OCBC Report 6 Feb 14

KEY IDEA Singapore Post: Steady yield play Singapore Post (SingPost) reported 3QFY14 PATMI of S$39.4m which was flat YoY (-0.2%). 9MFY14 PATMI now cumulates to S$112.3m, constituting 76.0% of our full year forecast and we judge this to be mostly in line with expectations. In terms of the topline, 3QFY14 revenue grew 30.2% YoY to S$222.6m mainly due to contributions from acquisitions and an increase in e-Commerce activities. Net flow generated by operating activities remained healthy at S$40.2m in 3QFY14 versus S$39.8m generated in 3QFY13. We note that total expense growth in 3QFY14 rose at a rate (up 34.4%) marginally above that of revenue (30.2%) due to increased exposure to lower net margins businesses. As expected, the group has proposed an interim quarterly dividend of 1.25 S cents/share. We continue to like SingPost’s consistent dividend policy which is backed by stable operating cash flows, but see few re-rating catalysts for now. Maintain HOLD with an unchanged S$1.32 fair value estimate. (Research team)

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NEWS HEADLINES - US stocks ended Wed’s choppy session lower as investors were unable to shrug off worries over the economy. - Singapore's manufacturing sector has got off to a surprisingly strong start in 2014, going by the improvement in Jan's purchasing managers' index. - Blumont Group said that the proposed acquisition of 135m Blumont shares by chairman- designate Alexander Molyneux had been deferred. - Del Monte Pacific is selling some stakes to boost its war-chest to fund its purchase of a US food company of the same name, while SunMoon Food Company is buying into a US-based beverage maker. - United Envirotech has issued S$35m of 7.25% fixed-rate notes due 2016 under a US$300m medium-term note programme established last Jun. - ST Aerospace, a subsidiary of ST Engineering, has opened a new S$26.6m aviation centre at Seletar Aerospace Park. - Singapore Airlines said that it had grounded an Airbus A380 superjumbo for further inspection after scratches were found on its fuselage.