1Q09 core net profit of S$71.4m forms 17% of our full-year forecast as lower property bookings and weaker dairy income due to the melamine scare proved to be drags. We believe results were below consensus as well.
Net gearing at 1Q09 was 0.66x, within the upper bound of its big-cap property peers. Potential write-downs of F&N’s UK and Australia properties could lift this ratio. While we take comfort in guidance that refinancing for over S$1bn of the S$1.7bn worth of maturing debt has been secured, risks of off-balance sheet commitments to re-capitalise FCOT remain, with the latter needing to retire over S$620m of maturing debt in 2009. A short-term loan of S$70m has already been given to the REIT. It remains to be seen if FCOT can successfully monetise its Japanese and Australian assets to pare down debt.
We lower our FY09-11 core EPS estimates by 0-19% to factor in slower inventory turnover and F&B income. We also reduce our end-CY09 RNAV by 13% to S$3.80 to account for: 1) potential capital drains to recapitalise FCOT; 2) lower valuations for its stakes in listed entities; and 3) lower ASPs. We continue to peg our target price at a 30% discount to RNAV to reflect its holding company structure and rising risks of asset write-downs. Accordingly, our target price drops to S$2.66 from S$3.09.
Tuesday, February 17, 2009
Monday, February 16, 2009
Suntec REIT: Target cut to S$0.73 - BUY (DB)
DJ MARKET TALK: DB Cuts Suntec REIT Target To S$0.73; Keeps Buy
0105 GMT [Dow Jones] STOCK CALL: Deutsche Bank cuts Suntec REIT target price to S$0.73 from S$1.00; maintains Buy rating. Broker says new target price reflects "dilution scenario" based on assumption REIT will issue new equity to help refinance debt maturing this year. But thinks refinancing risks already priced in; "we believe that dilution for an equity raising to refinance S$825 million of debt expiring this year is priced in, and a successful refinancing could lift this overhang." Adds weakening retail sales, declining office rents will affect REIT's portfolio, but this is also already reflected in low valuation with REIT offering 15.7% FY09 yield, deep 69% discount to book net asset value. Shares down 0.8% at S$0.605. (KIG)
(END) Dow Jones Newswires
February 16, 2009 20:05 ET (01:05 GMT)
0105 GMT [Dow Jones] STOCK CALL: Deutsche Bank cuts Suntec REIT target price to S$0.73 from S$1.00; maintains Buy rating. Broker says new target price reflects "dilution scenario" based on assumption REIT will issue new equity to help refinance debt maturing this year. But thinks refinancing risks already priced in; "we believe that dilution for an equity raising to refinance S$825 million of debt expiring this year is priced in, and a successful refinancing could lift this overhang." Adds weakening retail sales, declining office rents will affect REIT's portfolio, but this is also already reflected in low valuation with REIT offering 15.7% FY09 yield, deep 69% discount to book net asset value. Shares down 0.8% at S$0.605. (KIG)
(END) Dow Jones Newswires
February 16, 2009 20:05 ET (01:05 GMT)
DBS: 4Q08 results update - Hold (Kim Eng)
Previous Day Closing price: $8.39
Recommendation: Hold (maintained)
Target price: $10.10 (reduced from $10.60)
Yield: 2008 - 9.5%, 2009F - 4.2%
DBS posted a bottom line of $295m (-22% q-o-q; -40% y-o-y) including one-time charges from staff restructuring and impairment costs. Excluding one-time items, net profit was $383m in 4Q08, slightly below our expectations of $391m. The variance was mainly due to weaker than expected fee-based income. The board proposed a fourth-quarter dividend of 14 cents per share over the enlarged share base.
We have reduced our FY09 and FY10 earnings estimates by 15-20% to reflect higher provisions. Our target price is lowered to $10.10 based on FY09 BVPS (book value per share). The weak economic outlook and earnings uncertainties ahead will likely continue to depress share price. Maintain Hold.
Recommendation: Hold (maintained)
Target price: $10.10 (reduced from $10.60)
Yield: 2008 - 9.5%, 2009F - 4.2%
DBS posted a bottom line of $295m (-22% q-o-q; -40% y-o-y) including one-time charges from staff restructuring and impairment costs. Excluding one-time items, net profit was $383m in 4Q08, slightly below our expectations of $391m. The variance was mainly due to weaker than expected fee-based income. The board proposed a fourth-quarter dividend of 14 cents per share over the enlarged share base.
We have reduced our FY09 and FY10 earnings estimates by 15-20% to reflect higher provisions. Our target price is lowered to $10.10 based on FY09 BVPS (book value per share). The weak economic outlook and earnings uncertainties ahead will likely continue to depress share price. Maintain Hold.
