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MAYBANK KIM ENG |
MAYBANK KIM ENG |
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Singapore Telecommunications (ST SP) Associates’ 2QFY25 a mixed bag
Airtel & Globe strong, AIS moderate, TSEL soft Based on Singtel’s key associates’ results, we estimate 2QFY25 post-tax contributions from associates fell -3% YoY, but rose 5% QoQ. Bharti Airtel’s 2QFY25 earnings rose by a strong 32% YoY and 34% QoQ. This was followed by Globe’s +22% YoY/flat QoQ core earnings growth. AIS’ core earnings (+12% YoY/flat QoQ) are in line. But Telkomsel disappointed (core earnings -23% YoY/-16% QoQ) as revenue was soft and costs rose. Fx had a -3ppt YoY/flat QoQ impact on Associates contribution. As such, we estimate 1HFY25 post-tax contributions from associates for Singtel achieved 41% of ours and 44% of the Street’s full-year forecast. This suggests the Street may revise down earnings forecasts for Singtel. Singtel will announce results on 13th November.
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Sembcorp Industries (SCI SP) Recycling capital
Accretive divestment of non-core business, BUY On Friday, SCI announced sale of SembEnviro, a waste management services provider, for SGD405m, at a 43% premium over book value. SCI will use the sales proceeds to invest further in the energy business to achieve the 2028 strategic roadmap. Based on divestment gains and financial cost savings from debt repayment, we estimate mid-single digit earnings accretion. Notwithstanding the higher yields and uncertainty over the energy transition policy, we maintain our rating and estimates given the steady execution of strategy and fair valuation of the stock.
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PHILLIP SECURITIES |
UOB KAYHIAN |
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Singapore Airlines Yield and cost pressures
• 1H25 revenue met our expectations, improving by 4.7% YoY to S$9.5bn, forming 49% of the FY25e estimates. The growth was driven by a 10.8% YoY increase in passengers carried and a 4.7 ppt uplift in cargo load factor.
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UMS Integration (UMSH SP) 3Q24: Earnings Still Below Expectations Due To Slow Ramp-up Of New Customer
UMS’ 3Q24 earnings of S$10m (-32% yoy/+12% qoq) are below expectations, while its 9M24 earnings of S$29.5m (-33% yoy) only met 69% of our full-year estimate. This was due to weaker global chip demand and a general business slowdown. Interim dividend declined 20% yoy. UMS indicated that its new key customer has requested UMS to ramp up production in the coming months, but it may take some time to achieve meaningful earnings contributions. Upgrade to HOLD. Target price: S$0.95.
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UOB KAYHIAN |
UOB KAYHIAN |
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Seatrium (STM SP)
Seatrium’s 3Q24 business update showed that it continues to execute well on its projects. After the end of the quarter, the company signed an LOI for a US$400m EPC project from a Japanese client with the potential award of the contract in 1Q25. Two legacy low-margin projects should be completed by end-24, and while the MAS/CAD investigation remains an overhang, it could lead to a re-rating of the stock if removed in the near to medium term. Maintain BUY. Target price: S$2.80.
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Singapore Airlines (SIA SP) 1HFY25: Earnings Miss Expectations On Slightly Higher-than-expected Costs
SIA’s 2QFY25 headline net profit of S$290m (-59% yoy, -36% qoq) came in below our guided range of S$360m-460m, due to slightly higher-than-expected operating costs. While pax travel and cargo demand are robust, SIA’s core profitability is likely to stay in an overall moderating trend in FY25-26, as pax and cargo yields remain under pressure amid an increased capacity supply. The speed of Air India’s turnaround is a key wild card. Maintain SELL on SIA, with a slightly lower target price of S$5.72.
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