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Investors’ Corner (M1, TigerAir, HPH Trust US$, SingPost)
Investors' Corner | 23 September 2011
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By: Gerald Teo
Articles (40) Profile

Price – $2.52
Target – $2.63
We view negatively on M1’s decision to end its partnership with Vodafone from 31 Dec 11 as this may shave M1’s core net profit by 5-10%, based on our estimates. Vodafone supplies business products (such as Blackberry devices and dongles) at lower prices, and provides M1 users preferential roaming arrangements on Vodafone and Vodafone-partner networks. We also gather from the industry that Vodafone provides mobile telephony for multinational companies (MNCs) through M1. We believe Vodafone will soon ink a new partnership with SingTel or StarHub for roaming and mobile telephony services in Singapore. M1 still has roaming partnerships via the Axiata group and Asian Mobility Initiative, a regional grouping of networks which includes Celcom (Malaysia), DTAC (Thailand), Idea (India), Smartone (Hong Kong and Macau), Sun Cellular (Philippines), and XL Axiata (Indonesia). M1’s share price should be supported by its fairly attractive dividends. Maintain NEUTRAL. – CIMB (20 Sep)

Tiger Airways Holdings
Price – $0.895
Target – $0.75
Given that its Thai Airways joint venture is not likely to go ahead, Tiger will have to delay aircraft deliveries or lease out its aircraft. Management guided that loads were weak when its Australian operations re-commenced because of the limited lead time given to sell tickets. The month-on-month decline in August passenger carriage indicates that traffic out of Singapore has also declined, given that Tiger was banned from flying from most of July. In addition, the planned 40% increase in seat capacity places traffic, pricing power and profitability of Tiger’s Singapore operations at risk with the weak global economic outlook. Year-to-date, passenger carriage amounts to 40% of FY12 estimate and as such we maintain our full-year traffic growth of 11.7%. Risks include excess capacity from an inability to commence joint ventures, and higher-than-expected losses from the Australian unit. Maintain SELL. – UOB-Kay Hian (20 Sep)

Hutchison Port Holdings Trust
Price – US$0.66
Target – US$0.95
Yantian Port’s throughput volumes fell 6.9% year-on-year in August 2011. In view of the weaker peak season, and ongoing economic uncertainties, we thus cut our volume growth assumptions at Yantian to 2% and 4% for FY11 and FY12. Given Yantian Port’s exposure to export volumes to US and EU economies, growth are expected to remain anaemic in the near to medium term, but we are decidedly not looking at the kind of recession that HPH Trust’s current valuations seem to imply. As to data from Hong Kong port, we note that throughput growth at Kwai Tsing terminals came in at –1.5% for August 2011, and year-to-date growth now stands at 2.3%. In case of a deeper slowdown than currently forecasted by our economists, we forecast flat volumes at both ports in FY12 and discounts on tariffs owing to competition and potential losses for customers. Share prices for HPH Trust have bounced off the lows of US$0.60 and currently trading at US$0.66, which we think is still very attractive with limited downside even in the case of a recession and contraction in trade. Maintain BUY. – DBS Vickers (19 Sep)

Singapore Post
Price – $1.045
Target – $1.14
Singapore Post (SingPost) recently announced it will set up a joint venture called vPOST Hong Kong which will provide internet shopping, shipping, and logistics services. Recall that Quantium Solutions, a subsidiary of SingPost, had earlier invested $11.5m for a 20% stake in Shenzhen 4PX Express which provides international express delivery services (excluding postal services), international freight forwarding, import/export of goods and technology. These investments give SingPost a platform for entry into the logistics and high-growth e-commerce market in countries such as China and Hong Kong. The growth potential of China is especially eye-catching; as its economy grows, more of its consumers and businesses are able to purchase goods as well as sell to other markets. SingPost is taking the right direction but the group is still in the early stages of gaining a strong foothold in the Chinese market. Pending more details on its expansion strategy, we retain our discounted cash flow-based fair value estimate of $1.14 and maintain our HOLD rating. – OCBC Investment (19 Sep)

Hutchison Port Hldgs Trust US  0.160 -- --   
Business: Co invests in, develops, operates and manages deep-water container ports in the Pearl River Delta.

Insight: Apr-19, 1Q19 revenue inched up 0.3% as combined co... Read More
Singapore Post  0.930 -0.005 -0.53%   
Business: [FY19 Turnover] Post and Parcel (47.8%), logistics (31%), eCommerce (15.5%), property (5.7%).

Insight: May-19, FY19 revenue rose 2.9% to $1.6b largely du... Read More

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