Fraser & Neave 1Q09 Results - BUY (Kim Eng)
Previous day closing price: $2.90
Recommendation: Buy (maintained)
Target price: $3.36 (reduced from $3.95)
Yield: 2008 - 4.3%, 2009F - 3.5%
1Q09 profit plunged 50% yoy to $52m, mainly due to fair value revaluations of its property business. Negative revaluation of overseas projects carved out almost $39m in profit, although this was offset by $37m in revaluation and exceptional gains. Operationally, earnings fell only 6% yoy to $86m. The F&B business, except Dairy, stayed resilient, with exceptional growth from Breweries.
F&B PBIT rose 9% yoy to 50% of group profits, led by soft drinks (+19%) and breweries (+13%). Margins improved on higher volumes, price increases and in certain countries such as Papua New Guinea and China, currency appreciation as well. However, dairies were hit by lower export sales and lower domestic sales in Thailand, due to the melamine scare and weaker economic conditions.
We have cut FY09 forecast by 26% and RNAV to $3.36. However, we reckon F&N’s pursuit of a business mix rebalancing to even out property volatility could yield some catalysts. Further, we reckon at the current share price, further fair value revaluations have been accounted for. Maintain BUY.
Recommendation: Buy (maintained)
Target price: $3.36 (reduced from $3.95)
Yield: 2008 - 4.3%, 2009F - 3.5%
1Q09 profit plunged 50% yoy to $52m, mainly due to fair value revaluations of its property business. Negative revaluation of overseas projects carved out almost $39m in profit, although this was offset by $37m in revaluation and exceptional gains. Operationally, earnings fell only 6% yoy to $86m. The F&B business, except Dairy, stayed resilient, with exceptional growth from Breweries.
F&B PBIT rose 9% yoy to 50% of group profits, led by soft drinks (+19%) and breweries (+13%). Margins improved on higher volumes, price increases and in certain countries such as Papua New Guinea and China, currency appreciation as well. However, dairies were hit by lower export sales and lower domestic sales in Thailand, due to the melamine scare and weaker economic conditions.
We have cut FY09 forecast by 26% and RNAV to $3.36. However, we reckon F&N’s pursuit of a business mix rebalancing to even out property volatility could yield some catalysts. Further, we reckon at the current share price, further fair value revaluations have been accounted for. Maintain BUY.
Friday, February 13, 2009
ComfortDelgro: Positioning for the long term - BUY (DBS)
4Q/FY08 net profit were within expectations. But, a lower dividend payout at 52% versus past 4 years was a surprise. It seems like management is conserving cash for acquisitions, which should be beneficial over the long term, given its track record. Maintain Buy, TP: S$1.57.
The Group declared a final dividend of 2.4cents, equating to a 52% payout, which was below our expectations of 70% and the range in the last 4 years (75% - 85%). We think management is conserving cash for overseas acquisition opportunities, particularly in Australia and China.
The recent Budget measures will yield S$35m for the Group and will be passed on as rebates and the widely anticipated fare reductions later this year. We do not expect the fare reduction to have a significant impact on the Group’s bottomline.
Whilst the market may be disappointed by a lower dividend payout versus its historical average, we think this may be beneficial for the Group in the long-term if they are able to deliver on accretive acquisitions to reinforce its overseas growth. We maintain our Buy recommendation with a TP: S$1.57 based on 15x FY09F earnings.
The Group declared a final dividend of 2.4cents, equating to a 52% payout, which was below our expectations of 70% and the range in the last 4 years (75% - 85%). We think management is conserving cash for overseas acquisition opportunities, particularly in Australia and China.
The recent Budget measures will yield S$35m for the Group and will be passed on as rebates and the widely anticipated fare reductions later this year. We do not expect the fare reduction to have a significant impact on the Group’s bottomline.
Whilst the market may be disappointed by a lower dividend payout versus its historical average, we think this may be beneficial for the Group in the long-term if they are able to deliver on accretive acquisitions to reinforce its overseas growth. We maintain our Buy recommendation with a TP: S$1.57 based on 15x FY09F earnings.
COMFORTDELGRO - BUY (DMG)
BUY: Maintain
Price: S$1.32
Target: S$1.78
Yield: 2007 - 7.7%, 2008 - 3.8%
ComfortDelgro reported 2008 net profit of S$200.1m, down 10.3% YoY. This is in line with our S$198.3m expectation and consensus’ S$195m.
WTI price was fallen from 2008 average of US$100/bbl to the current US$36/bbl. Although ComfortDelgro has hedged 43% of its 2009 diesel requirements (at higher-than-current WTI prices), there will be cost savings from the balance 57% that is unhedged. We are assuming effective 2009 WTI price of US$63/bbl for ComfortDelgro, which will lower its 2009 energy costs by 30% from 2008 levels. We expect 2010 earnings to rise further on our assumption of 2010 WTI price of US$45/bbl.
