ThaiBev dips to 3-month low on S&P downgrade; Singapore shares lower
Tue Dec 10, 2013 6:26am GMT
Thai Beverage PCL shares slid to their lowest in more than three months, leading losses in Singapore's benchmark index, after rating agency Standard & Poor's downgraded the company's debt to junk status.
ThaiBev shares dropped more than 2 percent to a three-month low of S$0.465. The stock fell 11 percent in November, but still registered a nearly 18 percent year-to-date gain.
S&P cut its long-term corporate credit rating on the company to "BB+', below investment grade, with a stable outlook, the rating agency said in a statement.
S&P also said it was withdrawing all the ratings on ThaiBev at the company's request.
"We lowered the rating on ThaiBev because we now view the company as a 'core' member of a corporate group that we assess as having weaker credit characteristics than those of ThaiBev as a stand-alone entity," said S&P credit analyst Xavier Jean in a statement.
The group, which consists of ThaiBev, Fraser and Neave Ltd and investment holding company TCC Assets Ltd, has become highly leveraged.
"We believe that TCCA's likely high debt burden and the subordinated nature of its debt has the potential to lead to more aggressive financial policies at ThaiBev and influence ThaiBev's financial performance, debt-servicing capacity, and financial policies to an extent," Jean said.
F&N shares eased 0.2 percent to S$5.70.
The benchmark Straits Times Index eased 0.4 percent to 3,102.54 by 0534 GMT, close to a near three-month low of 3,098.80 hit last week.
Blumont Group Ltd was the most traded stock on the Singapore Exchange, with 108 million shares changing hands, nearly twice the average daily turnover in the past 30 days.
Blumont shares shot up 57 percent in the previous trading session, and eased 2 percent on Tuesday.
Why M1 is poised to beat rivals in 2014 earnings race
Here are 4 big reasons.
According to maybank Kim eng, its top telco pick for 2014 is M1.
It is expected to post the fastest earnings growth among the three telcos under our coverage.
Maybank noted that potential catalysts are:
(1) earnings upside from faster-than-expected monetisation of tiered data usage,
(2) improving margins from lower subscriber acquisition costs,
(3) BPL cross-carriage giving M1 a unique opportunity to jumpstart its fledgling Pay TV business, and
(4) the potential for a higher dividend payout. Reiterate BUY with DCF-derived target price of SGD3.98.
Here's more:
2014: Another data-driven year.
We expect M1 to follow up its 2013 double-digit earnings growth with another year of good growth (our forecast: 8%) in 2014.
We see several catalysts that could energise its bottom line. Mobile data monetisation to accelerate.
Data contribution, which has grown 4ppts to 42.3% of service revenue since the start of 2013, should jump to 48% by end-2014, driven by robust take-up of 4G data plans.
32% of M1’s postpaid subscribers have switched to tiered plans and this could reach 45% by end-2014.
M1 expects 80% of its postpaid base to switch, with the rest on 3G and enjoying the untiered 12GB data cap.
But as apps get more data-intensive, it is possible that as high as 90% of its postpaid base will switch by 2015.
Margins to benefit, be it iPhone or Android. Currently at 38% for 9M13, we expect service EBITDA margin to improve to 40% in 2013F and 41.4% in 2014F.
For M1, more sales of the iPhone will lift its margins as iPhone subsidies are treated differently from Android phones; they are not expensed but amortised over the duration of the user contracts.
But the lower subsidies for Android phones, should they sell in bigger volumes, will also benefit M1. Either way, M1 wins.
Getting BPL would be a coup for Pay TV ambition. M1 may be able to cross-carry BPL by mid-2014 if it gets the 10,000 subscribers needed to qualify.
This could push its fledgling miBox TV service, which is the cheapest in town at SGD8 a month, into the mainstream.
More dividends expected. M1’s net debt/EBITDA has fallen to a very low 0.6x. With more clarity on its capex for 2014, which is expected to stay the same as 2013 including a SGD40m spectrum outlay, we think M1 can afford to pay out more dividends.
For now, we keep our 2014F DPS forecast at 80% of earnings but M1 could very well pay up to 100%. Projected FCF of SGD167m with a bit of gearing would be enough to fund a 100% payout of SGD183m. Assuming a 100% payout, dividend yield would be 6.2%.
SAN FRANCISCO (MarketWatch) — Gold futures climbed by more than $30 an ounce on Tuesday, with analysts attributing the rally to short covering as investors continued to speculate whether the Federal Reserve will begin scaling back its bond-buying program as soon as this month.
Yoma - Proposed Acquisition Of 80% Interests In Respect Of Land In The Pun Hlaing Golf Estate As An Interested Person Transaction And Update On Riverside
According to OSK-DMG, AusGroup announced that it: i) has repaid all senior bank debt, ii) is in discussions with a number of parties to provide the group with working capital and contract bonding facilities, and iii) has AUD219m of work in hand.
OSK-DMG said it is negative on AUSG for its increased insolvency risk as banks have pulled their lines, while its work in hand is unprofitable.
Here's more:
Banks pull lines. AUSG has repaid its senior debt facilities, which were AUD27.9m in 1Q14 against its balance sheet cash of AUD34.8m. Cash-ex-secured-debt was thus AUD6.9m. However, 1Q14 bank overdrafts were AUD8.8m, suggesting that AUSG is at serious risk of insolvency.
Quid pro quo for working capital negative for outlook. We see AUSG accepting lower margins for future contract work in return for working capital and so-called contract bonding facilities, and higher interest rates if these parties are financial lenders. Either way, AUSG’s future margins will suffer, delaying its return to profitability.
On-hand order book likely unprofitable. AUSG made an AUD21m gross loss in 1Q14 at an AUD77m topline, and only broke even in 3Q-4Q13 at AUD138m revenue. We believe that the current contracts on hand will fetch negative EBITDA margins, given the recent experience and slow recognition being unlikely to cover overheads. The AUD219m orderbook is insufficient for even two quarters of breakeven performance.
We expect continued losses for FY14F, and our recovery-to-profitability scenario is pushed out to FY16F. The negative-EBITDA position today also means that AUSG is burning cash, causing further deterioration in its balance sheet position.
Most dire chapter in AUSG’s history. AUSG has never, since its 2005 listing, faced the prospect of a full-year loss, and its 1Q14 AUD15m loss (after the AUD10.4m cushion of asset sale gains) was the largest quarterly loss on record. With a book-to-bill flow ratio well below 1.0x, the dwindling orderbook presents a dire outlook, further exacerbated by the cash crunch today. Our TP is lowered to SGD0.21 based on 0.65x FY14F P/BV. Maintain SELL.
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