SINGAPORE, Nov 22 (Reuters) - Banks will continue to come under pressure on Thursday on lingering concerns over the U.S. subprime crisis, but SingTel (STEL.SI: Quote, Profile, Research) and DBS (DBSM.SI: Quote, Profile, Research) may be lifted by a report that Dubai may buy stakes in the firms.
U.S. stocks fell on Wednesday on signs that trouble in the housing market could worsen and further harm the economy, unnerving investors as they headed into the Thanksgiving holiday.
Stocks and factors to watch.
- Oversea-Chinese Banking Corp (OCBC.SI: Quote, Profile, Research), Singapore's third-biggest bank, said it has raised S$225 million of tier-2 capital through the sale of 10-year bonds with a five-year call option. [ID:nSIN118156]
- Dubai's ruler Sheikh Mohammed bin Rashid al-Maktoum, through his private investment arm Dubai International Capital, is eyeing stakes in Singapore Telecommunications and DBS Group, the Business Times said.
- The stock exchange chiefs of six Southeast Asian countries -- Singapore, Thailand, Malaysia, Philippines, Indonesia and Vietnam -- will meet in Bangkok on Sunday to work out details of a common bourse to be set up late next year, the Business Times reported.
- Popular Holdings (POPU.SI: Quote, Profile, Research), which runs a chain of book stores in Singapore, said it has bought a Singapore property for S$16.5 million. [ID:nSNBL80881]
- SembCorp Industries (SCIL.SI: Quote, Profile, Research) and Singapore Petroleum Co (SPCS.SI: Quote, Profile, Research) said in a statement that they will jointly introduce Singapore's first retail compressed natural gas (CNG) service early next year. There are currently about 350 CNG cars in the city-state, they said. [ID:nSNBL30551]
- Singapore's Straits Times Index (.STI: Quote, Profile, Research) slid 2.65 percent to 3,347.20 points on Wednesday.
- The Dow Jones Industrial average (.DJI: Quote, Profile, Research) fell 1.62 percent to end at 12,799.04, its lowest close since April. The Nasdaq Composite Index (.IXIC: Quote, Profile, Research) dropped 1.33 percent to 2,562.15. (Reporting by Chua Baizhen; editing by Geert De Clercq)
Kept on stepping onto people's toes with the sensitive overseas asset acquisition. I dont think it will leave a positive impression with those countries. I seriously hope they review their strategy and be more sensitive towards such acquisition. Unilateral/Bilateral relationships with Asean and/or trade relation countries are utmost importance to Singapore. Those takes years to build and nuture however it only takes an uncalled acquisition to demolish it all.
(SINGAPORE) Temasek Holdings said yesterday it will seek international arbitration if necessary in its fight against the ruling by Indonesia's competition regulator that it breached anti-trust laws there.
DBS Vickers - Singtel (Buy, TP S$4.50) announced that the Indonesia Commission ruled that Temasek had breached competition laws due to cross-ownerships in two of Indonesia's largest mobile operators, Telkomsel and Indosat, and are required to divest its stake in one of them within 2 years. Temasek's 56% owned unit, SingTel owns 35% of Telkomsel while its wholly-owned ST Telemedia unit along with Qatar Telecom controls 41.9% of Indosat. SingTel expressed their disappointment over the decision and will take necessary steps to protect their interests under Indonesian and international law.
DBSV Research maintains its BUY recommendation on the Electrotech at a revised target price of S$0.58, based on 6x FY08 earnings. We see near term pricing pressure but remain optimistic about its longer-term prospects. The stock offers deep value at current levels, trading at undemanding PE of only 4.5x FY07 earnings.
CIMB - Singapore Telecommunications (S$3.68) - Positive takeaways from Investor Day
Regional Mobile Investor Day
SingTel held the event yesterday. Key take-aways were positive: (1) Regulatory concerns in surrounding Bharti are overblown; (2) Telkomsel is poised to rise above its competitors; (3) Singapore and Optus remain a top-line growth driven story.
