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Investors’ Corner
Investors' Corner | 22 October 2010
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By: Cassandra Sim
Articles (14) Profile

Price – $2.06
Target – $2.16

SMRT Corporation is due to release its 2Q11 results and we are expecting revenue of $244.7m, representing a 6.6% y-o-y growth. We believe the topline will be driven by higher rental revenue, continued growth in ridership and record tourist arrivals. Strong numbers in bus ridership, together with the robust tourism performance should provide support to our revenue projection. However, its earnings is expected to show y-o-y decline in growth in 2Q11, consistent with management guidance in 1Q11 for higher operating costs, attributable to increased headcount for Circle Line operations and higher electricity and diesel costs. Based on trend lines on the wholesale electricity price and short-term energy outlook, we anticipate SMRT’s profitability to be impacted by rising electricity costs in the months ahead. We also expect SMRT to shed more light on recent switch to distance-based fare system, which supposedly is expected to cost the public transport operators $88m a year in revenue. Maintain HOLD. – OCBC Investment (18 Oct)

Ascendas REIT
Price – $2.11
Target – $2.13

1H11 results met our expectations, with distribution per unit (DPU) of 6.67 cts forming 47% of our full-year forecast of 14.2 cts. Net property income of $83.9m for 2Q11 was down 3.9% q-o-q as property expenses increased with more single-user buildings (where tenants usually bear most property-related expenses) being converted to multi-user facilities and weakening occupancy despite positive macros is in line with our view of a lag time between the two. We add in $97m of asset enhancement initiatives as announced, lower our cost-of-debt assumptions, and increase our DPU estimates by 1-4% for FY11-13. Despite a still attractive yield of 6.8%, we believe its management premium and track record have been priced in, at a 34% premium to book value, particularly given still-weakening occupancy. Re-rating catalysts could include announcements of accretive acquisitions and development projects. Maintain NEUTRAL. – CIMB (19 Oct)

Price – $2.25
Target – $2.65

9M10 results met our expectation and consensus, forming 73% and 75% of the respective FY10 forecasts. 3Q10 revenue grew 10% q-o-q on a rise in handset sales from iPhone 4 while service revenue was flat q-o-q owing to a slight drop in postpaid revenue. As noted, there was a sharp appreciation in handset costs due to the iPhone 4 launch and NGNBN-related opex (wholesale and staff costs). This was partially offset by lower bad debts and advertising costs. As expected, M1 did not declare any capital management in 3Q but it did note that conditions are now more favourable for capital management and we continue to expect this in 4Q. We are expecting a special DPS of 10 cts/share. It also kept its guidance of net-profit growth after tax in 2010 and capex of $100m excluding 3G spectrum costs of $20m. We lower our FY10-12 forecasts by 1-4% and continue to expect catalysts from capital-management potential, upside from NGNBN and benefits from soaring inbound visitors. Maintain OUTPERFORM. – CIMB (19 Oct)

Singapore Exchange
Price – $10.04
Target – $10.86

1Q11 core net profit of $74.2m accounted for only 18% of our full-year estimate and consensus, seemingly below expectations. However, we highlight that this has to be viewed in the context of lethargic volumes earlier in 1Q11 and upgraded earnings estimates lately, in reaction to powering market volumes in recent weeks and the impact of ADR contributions. 1Q11 overall ADV was $1.56b, leaping from $1.4b-1.5b in July/August to $1.8b in September. While 1Q volumes were within expectations, 1Q average securities yields fell to 2.8 cts from 3.0 cts normally. Management attributed this to a quarter when retail participation dropped off and volumes centred on a single gaming stock, increasing the mix of capped trades. Quarterly DPS was 4 cts. Lower-than-expected securities clearing yields did make us lower FY11 EPS by 3%, but our bullish FY12-13 estimates are intact. We roll forward our DDM-based target price from $9.75 to $10.86, seeing catalysts in a further pick-up in trading volumes. Maintain OUTPERFORM. – CIMB (19 Oct)

Ascendas REIT  3.120 +0.01 +0.32%   
Business: Co invests in the real estate markets of Singapore and Australia.

Insight: Apr-19, FY19 gross revenue and NPI inched up 2.8% ... Read More
Singapore Exchange  8.490 -0.01 -0.12%   
Business: [FY18 Turnover] Equities & fixed income (48.2%), derivatives (40.2%), mkt data & connectivity (11.6%).

Insight: Jan-19, 1H19 operating revenue increased 5.7% to $... Read More

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