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Investors’ Corner (Singapore Exchange, SingTel, Suntec REIT, Keppel Corp)
Investors' Corner | 30 October 2014
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By: Shane Goh
Articles (99) Profile

Singapore Exchange
Price – $6.86
Target – $7.30

Singapore Exchange announced 1Q15 underlying net profit of $77.6m, flat q-o-q and down 16% y-o-y, while total revenue declined 2% q-o-q and 8% y-o-y to $168.9m. The record low securities daily average value (SDAV) observed is attributed to the low volatility in the securities market. SDAV for stocks below $0.20 suffered the worst, declining 64% y-o-y, while SDAV for stocks above $5 improved 6% y-o-y. Derivatives revenue, which grew 3%, was driven by the phenomenal growth in the FTSE China A50 Index Futures. We had expected that derivatives revenue would overtake securities revenue and for this quarter, the former accounted for 32% of topline while securities revenue formed 29%. Our earnings-per-share estimate and target price remain unchanged and dividend yield is currently attractive at 4.4%. Maintain ACCUMULATE. Phillip Securities (23 Oct)

Singapore Telecommunications
Price – $3.69
Target – $4.08

Singapore Telecommunications’ (SingTel) share price has fallen some 7% to hit a recent $3.64 low, which is close to our comfort level of $3.60. While part of the fall could be due to the overall weaker market, the continued slide in the Australian Dollar against the Singapore Dollar could have also played a part as Optus accounts for about 50% and 30% of the group’s revenue and net profit respectively, based on our estimates. In our view, the fall should have captured most of the negativity surrounding the Australian Dollar’s slide. We note that SingTel is making progress in moving beyond just a pure telecommunication (telco) play with its acquisitions of Adconion and Kontera in Jun-14, which represents a move to further its Digital Life strategy of turning Amobee into a global leader in mobile-led digital advertising space. Although SingTel has alluded that it may take 3 to 5 years for Amobee to break even and become profitable, we recognise that this is an important step as the traditional telco space is increasingly being commoditised. Upgrade to BUY. OCBC Investment (23 Oct)

Suntec REIT
Price – $1.80
Target – $1.89

9M14 results were in line with our expectations with revenue and distribution per unit accounting for 72% and 75% of our full-year estimates respectively. During 3Q14, the amount available for distribution from operations grew by 20.9% y-o-y, reflecting the completion of Suntec City Phase 2 and additional contribution from Leighton Tower in North Sydney. Although office leases secured during the quarter were weaker at $8.24 per sqf (psf) per month (vs $8.98 psf per month in 2Q14), this was mainly due to the early renewal of a lease held by an anchor tenant of 150,000 sqf, which was due to expire in FY15. Excluding this, rents achieved were higher at $9 psf per month, reflecting the continual strengthening of the office market. While Suntec REIT’s portfolio remained stable with the office segment at full occupancy and Phase 1 and 2 of Suntec City mall recording a committed occupancy of 98.9%, pre-commitment rate of Phase 3 of Suntec City was slow on the back of sluggish retail rental market, achieving only 60% as at end Sep-14. Maintain HOLD. CIMB Securities (22 Oct)

Keppel Corporation
Price – $9.70
Target – $12.60

Keppel Corporation delivered a healthy 3Q14 net profit of $418.2m (down 9.5% y-o-y, up 2% q-o-q), with 9M14 net profit of $1,159m meeting 78% of our original forecast. Keppel’s offshore and marine segment delivered healthy operating margins of 15% for 3Q14. The order wins of $471m in 3Q14 were disappointing, but as contract wins tend to be lumpy, it may be able to make up the difference in 4Q14. In the 3Q14 results briefing, the firm mentioned a potential data centre REIT, which would mirror Keppel Land’s strategy of recycling capital into REITs, and may generate asset sales gains for the firm. Oil price fluctuations have triggered the recent sell off, which is overdone in our opinion. With stronger-than-expected property results, we raise our FY14F/15F earnings by 7.6%/8.3% respectively, nudging our sum-of-parts-based target price up. Maintain BUY. DMG & Partners (22 Oct)

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

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Singapore Exchange  8.400 -0.10 -1.18%   
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
Singtel  3.170 -0.01 -0.31%   
Business: Asia's leading communications group. [FY19 Turnover] Mobile Comm (31.1%), Data & Internet (19.2%), Infocomm Technology (17.5%), Sale of Eqmt (16.5%), Digital Biz (7.2%), Fixed Voice (5.2%), Pay-TV (2.1%), Leasing (0.8%), others (0.4%).

Insight: May-19, FY19 operating revenue remained flat at $1... Read More
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
Keppel Corp  6.080 -0.02 -0.33%   
Business: [FY18 Turnover] Infrastructure (44.1%), offshore & marine (O&M) (31.4%), property (22.5%), investments (2%).

Insight: Apr-19, 1Q19 revenue rose 4.1% underpinned by high... Read More

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