KEY IDEA
Neptune Orient Lines - Looking at the positives
Summary: Neptune Orient Lines's (NOL) 1Q13 results disappointed with a larger-than-expected core operating loss. Nonetheless, the figures marked a vast improvement over the same period a year ago. Revenue stayed relatively flat at US$2.37b (-0.3% YoY) and core operating losses narrowed to -US$85.2m from -US$233m a year ago following the success of the cost cutting initiatives implemented last year. Entering 2Q13, NOL could experience further downward pressure on freight rates although we remain hopeful that a combination of positive macro-data, collective industry action and lower bunker fuel costs will push NOL towards a more positive showing by 3Q13. We maintain our view for a modest recovery in FY13 for the liner and keep our BUYrating with an unchanged fair value estimate of S$1.38. (Lim Siyi)
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SingTel: FY13 results just about in line Summary: SingTel posted its 4QFY13 results this morning, with revenue slipping 6% YoY and 3% QoQ to S$4.48b, weighed down by the weaker A$. Full-year revenue fell 3% to S$18.18b, and was 3% shy of our forecast. Reported net profit for 4Q came in at S$868.2m, down 33% YoY but up 5% QoQ; core earnings slipped 2% YoY and rose 15% QoQ to S$1.0b. Core FY13 earnings eased 1.8% to S$3.61b, and was about 4% below our forecast. SingTel has declared a final dividend of S$0.10/share, bringing the full-year payout to S$0.168 (74% of underlying net profit). For FY14, SingTel expects to consolidated revenue to remain stable, while EBITDA should continue to see low single-digit growth. It also expects to spend some S$2.5b in capex, with free cashflow coming in at around S$2b. Last but not least, it has revised up its dividend payout ratio from 55-70% to 60-75%. We will have more after the analyst teleconference later. Meanwhile, we place our Buy rating and S$3.68 fair value under review. (Carey Wong) Olam Int'l: Decent 3QFY13 results
Summary: Olam International Limited (Olam) saw 3QFY13 revenue climb 12% YoY (but down 4% QoQ) to S$4.72b, such that its 9MFY13 revenue of S$14.31b (+20%) met 72% of our FY13 forecast. Reported net profit gained 10% YoY (but fell 30% QoQ) to S$108.5m, while core earnings (excluding bio-asset revaluation gains etc) rose 13% YoY (down 22% QoQ) to S$92.8m. Core 9MFY13 earnings of S$240.3m met about 79% of full-year forecast. We will have more after the analyst briefing later. Until then, our Hold rating and S$1.50 fair value is under review. (Carey Wong)
Noble Group Ltd: Weak FY13 start but recovery expected
Summary: Noble Group (Noble) reported a 1.1% YoY QoQ decline in revenue to US$22.6b, meeting 22.5% of our full-year forecast, but reported net profit tumbled 62.5% to US$41.3m, or about only 10.2% of our original FY13 forecast, weighed by losses at its Agriculture segment. Its Metals, Minerals and Ores (MMO) also did not fare too well. The only bright spark came from its Energy segment, with operating income up 6% at US$368.0m, although tonnage (Excluding gas and power volume) was flat. Noble intends to continue with its asset light strategy and also intends to focus on improving its efficiency and lowering cost amid a still-challenging environment. Still, we are cutting our FY13F earnings by 10% (FY14F by 13%), which in turn eases our fair value from S$1.19 to S$1.09. Maintain HOLD. (Carey Wong)
ComfortDelGro - Decent start to the year
Summary: ComfortDelGro's 1Q13 results saw revenue increasing slightly by 1.8% YoY to S$870.8m on the back of broad-based growth across its segments while operating profit improved 2.8% to S$95.9m as higher staff and repairs and maintenance expenses were offset by a reduction in fuel and electricity expenditure. As a result, PATMI rose 7.9% to S$57.7m. In the coming quarters, we expect a fare increase to be implemented by the government in FY13, and the group should to continue benefiting from lower fuel costs due to the favourable fuel outlook and proactive hedges in place, which should offset sustained weakness in the SG bus business. While we continue to prefer ComfortDelgro over SMRT, we maintain our HOLD rating with an unchanged fair value estimate of S$1.95 in light of its recent ~8% appreciation. (Lim Siyi)
Midas Holdings: 1Q13 net loss wider than expected
Summary: In line with its profit guidance issued on 10 May, Midas Holdings reported a net loss attributable to shareholders of CNY4.9m in 1Q13, versus PATMI of CNY15.3m in 1Q12. Revenue fell 12.1% YoY to CNY202.4m. While we had expected Midas to report a loss-making quarter, the magnitude was larger than our forecast for a net loss of CNY3.2m. However, revenue was within our CNY199.8m estimate. The below-expectations bottomline performance was due partially to weaker-than-estimated gross margin and largely attributed to a wider share of loss of CNY4.0m from its associated company, Nanjing SR Puzhen Rail Transport (OIR forecast: share of loss of CNY0.8m). On an operational basis, Midas was actually profitable, although profit from operations dipped 50.4% YoY to CNY18.9m. We will provide more updates after the analyst conference call. For now we have a BUY rating on Midas. However, our forecasts, 1.2x P/B target peg and S$0.595 fair value estimate are likely to be lowered given the ongoing uncertainty over the timeline of resumption of new high-speed train car orders. (Wong Teck Ching Andy)
SATS Ltd - FY13 results in-line
