SINGTEL | NEUTRAL
TARGET PRICE: $4.00
MAY 18 CLOSE: $3.76
RHB Research Institute, May 18
Singtel released its Q4 FY17 results yesterday. FY17 core earnings formed 98 per cent and 100 per cent of our and consensus estimates respectively, in line with management's guidance.
Key highlight was the weaker associate showing (Airtel hit by aggressive competition) that offset the growth in mobile data, ICT and digital revenues.
An expected final dividend per share (DPS) of 10.7 cents/share (payable in August) brings FY17 DPS to 17.5 cents/share.
This reflects a payout of 73 per cent, that is, at the higher-end of its guidance (60-75 per cent).
MIDAS HOLDINGS | HOLD
TARGET PRICE: $0.245
MAY 18 CLOSE: $0.225
OCBC Investment Research, May 18
Midas Holdings Limited's Q1 2017 revenue grew 31.3 per cent year on year to 398.4 million yuan (S$80.5m), mainly due to the consolidation of results.
While Q1 2017 overall gross profit margin (GPM) fell 3.1 percentage points year on year to 27.9 per cent, Midas' share of profits of its associate recorded a 359.3 per cent year-on-year increase.
Consequently, Q1 2017 profit after tax and minority interest (patmi) was within expectations as it grew 187.6 per cent year on year to 28.7m yuan.
Looking ahead, we expect revenue to be higher as new businesses contribute in FY17 along with growth from its core aluminium alloy extruded products business while we expect to see overall GPM decline given this change in sales mix.
Midas also announced on Wednesday that it has been awarded 13 international and Chinese supply contracts worth a total of 520.9m yuan, which are positive for Midas' growth.
All said, we believe Midas' growth outlook still largely hinges on the ramp up and execution of its new startup business - Jilin Midas Light Alloy Co. With in-line Q1 2017 results, we made slight adjustments to our forecasts and lower our fair value from $0.255 to $0.245 (based on 0.6x FY17F P/B).
SATS LTD | HOLD
TARGET PRICE: $5.17
MAY 19 CLOSE: $5.24
CIMB Research, May 17
The stock is trading at stretched valuations of 23 times FY18 price-to-earnings ratio (P/E), leaving little room for disappointment.
Recent share price strength could be due to rotation into year-to-date index laggard as SATS had underperformed the FSSTI.
We see opportunity to trim some profits post results and dividend announcement. Re-rating catalysts could come from stronger-than-expected cost cutting measures or sizeable mergers and acquisitions.
Key risk is a general slowdown in air traffic within Asia. Maintain "hold".
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