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Investors’ Corner (Suntec REIT, M1, First Resources, Singapore Press Holdings)
Investors' Corner | 26 July 2013
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By: Shane Goh
Articles (99) Profile

Suntec REIT
Price – $1.53
Target – $1.64
99.6% and 70% of Phase 1 and Phase 2 of the mall have been pre-committed and rents achieved in Phase 1 of $13.1psf per month were 4% ahead of management forecast of $12.6psf per month. We continue to expect overall rents to reach $13.5psf per month after Phases 2 and 3 are completed. Net property income was 39% lower y-o-y and 33% below our and consensus estimates. However, distribution per unit was in line with consensus estimates, due to dividend support of $7.8m. We expect less dividend support in the coming quarters as new rental income from Phase 1 should help to offset the decline in rents, with Phase 2 of the refurbishment continuing and Phase 3 commencing in Nov-13. Signing rents at Suntec office towers fell to $8.42psf per month as a large office tenant renewed a lease for 90,000sqf. We expect office rents to remain stable in 2H13 before rising from mid-FY14. Maintain OUTPERFORM. Stanchart (20 Jul)

Price – $3.15
Target – $3.72
1H13 profits of $80m (+6% y-o-y) represented 47% of ours and 50% of consensus FY13 estimates. An interim dividend of $0.068 was better than expected. With M1’s revenues and profits now on an upward trend, we believe that it is well positioned to increase dividends from a rising profit pool but could also look to expanding its payout ratios. Increased data usage amongst mobile customers fuelled service revenues. 26% of M1’s subscriber base has converted to new tiered data plans with 15% of subscribers now exceeding their bundled data inclusions. In the fixed line (fibre) space, M1 added 7k subscribers to 67k; consistent with previous quarters albeit below what we and the market were expecting. Staff costs were higher (+23% y-o-y in 2Q13) largely due to provisioning for bonuses. Catalyst will be derived from evidence of further revenue uplift from data usage and a more aggressive dividend policy. Maintain OUTPERFORM. Macquarie Research (16 Jul)

First Resources
Price – $1.74
Target – $2.18
2Q13 crude palm oil output (+10% y-o-y; +10% q-o-q) was 21% of our full year target, weaker than the 24% we were expecting. The culprit was a marked deceleration in its own FFB (Fresh Fruit Bunches) production growth to 5% y-o-y from 14% booked in 2Q12, despite inclusion of output from recently purchased GSI and Lynhurst. Smallholders FFB output also fell 24% y-o-y (-14% q-o-q). However, the drop was partly compensated by a jump in third-party FFB purchases to almost 6-fold from the previous year. We understand output is expected to rebound in 2H13 and the management has not revised its guidance of 5-10% growth in its own FFB production. We also expect smallholders’ output to recover to match FY12 level by the end of this year. First Resources’ production will pick up again post-Eid festival in Aug-13. Maintain BUY. DBS Vickers (15 Jul)

Singapore Press Holdings
Price – $4.33
Target – $4.28
Singapore Press Holdings’ 3Q13 pre-exceptional net profit declined 3% y-o-y to $100.5m on a 2% y-o-y decline in revenues. If not for the impairment charges, the results were in line with expectations. The decline in profits reflects the weak core business due to the weak economy although this was mitigated by steady property income. The share price should be supported by the proposal to pay a special dividend of $0.18 to shareholders. Display revenue was 6.3% lower y-o-y for the quarter while classified revenue was down 2.6% y-o-y, resulting in total ad revenue declining 5.1% y-o-y. Circulation revenue was also weaker, falling 2.3% y-o-y for the quarter. Revenue from property progressed 3% y-o-y due to higher rentals achieved at Paragon. Costs were well managed, with materials and production costs falling by 5.4% y-o-y while staff costs fell 2% y-o-y. However, other operating expenses expanded 79% y-o-y due to impairment charges of $15.6m for overseas subsidiary and higher promotional expenses. Remain NEUTRAL. Nomura (15 Jul)

Currently pursuing his Chartered Financial Analyst qualification, Shane provides coverage on the property, consumer and environmental sectors at Shares Investment.

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Suntec REIT  1.930 -- --   
Business: Real Estate Invs Trust. Ppties incl Suntec Office Towers, Suntec City Mall & Park Mall. [FY18 Turnover] Office (46.8%), Retail (34%), Others (Ad space, car park income , convention & exhibits) (19.2%).

Insight: Jan-19, FY18 gross revenue rose 2.6% to $363.5m du... Read More
First Resources  1.590 -0.010 -0.63%   
Business: Co engages in the cultivation and maintenance of oil palm plantations. [FY18 Turnover] Refinery and processing (95.5%), plantations & palm oil mill (4.5%).

Insight: Feb-19, FY18 revenue dipped 2.1% due to lower aver... Read More
Singapore Press Hldgs  2.110 +0.03 +1.44%   
Business: Co is S'pore's main newspaper & magazines publisher that also has investment in properties. [FY18 Turnover] Media (66.7%), property (24.7%), others (8.6%).

Insight: Apr-19, 1H19 operating revenue fell 3% to $477.6m ... Read More

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