Associates & investment strategy
Bharti: regulatory concerns are overblown. There was much discussion surrounding key regulatory developments and their potential negative impact on Bharti. We came away with the conclusion that reported regulatory developments on spectrum allocation, 3G spectrum and mobile-number portability (MNP) are still not cast in stone and could take at least a year before final decisions are made. We also see limited negative impact on Bharti?s growth prospects:
? Spectrum allocation. There have been concerns about spectrum constraints at Bharti on the back of delays in spectrum allocation and unfair conditions imposed. Bharti said no decisions have been made on the award of new spectrum to existing players facing spectrum constraints. Under the Department of Telecom?s (DoT) recommendation, it would be very difficult for large GSM operators including Bharti to secure new spectrum. The industry has since objected to the recommendation and the DoT is now reviewing its recommendation. Bharti reiterated that it is not facing spectrum constraints in the rural markets where most of its growth is coming from. Spectrum constraints remain limited to 8-10 towns which have high market penetration (65% for overall, 90+% penetration of consumers above 13 years old). These are markets where Bharti has below-average market share (17% vs. Bharti?s overall market share of 24%). Hence, the commercial impact on Bharti is limited and the need for incremental capacity is not beyond Bharti?s ability to meet through the addition of base towers as well as spectrum optimisation technology.
? 3G spectrum. Under the current recommendation, six licences would be issued through an auction process vs. three previously, to instil more competition in the industry. Based on discussions with management, we believe that incumbents such as Bharti have an advantage over potential new entrants in the auction process. Key reasons are the licences are likely to come with demanding roll-out requirements (e.g. coverage, spectrum efficiency), making it difficult for new telco players to justify a business case. Also, the business case for a 3G greenfield operator without a 2G base in a developing country is an extremely difficult one.
? MNP. This is expected to kick off in four metropolises in which Bharti has low exposure and relatively lower market shares. As a result, Bharti may actually have more to gain than lose. We also reckon that the impact of MNP may be limited in India, as almost 95% of its subscribers are prepaid customers.
Telkomsel still holds the upper hand. Concerns of rising competition due to marketshare slippage in 3Q07 were allayed. No change to our view that Telkomsel is a reliable growth driver for SingTel. Key reasons are:
? Premium tariffs leave room for competitive response. Telkomsel?s market-share loss was triggered by its decision to hold back its response to Excelcomindo and Indosat?s tariff cuts. We expect Telkomsel to hit back with tariff cuts to regain market share in 4Q07.
? Reaccelerating network rollout. Telkomsel?s market-share loss in 3Q07 could also be blamed on its decision to reduce the pace of network expansion in 1Q07. The company has since reinstated plans for more aggressive rollout and extend its leadership in the coverage of rural markets. We therefore expect the growth momentum to pick up over the coming quarters.
New acquisitions: eyes on Vietnam. SingTel remains focused on gaining a foothold in the privatisation of telco assets in Vietnam. It has made progress in establishing its relationship with the regulator with a recently concluded consulting project for Mobifone and VNPT (Vietnam Postal and Telecommunications). This should help cement SingTel?s positioning as a strategic partner ahead of the privatisation process. The Vietnamese regulators have now indicated their intention to list Mobifone sometime in Jun-Jul 08. We believe the timeline and structure of the deal remain fluid at this juncture. SingTel is clearly interested in a stake in either Mobifone or VinaPhone.
More synergies from associates. We like the recently announced Bridge Alliance flatrate data roaming offering that marks a significant step forward in driving synergies from its associates. The offering gives associates the ability to differentiate themselves from local competitors by leveraging SingTel?s extensive regional footprint. This is a value proposition that many local competitors cannot readily match. More offerings based on the regional footprint are underway, especially in the wireless broadband space where SingTel has set up a regional task force.
Singapore & Optus
Singapore growth to be topline-led. No change to our view that Singapore is poised to deliver topline-led earnings growth. Key drivers continue to be subscriber growth, especially prepaid and broadband. Postpaid ARPU should also see upside from increased roaming charges as well as a recently launched island-wide wireless broadband offering in October. EBITDA margins are expected to decline yoy due to spending on strategic initiatives, e.g. mioTV but should remain manageable. M1 is likely to be increasingly marginalised as SingTel strengthens its mio bundled plans over time. SingTel also clarified that its recently announced F1 naming rights include only advertising and event rights, not broadcast rights.