Summary: SATS's FY13 results were in line with our expectations, coming in within 2% of our projections. Revenue grew 7.9% YoY to S$1,819m on the back of increases from the gateway and food businesses while operating profit increased correspondingly by 13.8% YoY to S$192.3m. Despite cost pressures related to higher staff expenses and raw material costs, SATS was able to register an improvement of 0.6ppt in operating margin to 10.6% from a year ago. FY13 PATMI was S$184.8m (+2.1% YoY). Management declared a final and special cash dividend of 6 S cents and 4 S cents, respectively, to bring the total dividends declared in FY13 to 15 S cents (FY12 total: 26 S cents), representing a payout ratio of 90.3% of PATMI. As SATS's share price has continued to appreciate in the previous weeks, we feel that many of the positives have already been priced in. Nonetheless, pending the analyst briefing later this morning, we place our HOLD rating and fair value under review. (Lim Siyi)
SIA Engineering: FY13 within expectations
Summary: SIA Engineering Company's (SIAEC) FY13 results were in line with ours and the street's expectations. Revenue decreased by 2.0% to S$1.15b, chiefly due to lower fleet management and project revenue. Operating profit fell 1.2% to S$128m. Share of profits from associated and JV companies increased by 1.5% to S$159m, representing a contribution of 52.0% of the group's pre-tax profits. PATMI was up 0.4% to S$270m. Basic EPS of 24.51 S cents formed 98% of ours and the street's FY13 estimates. The board is recommending a final ordinary dividend of 15.0 S cents, which will bring total FY13 dividends to 22.0 S cents per share. Pending a briefing with management, we are maintaining our HOLD rating but place our fair value estimate of S$4.38 under review. (Sarah Ong)
Swiber Holdings: Good 1Q13 results
Summary: Swiber Holdings (Swiber) reported a 59.3% YoY rise in revenue to US$309.7m and a significant rise in net profit from US$8.6m in 1Q12 to US$20.1m in 1Q13. Both revenue and pre-tax profit formed 27% of our full-year estimates, in line with our expectations, but the lower-than-expected tax rate meant that net profit accounted for 38% of our full-year forecast. Gross profit margin was lower at 16.1% in 1Q13 vs 19.8% in 1Q12. Swiber's order book stands at about US$1.1b as at May. Net gearing increased slightly from 0.95x in 4Q12 to 1.0x in 1Q13. Pending an analysts' briefing later in the afternoon, we put our hold rating and fair value estimate of S$0.70 under review. (Low Pei Han)
CSE Global: 1Q13 net profit within expectations
Summary: CSE Global's 1Q13 net profit was flat at S$12.7m, forming about 24% of our full-year estimates and 23% of the street's. Revenue declined 11% to S$120m due to lower contribution from the Americas and the EMEA region. However, net margin improved to 10.5% (1Q12: 9.4%) as it undertook higher margin work in the Americas and the loss-making projects are nearing completion. CSE's order-book declined to S$361.1m as at end-1Q13 (end-4Q12: 384.5m). Pending an analyst briefing later, we keep our BUYrating (FV: S$0.99) unchanged. (Chia Jiunyang)
CWT Ltd: Commodity SCM expansion underway
Summary: CWT's 1Q13 revenue increased by 39% YoY to S$1.5b, largely due to growth from its newly established Commodity SCM business. However, net profit was flat at S$27m as the start-up costs offset any incremental earnings for the new business segment. Nonetheless, the results were within our expectations. CWT's balance sheet also appeared to be stable with net gearing of 0.48x as at end-Mar 2013. We currently have a BUYrating on CWT with a FV estimate of S$2.08, and will provide further updates after our call with management. (Chia Jiunyang)
Dyna-Mac Holdings: Stay cautious
Summary: Dyna-Mac Holdings reported revenue of S$60m (+155% YoY) and net profit of S$6.7m (+101% YoY) for 1Q13. However, gross profit margin declined to 24.4% from 28.8% in the year-ago period due to fewer variation orders during the quarter. Its order-book fell to S$113m (as at 14 May 2013) from S$134m (as at 27 Feb 2013), providing cover for only two quarters. This makes it vulnerable to any delays in the award of new contracts. We keep our HOLD rating for now and will review our S$0.50 fair value after our discussions with management. (Chia Jiunyang)
UE E&C: Construction pace expected to pick up
Summary: UE E&C reported a 43% YoY increase in revenue to S$87.6m and a 14% YoY increase in net profit of S$4.8m in 1Q13. The improvements were mainly due to larger contribution from existing projects. However, 1Q gross profit margin fell to 10.8% from 15.4% in the year-ago quarter as some of the projects were still in preparatory stages. We expect the construction pace to pick up in 2H13. Pending our discussions with management, we keep our BUY rating and S$0.82 fair value unchanged. (Chia Jiunyang)
VARD Holdings: Earnings recovery in FY14
Summary: VARD Holdings' 1Q revenue and net profit declined by 2% and 30% YoY to NOK2.7b and NOK188m respectively, largely due to (i) the completion of several high-margin jobs last year, and (ii) operational challenges in the Niteroi yard in Brazil. Although 1Q results were slightly lower than ours and consensus estimates, we now see positive developments that we believe would herald an earnings recovery in FY14F. Firstly, management is now more positive on Brazil and expects operations to stabilize by year-end. Secondly, order-book is at a very healthy level and management is optimistic on securing new contracts. Thirdly, management is now able to commit to longer-term investment with Fincantieri coming onboard as a controlling shareholder. Maintain BUY with unchanged S$1.52 fair value estimate. (Chia Jiunyang) |
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