By Carmen Lee
Mon, 26 Apr 2010, 09:06:50 SGT

Market Pulse: SingTel, FCT & Yangzijiang (26 Apr 2010)

FOCUS

Singapore Telecom: Adds 45k Pay TV subscribers

Summary: SingTel has added another 45k Pay TV subscribers over the last four months, growing its mio TV base from 155k to 200k, an increase of 29%, likely driven by the upcoming broadcast of the 2010-2012 BPL matches exclusively on its mio TV setup. Despite the sharp jump in new Pay TV adds, we do not expect them to have any impact on FY10 numbers. We believe that the bulk of its new subscribers may be paying nothing until the actual broadcast of the BPL in Aug 2010. Having said that, we still expect its 4QFY10 results – likely due out by mid-May – to be fairly upbeat; we expect net profit to come in around S$673.2m on revenue of S$3391.3m. With its FY10 results due soon, we hold off revising our FY11 estimates; but we remain upbeat about its prospects on the back of a likely faster-than-expected recovery in its associate earnings and opportunities presented by the NBN. As such, we maintain our BUY rating and S$3.51 fair value. (Carey Wong)

Frasers Centrepoint Trust: 2Q10 outperforms; FCT already looking ahead

Summary: Frasers Centrepoint Trust (FCT) reported S$28.3m in 2Q10 revenue, up 33.9% YoY and 21.3% QoQ. The strong gains were due to contributions from recent acquisitions and also because of the recent completion of asset works at Northpoint (NP). The results beat our estimates, largely because of the strong performance of NP. We understand that plans for FCT’s proposed Causeway Point asset enhancement may be released soon. We believe this is a great opportunity both to refresh the mall and also to optimize income. FCT disclosed that construction of Bedok Point, part of its sponsor pipeline, is about 81% completed. In our view, it could be ready for acquisition as early as mid-2011. We have revised up our estimates for NP to reflect its current performance. We have also adjusted our FY10 estimates to reflect actual 1H10 results. FCT can continue to create value for unitholders through rent increases, asset works and further acquisitions, in our view. Maintain BUY rating and S$1.50 fair value (15% total return). (Meenal Kumar)

Yangzijiang Shipbuilding: Sembcorp Marine opposes PPLH sale

Summary: Baker Tech has accepted the offer to sell its stake in PPL Holdings (PPLH) to a consortium led by Yangzijiang Shipbuilding (YZJ), which is not surprising given the attractive offer price. The sale is subject to shareholders’ approval in an EGM (to be convened) and we note that Saberon Investments Pte Ltd, Baker’s controlling shareholder with about 69.63% stake, has agreed to vote in favour of the sale. However, not everyone is happy with the deal, Sembcorp Marine (who has a 85% interest in PPL Shipyard) has alleged that the sale would be a circumvention of its pre-emptive rights by not giving it a first right-of-refusal over the sale. On this note, Baker Tech’s lawyers have said that Sembcorp Marine “has no basis for its claims”. A drawn-out tussle for PPLH may affect YZJ’s offshore initiatives. We maintain our HOLD rating on YZJ with S$1.60 fair value estimate. (Low Pei Han)

For more information on the above, visit www.ocbcresearch.com for detailed report.

NEWS HEADLINES

- The combined S$1.04b in earnings made by 33 companies which have released their 1Q results thus far amounted to a sharp 35% rise from corresponding quarter a year ago.

- China Huaneng said its Singapore unit, Tuas Power, upped its share of the local electricity market to 24.5% from 22.4% in 1Q09.

- Employers are ready to back partial CPF restoration.

- The outsized performance of small cap stocks this year has sent the Russell 3000, with its YTD gain of nearly 12%, shooting past the S&P 500’s 8.4% advance.

- SIA said it has cleared its backlog of passengers who were left stranded in Australia when a volcanic eruption in Iceland created an ash cloud that shut down European airports.

- Only about one-third of large cap global companies have recovered the losses suffered during the downturn to generate net positive shareholder return in 2008-09, according to Boston Consulting Group study.

- Work on Iskandar Malaysia over the past year has led to an increase in economic activity that has boosted demand for housing in Johor, according to a property market report.

- Singapore was the sixth largest source of cyber attacks in Asia-Pacific last year, up from 14th place in 2008, according to report by Symantec.