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OCBC |
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CSE Global (CSE SP) Positive for FY19; Maintain BUY
Maintain BUY, and high end of consensus TP of SGD0.61, 22% upside plus 6% yield. Core net profit was SGD4.6m (+5.3% YoY) on higher gross (1QFY19: 27.7%, 1QFY18: 26.8%), and net (1QFY19: 6.7%, 1QFY18: 6.2%) profit margins despite recording lower revenue of SGD85.4m (-7.4% YoY). We expect revenue to catch up in the next two quarters. As such, we remain positive on this counter, and even included it in our “20 Jewels 2019 Edition”.
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Singapore Post: Steadying the base
Singapore Post (SingPost) saw a 2.1% YoY fall in revenue and a S$75.1m net loss in 4QFY19, bringing full year net profit to S$19.0m. Excluding exceptional items such as a S$100.4m impairment of goodwill, intangible assets and PPE, underlying net profit in 4QFY19 was S$14.5m, or 6.1% YoY lower. This would bring full year underlying net profit to S$100.1m, which was 5.8% lower compared to FY18. As mentioned in our 1 Feb 2019 report, there are risks of impairments to the US businesses. Do note that besides the impairments that have been made, the group expects to continue to account for operating losses of the US businesses until it completes an exit. Looking ahead, capital expenditure is also expected to be incurred for the Post and Parcel segment to improve processes and preparing it to be future-ready. Meanwhile a final dividend of S$0.02/share has been declared, same as last year. We maintain our HOLD rating and fair value estimate of S$1.00 on the stock. |
| UOB KAYHIAN | DBS VICKERS |
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Overseas Education (OEL SP) 1Q19: Results In Line; Commendable Double-digit Net Profit Growth
1Q19 net profit was in line with our expectation, meeting 28% of our full-year estimate and up 10% yoy due to a slower decline in revenue and continued efficient cost control. We expect a better performance from 2Q19 onwards as the significant cost savings from loan refinancing kick in. Maintain BUY and EV/EBITDA-based target price of S$0.46. Valuation is attractive at the current 7.8x 2019F EV/EBITDA and with a sustainable 9.2% dividend yield.
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Singapore Telecom Sector
5G Framework encourages network sharing • Two nationwide 5G networks starting from 2020 • Gradual 5G rollout – 50% coverage by 2023 versus ~100% for 4G in just 12-months • Gradual 5G rollout implies similar or slightly higher annual capex as incurred for 4G and hence not a major cause of concern • Netlink is our top pick for yield and Singtel for earnings recovery in FYMar20F
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Check out our compilation of Target Prices