Optus?s topline rejuvenated. Optus?s mobile operations continue to benefit from its highly successful capped plans with the help of its Black & White campaign. Fixed broadband is also seeing encouraging growth (+7% qoq in 3Q07) with the successful launch of Optus Fusion, an innovative offering that combines fixed-line phones with broadband capped plans. Topline growth should offset expected EBITDA margin erosion as Optus seeks to gain subscriber market share with its innovative service offerings, possibly resulting in flat EBITDA yoy for FY08.
Valuation and recommendation
Maintain Outperform with unchanged sum-of-the-parts target price of S$4.54. The recent share-price weakness presents a good buying opportunity, in our view. We reiterate that SingTel offers highly-liquid exposure to reliable earnings growth from its regional associates, led by Bharti and Telkomsel. In addition, robust free cashflow from rejuvenated operations at Singapore and Optus should support our above-consensus yield forecast of 4.3%. SingTel remains our top Singapore telco pick over the next six months. Key catalysts could include earnings delivery, flight to quality on rising risk aversion and consensus dividend upgrades.
Wow! Subscriber increase steadily every qtr to 158m now. Tomorrow's 2Q result must be solid. Expect interim divs of 4-5cts at least. Stay vested in/out and be patient.
S'pore's SingTel says Q3 mobile subscribers up 16pct
SINGAPORE, Nov 6 (Reuters) - Singapore Telecommunications said on Tuesday its Asia-Pacific mobile phone subscriptions at end-September rose 16 percent from the previous quarter, helped by its interests in Pakistan and India.
SingTel, Southeast Asia's biggest telecom firm by market capitalisation, said it had 157.97 million mobile phone subscribers at the end of September, up 57 percent from 100.77 million a year earlier and from 136.35 million at end-June.
SingTel's mobile subscriber figures for the July-September quarter included 11.87 million mobile customers belonging to Pakistan's Warid Telecom, in which the Singapore company acquired a 30 per cent stake in September 2007.
India's Bharti , in which SingTel has 30.45 percent interest, added 6.17 million net mobile subscribers during the quarter, raising its total mobile subscriber base to 48.88 million as at September 30, the Singapore company said.
Indonesia's Telkomsel, which is 35 percent held by SingTel, got another 1.65 million subscribers to bring its total mobile subscriber base to 44.46 million.
SingTel's mobile subscriber base in Singapore rose 185,000 to 2.13 million, while its Optus unit in Australia saw subscriber numbers rise to 6.89 million from 6.80 million in June.
SingTel, which is 56 percent owned by state investor Temasek Holdings [TEM.UL], did not provide separate figures for Thailand's Advanced Info Service , the Philippines' Globe Telecom and Pacific Bangladesh Telecom.
SingTel has been acquiring stakes in mobile phone operators across the region to tap faster-growing markets and reduce its dependence on the mature Singapore and Australian telecom markets.
last few days whacked too high....these type of sudden surge will only last for a short while...investors need to pull $ out for other counters...they will not keep there for long....
- SingTel staged a rally over the last 4 weeks that is showing signs of
weakness at this juncture.
- First sign of weakness was observed as the price rallied on the back of
declining volume.
- Second sign of weakness was observed by the price break above the 2nd
of Feb 07 high of S$3.70 on 14th Sept which was accompanied by only a
marginally higher volume. This indicates the breakout might not be
sustained and could very likely pull back in the weeks ahead.
- Yesterday's strong price move up seemed to indicate that the uptrend
could head up a little more before we witness a reversal, given that RSI,
stochastic and MACD have all broken above their downtrend lines.
- However, we are not ignoring the weak volume on the rebound and price
breakout. We advocate caution and lightening up on positions as the
rebound continues. Resistance set at S$4.00.
- We anticipate a reversal in trend in the weeks ahead. 1st support is set at
S$3.60 and subsequent support is set at S$3.32.
Regional stock markets are mostly in the red and STI is not spare. But if not for the defensiveness and stability of Singtel's share price, STI could dip further. What has caused the recent strong performance? Any idea other than the reason stated in CLSA investor's forum?
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