Singapore “Flyer” of the Week: Raffles Medical Group Limited
By Sudhan P - April 4, 2014
Healthcare outfit, Raffles Medical Group (SGX: R01), or RMG, takes the spotlight as this week’s Singapore “Flyer”. It has surged close to 5% so far over the week to end at S$3.35 on Thursday.
Founded in 1976, RMG is the largest private group practice in Singapore. It owns and operates a network of family medicine clinics, a tertiary care private hospital, insurance services and a consumer healthcare division. Currently, RMG serves over a million patients and boasts 6,500 corporate clients, including local and multi-national corporations and government agencies.
On Tuesday, the firm announced that it has made an offer to grant options in line with the Raffles Medical Group Share Option Scheme. A total of 6.25 million options were granted at a price of S$3.20. The share price on that day was three cents higher at S$3.23. The following Directors received the options – Mr Koh Poh Tiong, Mr Kee Teck Koon, Dr Wee Beng Geok, Mr Tan Soo Nan, Professor Lim Pin and Mr Raymond Lim Siang Keat. The options granted have a vesting period of at least 12 months.
For its latest results for 2013, annual revenue increased 9.4% year-on-year to S$341 million while net profit jumped by 49.1% to S$85.3 million. RMG will also be dishing out a final dividend of 4.0 Singapore cents per share.
RMG is currently trading at a historical PE ratio of around 22 and has a dividend yield of 1.5%.
Singapore “Flyer” of the Week: CapitaMalls Asia Limited
By Sudhan P - April 18, 2014
CapitaMalls Asia (SGX: JS8), or CMA, made headlines this week when it was announced that CapitaLand (SGX: C31) intends to take the former private at a price of S$2.22 per share. This has caused the stock to surge 21.3% so far this week to close at S$2.19 on Thursday.
CapitaMalls Asia is one of Asia’s largest listed shopping mall developers, owners and managers, with a total property value of around S$34.3 billion. It has interests in and manages a pan-Asian portfolio of 105 shopping malls across 53 cities in the five countries of Singapore, China, Malaysia, Japan and India. In Singapore, the shopping malls in the portfolio include ION Orchard, Plaza Singapura and Raffles City Singapore.
The privatisation offer was made public on 14 April 2014. The total deal is worth approximately S$3.06 billion and CapitaLand wants to delist CMA once it has bought up more than 90% of the latter’s shares. Currently, CapitaLand controls around 65.3% of CMA. The price of S$2.22 per share represents a premium of 27% over the one-month volume-weighted average price.
The rationale for the offer is to fully integrate CMA into the CapitaLand Group instead of having it as a listed entity. CapitaLand wants to achieve four objectives with the proposed delisting:
1.Fully integrate CMA and CapitaLand’s competitive strengths in integrated developments
2.Simplify CapitaLand Group’s organisational structure
3.Increase CapitaLand’s financial flexibility and scale
4.Unlock shareholder value and achieve synergies
Mr Lim Ming Yan, President & Group CEO of CapitaLand Limited, said: “The proposed delisting of CMA is in line with our ’One CapitaLand‘ strategy. Post transaction, there will be six4 listed entities in the CapitaLand Group, compared to eight in January 2013. More importantly, development activities will be undertaken by CapitaLand, while most of our stabilised assets will be held in the listed REITs. This will significantly simplify CapitaLand Group’s structure and enhance our ability to undertake and optimise integrated developments. CapitaLand will be in a better position to capitalise on the growing trend towards integrated developments in our core markets of Singapore and China.”
CMA is currently trading at a historical price-to-earnings ratio of around 14.
SMRT Corporation (SGX: S53) released its results for the full year of 2014 on Wednesday. SMRT is one of the two main transport operators in Singapore. The other being ComfortDelGro Corporation (SGX: C52), which owns a majority share in SBS Transit (SGX: S61).
SMRT derives revenue from ridership of its trains, LRTs (light rail transit) and buses – collectively known as “fare sources” – and also from “non-fare sources” such as taxis, rental, advertising and engineering and other services.
For the full year, revenue increased 4% year-on-year to $1.2 billion due to higher revenue in all business segments, except LRTs and other services. The revenue from fare sources was up 2.7% to S$851.9 million while the revenue from non-fare sources gained 7.6% to S$312 million.
Total operating expenses rose 7.3% to $1.1 billion, due mainly to higher staff costs, depreciation and other expenses.
SMRT’s fare sources recorded an operating loss of $25 million as compared to an operating profit of S$32.3 million last year. For train operation, despite a 2.9% increase in ridership, operating profit plunged 91.6% to $5.5 million from $65.1 million in the previous year. This was due to operating costs outpacing fare revenue growth. Train operation was the only segment that raked in operating profit under the fare sources.
