OCBC Report 16 Oct 13

16 Oct 2013
KEY IDEA M1: Margins holding up in 3Q13 M1 Ltd reported its 3Q13 revenue of S$241.7m, down 5% YoY and 1.1% QoQ, mainly due to lower handset sales; but net profit rose 19% YoY and 1% QoQ to S$39.5m, aided by higher service EBITDA margin. 9M13 revenue was down 2.7% at S$729.3m, meeting around 64% of our FY13 forecast, while net profit rose 10% to S$119.7m, or 77% of our full-year estimate. Going forward, management has kept its 2013 guidance intact i.e. still expects to see moderate earnings growth; also keeps capex spending at S$130m. In light of the 9M13 results, we opt to pare our FY13 sales estimate by 8%; but we keep our earnings estimate unchanged. Our DCF-based fair value inches up to S$3.17 from S$3.10 on slightly risk-free assumptions. Maintain HOLD. (Carey Wong) MORE REPORTS TEE International: Impact from one-time expenses Tee International’s 1QFY14 PATMI dipped 67.5% YoY to S$0.9m mostly due to S$1.9m in unrealized foreign currency losses and a S$2.8m spike in admin expenses. The increase in admin expenses consist of a one-time S$1.1m incentive payment to employees, S$0.7m from the newly acquired integrated turnkey material-handling subsidiary, and staff costs from a higher headcount. 1QFY14 PATMI constitutes only 4.1% of our FY14 forecast and we judge this quarter to be a miss. That said, if we adjusted for the one-time incentive payment and currency losses, core PATMI is estimated at S$5.6m which would have made up 25.0% of our forecast and been in line. Our fair value estimate dips to S$0.35, versus S$0.38 previously, as we lower our FY14 PATMI forecast down by 26% to S$16.6m. Maintain HOLD. (Eli Lee) NEWS HEADLINES - US stocks tumbled Tue on signs of any progress toward a budget deal unravelling, two days before the nation is expected to hit its debt limit. - Keppel REIT posted a DPU of 1.97 S cents for 3Q13, up from 1.96 S cents a year ago. - K-Green Trust's net profit rose 7.4% to S$3.8m in 3Q13, from S$3.5m a year ago. - Nam Cheong is buying office space at Suntec Tower Three to house its Singapore corporate office for a price of ~S$30.3m. - Viva Industrial Trust, a stapled group that will have an initial portfolio of three industrial properties in Singapore valued at S$743m, is seeking to raise a total sum of about S$365m through an IPO. - Pure Beauty Investments plans to acquire Catalist-listed Singapore Medical Group for S$16.67m. - SIIC Environment Holdings is placing out 3.1b new shares to five investors including its controlling shareholder at an issue price of 8.5 S cents per placement share.