From OCBC:
Telco Sector: Minimal impact on SingTel
SingTel
will have to offer its BPL content to rival StarHub customers after the
Ministry for Communications and Information (MCI) rejected its appeal
for a stay of the Media Development Authority (MDA) ruling for the
cross-carriage of the closely followed football content. However, the
subscription comes with a price – new subscribers will have to fork out
S$59.90 (before GST) for the stand-alone package, while existing mioTV
subscribers can continue with the existing pricing of S$34.90 (before
GST). While we may see some migration of subscribers from mioTV to
StarHub’s cable TV platform, we do not expect a huge number. We maintain
our NEUTRALrating on the sector. While we also maintain our HOLD rating on SingTel, we downgrade StarHub to SELL.
StarHub Ltd: Downgrade to SELL; BPL likely non-event
StarHub
Ltd will be able to cross carry the widely-followed BPL (Barclays
Premier League) live matches for the upcoming 2013 to 2016 seasons.
However, with a seemingly steep price point of S$59.90/month (before
GST) for new subscribers (while existing mioTV subscribers continue to
pay the current S$34.90 (before GST)), we suspect that any migration of
subscribers from mioTV to StarHub’s cable TV platform would be quite
muted. In light of the likely muted boost from the BPL cross carriage
and recent strong run-up in share price (9.5% after our upgrade on 3
Jun), we feel that the stock may have run ahead of its fundamentals. As
we are also keeping our DCF-based fair value unchanged at S$3.82
(already accounted for a higher risk-free rate), we foresee more
downside risk from here. Hence, we downgrade our call back from Hold to SELL.
First REIT: Contribution from new assets
First
REIT’s (FREIT) 2Q13 results were within our expectations. Revenue and
DPU (after stripping out a special distribution in 2Q12) rose 43.4% and
16.4% YoY to S$20.1m and 1.85 S cents, respectively. Only 0.86 S cents
will be paid to unitholders (on 29 Aug 2013) as FREIT had already made
an advance distribution of 0.99 S cents on 26 Jun 2013 (prior to the
issuance of new units for part payment of its acquisitions). FREIT is in
the process of refinancing ~S$92m of its floating-rate debt to a 4-year
fixed-rate unsecured bank loan. Upon completion, its floating rate
exposure will be reduced from 72% to 46% of its total borrowings, which
we view as a positive development. We retain our forecasts, HOLD rating and DDM-derived fair value estimate of S$1.20 on FREIT.
Yoma Strategic Holdings: First take on Yoma 1QFY14 results
Yoma
Strategic Holdings (Yoma) reported 1QFY14 PATMI of S$0.4m, which
decreased 80.6% YoY mostly due to higher staff costs as the group
continues to build up a strong management team in anticipation of future
activity. We judge 1QFY14 PATMI to be below view – forming only 3.7% of
our full year forecast – but expect the pace of recognition at
development projects to be back-loaded in the year. 1QFY14 topline came
in at S$15.2m, up 11.6% YoY due to higher contributions from recognition
of residential sales. We highlight the slower pace of sales in Star
City over 1QFY14, as the sales status for Buildings 3 and 4 only crept
up by 22 units (from 491 units sold as at end Mar-13 to 513 units sold
as at end Jun-13). However, we note the group also reported a potential
conditional agreement with a third party investor for the sale of LDRs
for five buildings (1043 units) in zone B of Star City, which could be a
significant catalyst for Star City sales ahead. We would speak with
management about this set of results and the outlook ahead and, in the
meantime, maintain HOLD with our fair value estimate of S$0.87 under review.
M1: Joins Pay TV fray
M1
Ltd has announced its own Internet TV service – MiBox, which offers
video-on-demand entertainment and educational titles, games, e-books and
apps. Priced at just S$8/month with a 2-year contract for M1 fibre
customers (S$12/month for non-M1 subscribers), customers will have
access to MiBox’s library of 18k video-on-demand titles, 116 TV
channels, 1.2k e-books and 370 apps. In addition, there is also an
extensive selection of chargeable premium video-on-demand, e-learning
titles and apps. According to M1, the service offers a new TV experience
for everyone, from students to working adults to homemakers to
retirees. However, given M1’s small fibre customer base and its
relatively new presence in a pretty saturated Pay TV market, we do not
expect to see any major impact on earnings. Maintain HOLD with an unchanged fair value of S$3.10.
From Maybank KE:
Offshore & Marine: KL Marketing - Key Takeaways; Overweight
The robust oil and gas activities in Malaysia, led by Petronas
spending, piqued interest in Singapore offshore players during our
recent marketing trip to KL. We remain positive on the sector as we see
structural fundamentals sustaining a high level of spending over the
next few years. Key Buys are Keppel, SMM and Ezion.
There was a fair amount of concern on the impact of Chinese and
Korean competition on Singapore rigbuilders’ margins. Execution risk in
Brazil was also a key discussion point. While we acknowledge these
risks, we argue that these concerns may be overblown.
There was still strong interest in Ezion and the key question was if
there is further upside given the strong run up in share price. In our
view, forward valuations of 7.5x FY14F PER still look attractive,
backed by strong earnings visibility from its liftboat contracts to
support a 40% CAGR in EPS over FY13-15F.
From UOB KH:
Singapore Airlines (SIA SP)
From DBS:
United Envirotech has signed an agreement to fully acquire
Memstar’s membrane operation for S$293.4m or
S$0.11/share. Of this, S$73m will be settled in cash and the
remaining S$220m by the issue of 200m new shares priced at
S$1.10 a share (~19x FY14 PE). Apart from ensuring
membrane supply, this acquisition enables UENV to be
vertically integrated and to ride on growth potential of
Memstar’s membrane operations. Although this acquisition
could boost FY14/FY15F net profit by 1% and 6%
respectively, new share issues would dilute FY14/FY15 EPS by
18%/14% respectively. We are maintaining our earnings
forecast for UENV pending completion of this acquisition. No
change to HOLD call and TP for now.
2Q13 results for OKP Holdings below; gross margin collapsed
16ppts on higher subcontracting costs and low margin work.
We expect gross margins to remain depressed for at least
another quarter. Project rollout by the government has been
slow in 1H13. Visibility for project wins weak; going forward,
we expect project wins to come from the low value, low
margin maintenance segment. Maintain Fully Valued call.
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