Operating profit from the non-fare sources increased by 12.4% to S$106.4 million, mainly due to an increase in profits for taxi, commercial and engineering services. Taxi profits ballooned 49.7% to $9.6 million, due to higher rental contribution from a newer fleet and lower diesel tax as a result of a smaller diesel fleet. Rental profits, the highest contributor of operating profit for the non-fare sources, increased 9.6% to $73.4 million. This was because of an uptick in lettable space from the redevelopment of Woodlands Xchange and higher rental renewal rates. All the segments under non-fare sources were profitable, except other services, which saw an operating loss of S$1.2 million.
Overall, net profit for the year slumped 25.7% to S$61.9 million. Consequently, earnings per share was down 25.8% to 4.1 Singapore cents.
As of 31st March 2014, SMRT had a total borrowing of S$636.4 million against a backdrop of cash balances of S$146.9 million. It is in a net debt position of $490 million, an increase from that of S$277 million exactly a year ago. Return on equity for the year was at 7.9%, a decrease of 2.8 percentage points from last year.
The firm generated a cash flow from operations of S$234.4 million for the year, decreasing 10% year-on-year. It spent S$651.9 million in capital expenditures as compared to S$250.6 million last year.
SMRT has proposed a final dividend of 1.2 Singapore cents per ordinary share. Including the interim dividend of 1.0 Singapore cent, the total dividends that will be paid out for the year will be 2.2 Singapore cents. This translates to a dividend yield of 1.8%, at the closing price of S$1.22 on Wednesday.
Going forward, the transport operator will continue with its productivity efforts in the new financial year to help mitigate the declining profitability in the fare business. It also expects the imminent changes to the rail financing and bus operating models to address the sustainability of its fare business in Singapore. Furthermore, it is awaiting the launch of the new Sports Hub retail mall, which the firm will be jointly-managing with NTUC Fairprice and is just a stone’s throw away from its Stadium Circle Line station.
SMRT is currently trading at 30 times its latest earnings.
Electronic mail may have replaced snail-mail for many of us but there is little evidence that it has made a dent in the revenues of Singapore Post (SGX: S08).
Since 2002, revenues at SingPost have grown from S$403m to S$707m last year. That is the first thing to like about the company – its ability to adapt to a changing technological environment. Over the last decade the company has switched its focus from mail to logistics, which has become its main driver of growth.
In 2002, revenues from traditional mailing services have increased from around S$300m to S$440m – an increase of about 4% a year. Meanwhile, revenue from logistics, which includes warehousing and door-to-door shipping services, has quintupled from S$46m to S$250m. Logistics now accounts for almost a third of total sales.
SingPost’s high Net Income Margin is something else to like about the business. At 19%, it implies that the company is making $19 of bottom-line profit for every $100 of sales. It is higher than the median Net Income Margin of 14% for Singapore’s 30 largest companies in the Straits Times Index (SGX: ^STI).
An absence of share-price volatility is the third thing to like about SingPost. It could appeal to investors who abhor violent share-price movements. The volatility of the company’s shares is a calming 12%, which is lower than the overall market’s 17%. Coupled with the company’s stable payout history, its yield of 4.4% could appeal to income investors who like the idea of dividends without disorder.
Although we don’t believe in timing the market or panicking over market movements, we do like to keep an eye on changes — just in case they’re material to our investing thesis.
The Straits Times Index (SGX: ^STI) closed at 3,296 points for a 0.2% dip. Half of the index’s 30 constituents had made losses for the day while 12 others managed to make some headway.
What were some of the shares outside the index that managed to beat the market today?
The electrical, IT, and furniture product retailer Courts Asia (SGX: RE2) gained 8.4% to S$0.58 after the release of its full-year results yesterday evening. Although the company’s revenue had climbed by 4.6% to S$830.3 million, its profit actually slid by 31.6% to S$28.3 million.
Despite the profit decline, the market’s happy with what it has seen, judging from the company’s share price gains.
PEC (SGX: IX2) has risen by 5.5% to S$0.575. The company had just revealed yesterday that it has inked S$100 million worth of new contracts.
PEC “provides integrated project and maintenance solutions to the oil & gas, petrochemical, terminal and pharmaceutical industries.” These new contracts would end between March 2015 and May 2016 and would see the company be involved in activities that include: 1) the development of crude oil storage and handling facilities; and 2) the provision of mechanical, piping, and structural steel works.
Civil engineering and construction outfit Tiong Seng (SGX: K2P) rounds up the trio with its shares up 4.7% to S$0.199 after also announcing contract wins. In this case, Tiong Seng had just revealed on Wednesday that it has secured S$316 million worth of contracts from the Land Transport Authority.
Under the contract terms, the company had started work this month on the construction of the Great World Station and Tunnels for the Thomson Line, one of the new lines in Singapore’s Mass Rapid Transit (MRT) system.
