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Headliners | 05 February 2010
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By: David Lee
Articles (57) Profile

SIA Rebounds With Strong Rise In 3Q Net Profit
Singapore Airlines (SIA) has confounded critics and sceptics by posting a strong 3Q10 net profit of $403.7m, up 20% on-year. The Oct-Dec quarter saw though, revenue fall 19% to $3.4b. The bottomline boost was a result of lower expenditure, a lower fuel hedging loss and payroll savings. More significantly, the net profit will help to offset almost 87% of the $466m of cumulative losses chalked up in 1H10, leaving the company with just a net loss position of $62m.

The company’s long-suffering cargo unit posted its best quarterly results in 2 years with a 3Q10 profit of $40m that shaved its loss for the 9 months to $153m. Silkair, SIA’s smaller airline unit, also did well, almost doubling its operating profit on-year to $23m. On aggregate, both SIA’s passenger and cargo yields rose significantly in the quarter, while unit costs were down. Looking ahead, SIA expects the recovery in passenger and cargo demand to continue, as the airline industry recovers from its worst-ever downturn.

CIMB-GK Less Sanguine On Tourism Plays
Stockbroking firm CIMB-GK said in its latest strategy report that tourism-linked stocks such as CDL Hospitality Trusts, SIA, SATS and Genting are looking expensive and some may not benefit from the influx of tourists visiting the new casinos. The report cited peak earnings expectations and wide ownership spread of the stocks as main reasons for its grouse.

‘Tourist arrivals could easily grow 30% from the 9m in 2009 but a good portion of the gaming crowd could come in budget airlines and stay in budget hotels,’ says company analyst Kenneth Ng. ‘They may not all contribute to SIA and SATS.’ Instead, he advises investors to look to property counters such as Keppel Land, and takes a contrarian view that fears over softening office rents are overblown. He referred to the latter’s Marina Bay Financial Centre, which is enjoying a boost in occupancy rate due to tenants shifting from older office properties, as one of the main bullish drivers.

Asian Stocks Rally Over: Elliott Wave International
According to Elliott Wave International (EWI), Asian stocks may decline for months after forming a ‘top’ that signals the end of a 10-month rally. Benchmark indexes across the region have completed either 3- or 5-wave patterns showing that their gains are over, the researcher said in its February Asian-Pacific Financial Forecast report. The rally’s duration and divergence in both momentum and sentiment also signal a downturn, it said. The MSCI Asia-Pacific Index has lost 7.9% since Jan 15, when it peaked 80% above last year’s March 9 low. The advance, spurred by signs of a recovery in the global economy and corporate earnings, coincided with a March prediction by EWI that a ‘massive rally could ensue in the near future’. ‘With the MSCI Asia-Pacific Index having just broken below an important uptrend line, we have reached March 2009’s polar opposite juncture: the end of the rally,’ EWI said. ‘It’s time to turn bearish.’

CWT To Sell And Leaseback 2 Properties Worth $445m
Logistics group CWT has proposed the sale and leaseback of 2 of its logistics facilities in a deal worth $445m. The company will sell to Cache Logistics Trust for the purpose of the latter’s eventual public listing as Asia’s 1st logistics-focused REIT. The REIT’s manager will be ARA-CWT Trusty Management, of which CWT will hold a 40% stake.

CWT will book a one-off gain of $157.7m from the $445m deal, of which $65m will be settled in the form of Cache units while the rest will be paid in cash. CWT will use the sale proceeds to expand its logistics business and to settle its outstanding borrowings early, which it says will result in a significant boost to the company’s financial muscle and competitiveness in the region.

Singapore Airlines  -- -- --   
Business: Co provides air transportation services to destinations spanning a network spread over 6 continents. [FY19 Turnover] SIA (80%), Budget Aviation (10.5%), SilkAir (6.2%), SIAEC (3.1%), others (0.2%).

Insight: May-19, FY19 revenue edged up 3.3% to $16.3b. Pass... Read More
Genting Singapore  -- -- --   
Business: Develops, operates & mkts casinos & IRs globally, including Australia, M'sia, Philippines & UK. [FY18 Turnover] Gaming (66.1%), non-gaming (33.8%), others & invs (0.1%).

Insight: May-19, 1Q19, despite Co's non-gaming business reg... Read More
CDL Hospitality Trusts  -- -- --   
Business: A stapled group comprising CDL Hospitality REIT and CDL Hospitality Business Trust.

Insight: Apr-19, 1Q19 gross revenue and NPI dropped 10.6% a... Read More
SATS  -- -- --   
Business: Asia's leading provider of gateway services and food solutions. [FY19 Turnover] Food solutions (54.1%), gateway svcs (45.8%), others (0.1%).

Insight: May-19, FY19 revenue rose 6% to $1.8b driven by hi... Read More

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