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Singapore Airlines (SIA SP) 4QFY18: Earnings Trounce Estimates: Core Net Profit Recovers From S$6m Loss In 4QFY17 SIA reported vastly better earnings as it recognised profits from Krisflyer programme breakage and slot compensation. Still, even excluding these, core net profit more than doubled our forecast as pax yield was 2 S cents higher than our estimate. Forward bookings were also exceptionally strong, rising 48% yoy, suggesting yields have improved. Key unknown is the quantum of fuel hedges. We will provide more information pending an analyst meeting. For now, maintain BUY. Target price: S$11.90. |
Singtel: Keep calm and collect dividends
Singtel’s FY18 operating revenue grew 4.9% to S$17.5b, largely driven by the Australia Consumer (+3.9%) and Group Digital Life (+100.4%) segments. On weaker EBITDA margin at the Enterprise segment due to higher ICT sales mix, FY18 EBITDA grew by a lower 1.8% to S$5.09b. However, share of associates’ pre-tax profits fell 14.7% to S$2.46b, on adverse currency movements and heightened competition in India and Indonesia. Consequently, FY18 core NPAT (excluding divestment gain) fell 8.4% to S$3.54b. Looking ahead to FY19, Singtel guided for consolidated revenue to grow by low single digit and EBITDA to be stable. However, guidance for free cash flow remains healthy at ~S$1.9b. Singtel also guided for dividends to be maintained at 17.5 S-cents for FY19 and FY20. As we factor in Singtel’s guidance and for further dilution of Enterprise blended margin as ICT sales mix grows, we lower our FV to S$4.10 (prev: S$4.15). We remain positive on Singtel’s longer-term outlook for its growing exposure in digital-related businesses, and entrenched position in the regional mobile markets. Reiterate BUY, supported by FY19F dividend yield of 5.1%. |
| PHILLIP | CIMB |
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Golden Energy and Resources Ltd Strong production on track SINGAPORE | MINING | 1Q18 RESULTS
Revenue and net profit exceeded expectations due to higher than expected sales volume and an average selling price (ASP) Benefited from the buoyant coal prices in 1Q18 Upgrading the port loading capacity Cash cost was higher than expected in 1Q18 We maintained our FY18e EPS at 3.5 US cents as we expect the higher capex to offset higher profits. Based on unchanged peer average forward PER of 10x and the FX rate (USD/SGD) of 1.36x, we keep the target price at S$0.48 and reiterate our BUY recommendation.
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CapitaLand Commercial Trust Diversifying into Germany ■ Strategic maiden foray into Germany. ■ Provides access to the robust Frankfurt office market, accounting for c.5% of AUM and NPI. ■ Post-acquisition, leverage ratio up slightly to 39%. ■ Purchase is accretive to DPU. ■ Upgrade to Add with a slightly higher TP of S$1.94 |
| KGI | DBS |
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Results Update Event
Cityneon reported 1Q18 net profit of S$4.0mn (+80.4% YoY), in line our expectations. This was mainly driven by the IP business segment, which accounted for about 80% of the bottom line. Traditional business segments remained flat, in line with our expectations as well. The Group has also strengthened its IP business segment with the acquisition of its 4th IP: The Hunger Games: The Exhibition (THG Exhibition). Impact 1Q18 earnings in line with expectations.1Q18 earnings came as no surprise. The IP business segment, which typically commands higher margins as compared to the traditional business segments, now makes up 62% and about 80% of revenue and net profits, respectively. This led to improved overall gross and net margins of 69.8% and 16.8%, respectively, on the back of a positive shift in sales mix. Going by this trend, we expect the IP business segment to be the key driver of growth for the group as new IPs are announced. 4th IP – THG Exhibition. Cityneon has acquired its 4th IP, which will last for seven years, granting the Group the rights to the THG Exhibition and the creation and sale of the Hunger Games branded merchandise. The agreement allows Cityneon to exploit other IPs of Lionsgate such as, Twilight and Now You See Me etc, widening the range of movie franchises it can leverage on. 2nd Jurassic World exhibition set. Cityneon has also entered into an agreement with Universal to build a second Jurassic World exhibition set. This comes after successful tours in Australia and the US. The set will take about 9 months to build and should be completed by 2Q19 at the latest, enlarging Jurassic World’s revenue stream. Universal Pictures has announced its plans to produce another instalment of the Jurassic World franchise in 2021 and would complement the Jurassic World exhibitions. Valuation & Action Maintained BUY with no change to our P/E based target price of S$1.54 (FY2018F EPS: S$0.11; FY2018F P/E: 14.0x).Our investment thesis remains intact, with Cityneon’s attractive growth prospects and low risk business model being the basis of our recommendation. Risks Renewal of the various IP rights and a decline in the franchise popularity.
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Mermaid Maritime No reason to get excited Maintain HOLD on absence of near-term catalysts.
Although we did expect a weak quarter on drydocking of two key vessels, net losses in 1Q18 were larger than expected, as other working vessels also saw softer workloads. 2Q18 should continue to present some weakness as the Asiana vessel is still in drydock through most of May. Meanwhile, though the orderbook is up q-o-q, we note that 2Q/3Q tend to be slow quarters in terms of order wins. On the plus side, Mermaid has a healthy balance sheet and thus does not warrant to trade at distressed valuations as seen in other O&M stocks. Overall, we think Mermaid’s risk-reward trade-off is neutral at this point: the lacklustre near-term outlook and lack of near-term catalysts are offset by undemanding valuation (~0.45x P/BV) and lack of balance sheet stress. Thus, we maintain our HOLD call on the stock, but adjusting for higher-than-expected losses and lower book value, as well as movements in the SGD/USD, our TP is lowered to S$0.13 (from S$0.14 previously).
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