased 17% yoy to S$ 6.38, compared to S$ 5.74 that we pencil in for FY11. Repair and maintenance costs (up 18% yoy), fuel costs (up 20% yoy) and airport and handling charges (up 53% yoy), all contributed to this higher-than-expected cost performance.
-Maintaining our recommendation and target price. Tiger’s 1Q11 results were weakened further by the AUD weakening in that quarter. Stripping the forex effect would result in 1Q11 earnings of S$7.6m, still just 9.8% of full-year consensus earnings forecast of S$78m. Therefore, we expect Tiger’s stock price to weaken on the back of this news. We retain our S$1.95 target price and Hold recommendation.
-THAI Tiger is not a decisively positive development, in our view. Earlier this week, THAI Airways and Tiger announced the launch of THAI Tiger, a budget airline to be based in Bangkok and slated to start operations in by March 2011. The news received positive reaction from the market, but we believe some critical questions (eg, whether THAI Airways will allow this new venture to profit at the expense of its existing operations) need to be answered before we arrive at a definitive verdict of its impact on Tiger’s valuation.
Source: RBS
Tiger Airways reported S$1.9m earnings in 1Q11, a turnaround from a S$6m loss in 1Q10 but significantly lower than both consensus and our expectations. Stripping out the forex loss would lead to S$7.6m in profits, but even that number pales in comparison to consensus expectation of S$78m earnings in FY11.
-Revenue in line with consensus expectations. Tiger’s revenue grew 45% yoy in 1Q11, thanks to 18% yoy growth in RPK (revenue passenger kilometre, a measure of sales volume) and 23% yoy growth in yield (price). The latter is impressive, in our view, given stiff competition in Australia where Tiger operates nine of its 19 aircraft. 1Q11 revenue of S$145m amounts to 21% of full-year Bloomberg consensus estimate, which we would describe as ‘in line’, given the April-June quarter is typically the weakest for Tiger (it is winter time in Australia, resulting in less travel).
-Costs are racing up. However, Tiger’s operating cost in 1Q11 was substantially higher than we expected. Cost per ASK (a measure of unit costs) increased 17% yoy to S$ 6.38, compared to S$ 5.74 that we pencil in for FY11. Repair and maintenance costs (up 18% yoy), fuel costs (up 20% yoy) and airport and handling charges (up 53% yoy), all contributed to this higher-than-expected cost performance.
-Maintaining our recommendation and target price. Tiger’s 1Q11 results were weakened further by the AUD weakening in that quarter. Stripping the forex effect would result in 1Q11 earnings of S$7.6m, still just 9.8% of full-year consensus earnings forecast of S$78m. Therefore, we expect Tiger’s stock price to weaken on the back of this news. We retain our S$1.95 target price and Hold recommendation.
-THAI Tiger is not a decisively positive development, in our view. Earlier this week, THAI Airways and Tiger announced the launch of THAI Tiger, a budget airline to be based in Bangkok and slated to start operations in by March 2011. The news received positive reaction from the market, but we believe some critical questions (eg, whether THAI Airways will allow this new venture to profit at the expense of its existing operations) need to be answered before we arrive at a definitive verdict of its impact on Tiger’s valuation.
Source: RBS
Comfort Delgro
2Q10 Results preview
We are forecasting revenue for 2Q10 to come in S$800.5m, operating profit of S$72.5m and net
profit of S$46.4m. Operating expenses will likely remain high this year with the higher oil price
and labour costs. CDG will be releasing their 2Q10 results on 13.08.10 after the market closes.
Both bus and rail ridership grew for the first 6 months
Bus ridership continues to grow modestly 4.8% y-y in June and 2.4% y-y for the first half of
2010. However we are likely to see some erosion of bus ridership from the opening of circle line
which opened in July. We are forecasting bus ridership to grow 1% for the whole year to 838
million trips from 830 million trips. Rail ridership continues to impress in June growing 9.8% y-y,
bringing year to date growth to 12.8%. Public transport are seeing better growth numbers this
year mainly due to the sky high prices of COEs and increased connectivity of public transport.
Comfort Delgro : Buy to Hold (Downgrade)
Closing Price : S$1.58
Target Price: S$1.73 (+9%)
Source: Philips Securities
We are forecasting revenue for 2Q10 to come in S$800.5m, operating profit of S$72.5m and net
profit of S$46.4m. Operating expenses will likely remain high this year with the higher oil price
and labour costs. CDG will be releasing their 2Q10 results on 13.08.10 after the market closes.
Both bus and rail ridership grew for the first 6 months
Bus ridership continues to grow modestly 4.8% y-y in June and 2.4% y-y for the first half of
2010. However we are likely to see some erosion of bus ridership from the opening of circle line
which opened in July. We are forecasting bus ridership to grow 1% for the whole year to 838
million trips from 830 million trips. Rail ridership continues to impress in June growing 9.8% y-y,
bringing year to date growth to 12.8%. Public transport are seeing better growth numbers this
year mainly due to the sky high prices of COEs and increased connectivity of public transport.
Comfort Delgro : Buy to Hold (Downgrade)
Closing Price : S$1.58
Target Price: S$1.73 (+9%)
Source: Philips Securities
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