ComfortDelgro declared a final dividend of 2.4S¢/share, giving a FY08 payout ratio of 52%. This is sharply lower than FY07’s 85% (which includes special dividend). The market is likely to be disappointed with this. Looking ahead, management said that they will payout more than 50% of its earnings.
Price: S$1.32
Target: S$1.78
Yield: 2007 - 7.7%, 2008 - 3.8%
ComfortDelgro reported 2008 net profit of S$200.1m, down 10.3% YoY. This is in line with our S$198.3m expectation and consensus’ S$195m.
WTI price was fallen from 2008 average of US$100/bbl to the current US$36/bbl. Although ComfortDelgro has hedged 43% of its 2009 diesel requirements (at higher-than-current WTI prices), there will be cost savings from the balance 57% that is unhedged. We are assuming effective 2009 WTI price of US$63/bbl for ComfortDelgro, which will lower its 2009 energy costs by 30% from 2008 levels. We expect 2010 earnings to rise further on our assumption of 2010 WTI price of US$45/bbl.
ComfortDelgro declared a final dividend of 2.4S¢/share, giving a FY08 payout ratio of 52%. This is sharply lower than FY07’s 85% (which includes special dividend). The market is likely to be disappointed with this. Looking ahead, management said that they will payout more than 50% of its earnings.
Comfortdelgro - OUTPERFORM (CIMB)
Previous day closing price: $1.32
Recommendation: OUTPERFORM (maintained)
Target price: $1.84 (reduced from $1.97)
4Q08 net profit of S$44.8m (-6.3% yoy) was marginally above our estimate but ahead of consensus. FY08 net profit of S$200m was 2.3% and 6.4% higher than our forecast and consensus respectively. This was mainly due to lower-than-expected operating expenses in 4Q08. FY08 pretax margins slipped to 9.7% from 11.2% in FY07, but were steady yoy at 9.6% in 4Q08. Revenue fell 1.7% yoy to S$760m, led by forex translation of A$ and ₤. Overseas operations contributed 43% of revenue in FY08. A final tax-exempt dividend of S$0.024 was declared.
Bus revenue dipped 0.3% yoy to S$1,533m in FY08, due to the translation impact of a weak A$ and ₤ against S$. However, strong growth came from rail (+22.1% yoy), diesel sales (+31.9% yoy), automotive engineering (+40.3%) and vehicle inspection (+16.5%). Excluding the negative forex translation impact of S$140m, revenue would have risen S$244m (+8.2% yoy). A positive translation of S$133m from operating expenses mitigated this. The net forex translation impact for the group was a manageable loss of S$7.1m.
We adjust our FY09-10 forecasts by +4.2% to -5.5% to reflect retreating energy prices, higher ridership and forex translation. We also introduce FY11 forecasts. Due to our earnings changes, our DCF-derived target price falls to S$1.84 from S$1.97 on an unchanged WACC of 11%. Management guided for a minimum 50% dividend payout and no special dividends for FY09, translating to a prospective CY09 dividend yield of 4.4%. Maintain Outperform on the back of its defensive earnings.
Recommendation: OUTPERFORM (maintained)
Target price: $1.84 (reduced from $1.97)
4Q08 net profit of S$44.8m (-6.3% yoy) was marginally above our estimate but ahead of consensus. FY08 net profit of S$200m was 2.3% and 6.4% higher than our forecast and consensus respectively. This was mainly due to lower-than-expected operating expenses in 4Q08. FY08 pretax margins slipped to 9.7% from 11.2% in FY07, but were steady yoy at 9.6% in 4Q08. Revenue fell 1.7% yoy to S$760m, led by forex translation of A$ and ₤. Overseas operations contributed 43% of revenue in FY08. A final tax-exempt dividend of S$0.024 was declared.
Bus revenue dipped 0.3% yoy to S$1,533m in FY08, due to the translation impact of a weak A$ and ₤ against S$. However, strong growth came from rail (+22.1% yoy), diesel sales (+31.9% yoy), automotive engineering (+40.3%) and vehicle inspection (+16.5%). Excluding the negative forex translation impact of S$140m, revenue would have risen S$244m (+8.2% yoy). A positive translation of S$133m from operating expenses mitigated this. The net forex translation impact for the group was a manageable loss of S$7.1m.
We adjust our FY09-10 forecasts by +4.2% to -5.5% to reflect retreating energy prices, higher ridership and forex translation. We also introduce FY11 forecasts. Due to our earnings changes, our DCF-derived target price falls to S$1.84 from S$1.97 on an unchanged WACC of 11%. Management guided for a minimum 50% dividend payout and no special dividends for FY09, translating to a prospective CY09 dividend yield of 4.4%. Maintain Outperform on the back of its defensive earnings.
Subscribe to:
Posts (Atom)