Brokers' take
Singapore Airlines
Hold
OCBC Investment Research, May 15
May 15 close: S$11.71
Target price: S$11.59
LOWER fuel costs and improved passenger yield were offset by taxes and impairment losses on aircraft. Consequently, 4QFY15 Patmi (profit after tax and minority interests) grew 46.7 per cent to S$39.6 million.
FY15 results came in below our expectations as fuel hedging continues to limit earnings as Patmi only formed 92.6 per cent of our FY15 forecast. Revenue grew 2.1 per cent to S$15.6 billion but excluding Tigerair's consolidation, SIA's revenue declined 0.2 per cent to S$15.2 billion.
Passenger carriage and yields improved but cargo revenue declined due to capacity reduction. Lower fuel costs contributed to a net S$263 million reduction in fuel expenses, as it recorded hedging loss of S$549 million in FY15 compared to hedging gain of S$87 million in FY14. Consequently, Patmi increased 2.5 per cent to S$367.8 million. Pending management briefing, we maintain our "hold" rating on SIA but put our fair value of S$11.59 under review for now.
Singtel
Neutral
RHB Research, May 15
May 15 close: S$4.36
Target price: S$4
SINGTEL'S postpaid Arpu (average revenue per user) continued to be weighed down by lower revenues from roaming and SMS interconnect.
This is despite the higher take-up and the September 2014 re-pricing of its tiered plans, suggesting challenges still in monetising data. Its guidance of "mid-single digit mobile revenue growth" for FY16 is premised on:
While we acknowledge Optus' strong recovery - its strongest y-o-y mobile revenue growth since the revenue turnaround in 1QFY15 (March) - its rivals are upping their ante and responding with promotions which could impede the momentum. Optus has faced some challenges expanding its 4G footprint outside of metro areas on the back of weather challenges. The "low single-digit revenue growth" guidance has reflected expectations of another round of mobile termination rates (MTR) cut and additional competition.
Neptune Orient Lines
Hold
Jefferies Research, May 14
May 15 close: S$1.085
Target price: S$1
NEPTUNE Orient Lines (NOL) Q1 results were weaker than consensus. NOL volume was 17 per cent below our expectations as the company actively reduced its fleet. The company plans to return more charter-in vessels and expects capacity to continue to fall for the rest of the year. Volume in Transpacific was also affected by the congestion in USWC ports during the quarter. The decline in freight revenue, however, was partially offset by non-freight related revenue, which increased from US$123 million to US$225 million.
Total bunker costs decreased 52 per cent y-o-y, driven by a 23 per cent decline in oil consumption and a 38 per cent decline in oil price. However, this is offset by higher non-fuel unit costs, which may be attributable to lower volume and lower utilisation.
APL logistics divestment plan was approved by shareholder on April 15. Once the transaction is completed, this will bring in a disposal gain of around US$960 million.
Compiled by Jamie Lee
Brokers who wish to send in their reports can email us at btnews@sph.com.sg
