| UOB KAYHIAN |
RHB |
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Singapore Press Holdings (SPH SP) 1QFY20: Earnings In Line But Not Finding A Bottom Yet
SPH’s 1QFY20 core net profit of S$46.8m is in line with our expectations. Media ad revenue continued its decline, down 17% yoy, and does not appear to be abating. While PBSA acquisitions have grown SPH’s asset base to a sizeable extent, we remain wary of the decline in group core operating profit (-21% yoy). Maintain HOLD with a lower SOTP-based target price of $2.22. Entry price: S$2.00.
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Telecommunications Still a Tough Call
Maintain NEUTRAL. The sector’s risk-reward profile appears largely balanced in our view, with stocks having priced in the prospects of elevated competition over the past two years from new entrants and structural revenue/EBITDA pressures. The sector’s 1-year forward EV/EBITDA at -1SD is fair, supported by telcos’ decent yields of >5%. Our preferred pick remains Singtel for its earnings diversity and dividend certainty, which should augur well in a slow-growth and macro-infused environment. Improving tariff dynamics in India/Indonesia are its key re-rating catalyst.
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| CGS CIMB | RHB |
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Venture Corporation Business as usual
■ Based on our understanding, Venture’s customers’ corporate plans are on track. Hence, we still expect yoy profit growth in FY20. ■ We expect 4Q19 results to be announced on 27 Feb with net profit of S$85.5m (+0.3% qoq, -20.6% yoy). ■ We maintain our Hold call with a TP of S$16.88. Our base case scenario is a final DPS of S$0.50. A special dividend, if any, would be a bonus.
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DBS (DBS SP) Expect a 4Q19 Sequential NIM Squeeze
Stay NEUTRAL; SGD25.80 TP, 1% downside, 5% yield, on 1.28x 2020F P/BV. 4Q19 weakness in the SIBOR and Singapore Swap Offer Rate is likely to lead to a sequentially narrower 4Q NIM. Market expectations: 1H20 US federal funds rate (FFR) to be relatively stable. However, the lagged effects of past FFR cuts should still narrow DBS’ 2020 NIM. Amongst Singapore banks, its NIM is the most leveraged to changes in the 3-month SIBOR. We forecast NIMs to narrow in the quarters ahead – a negative headwind for earnings.
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Check out our compilation of Target Prices
