| CIMB | UOB KAYHIAN |
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SIA Engineering Boosted by stronger associates and JVs ■ 3QFY17 net profit of S$52.6m was slightly above our expectation and consensus, forming 30% of forecasts. 9M17 core net profit was in line at 75% of FY17F. ■ Share of associates and JVs surprised on the upside as they contributed 60% of SIE’s net profit. ■ We still expect SIE to declare special dividend in 4Q17 from the gain of HAESL divestment. Net cash stood at S$531m. ■ We maintain our Hold call with an unchanged DCF-based TP of S$3.77. Re-rating catalysts could come from stronger-than-expected MRO volume.
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STRATEGY – SINGAPORE Alpha Picks: Top-slicing After Outperformance Most of our Alpha picks outperformed in January, prompting us to top-slice selectively. We remove DBS and KPTT but add in Food Empire on hopes that the group may restore FY16 final dividends and continue on its earnings recovery.
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| MAYBANK KIM ENG | |
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SIA Engineering (SIE SP) Better quarter but not good enough Maintain HOLD; Small miss vs. our expectation 3Q17 core profit of SGD50.3m was around 6% lower than our estimate and, we believe, below consensus expectation as well. It was a decent quarter nonetheless with core profit performance the second best since mid-2014. Softer revenue was the key area of underperformance with lower fleet management offsetting the growth in line maintenance revenue. 9M17 core profit accounted for 72% of our FY17 forecast (and c66% of consensus estimate). Maintain HOLD with unchanged TP of SGD3.70, based on 20x FY3/18E EPS (0.25SD above 10-year mean).
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| OCBC | PHILLIP SECURITIES |
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StarHub Ltd: Dividend cut amid tough outlook StarHub Ltd’s (StarHub) 4Q16 revenue rose 0.2% YoY to S$634.8m but as operating expenses grew at a faster pace of 2.7% to S$570.7m, 4Q16 EBITDA and PATMI plunged 13.6% and 33.2% YoY to S$135.7m and S$54.0m, respectively. For FY16, revenue fell 1.9% to S$2396.7m, as strong showing from broadband and enterprise fixed were dragged by mobile, pay TV and lower sale of equipment. Operating expenses declined 2.2% to S$1433.1m but on lower service revenue and income grant, FY16 EBITDA missed our expecatations as it slipped 3.2% to S$690.1m and PATMI fell 8.3% to S$341.4m. While Starhub maintained its FY16 dividend, it is expected to cut its FY17 dividend, as management also guided for much weaker EBITDA margin on flat revenue in FY17. Given weak earnings visibility, we cut our FY17F/18F EBITDA by 17.2% /16.4% and lower our terminal growth rate from 0.75% to 0.50%. Consequently our DCF-based FV decreases from S$3.05 to S$2.65. Downgrade Starhub from HOLD to SELL as we see no near-term catalyst. Its expected dividend cut (first since FY09) also does not bode well for a dividend yield stock. |
SIA Engineering Company Ltd Headline PATMI boosted by one-off; recurring PATMI still weak SINGAPORE | TRANSPORT SERVICES | RESULTS 3QFY17 revenue of S$272.3mn in line with our forecast of S$273.3mn 3Q FY17 recurring PATMI of S$50.3mn exceeded our forecast of S$37.4mn by 34% 9MFY17 revenue of S$808.7mn met 74% of our full year forecast of S$1.089bn, and 74% of consensus full year expectation of S$1.097bn 9MFY17 recurring PATMI of S$123.8mn met 73% of our full year forecast of S$169.2mn, and met 75% of consensus full year expectation of S$165mn Positive surprise from qoq bounce in contribution from JVs
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