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Stocks In Focus SG (SATS, AIMS AMP Capital Industrial REIT, SIA) – 26/07/13
SATS 1Q14 Profit Increases By 11.9%
SATS released its 1Q14 results yesterday with profit up by 11.9 percent to $46.2 million. The higher profit is mainly attributed by operating profit and share of results of associates and joint ventures (JVs). Operating profit rose by 3.6 percent to $40.7 million through saving initiatives undertaken by the company. Share of results of associates and JVs, net of tax, rose 6.8 percent to $12.5 million, led by higher profit contributions from associates and JVs in the North and Southeast Asia regions. A one-off impairment provision of $1.7 million for assets held for sale was made; when excluded, its net profit would increase to $47.9 million. SATS currently has a healthy debt-to-equity ratio of 0.09 times while holding $490.7 million of cash and cash equivalents.
Significance:The group remains focused on managing its costs and raising productivity while actively evaluating strategic opportunities to grow its businesses and regional presence, especially in view of a moderation in passenger traffic growth and continued downward trend for air freight amidst the uncertain global economy.
AIMS AMP Plans On Acquiring Sydney Assets
AIMS AMP Capital Industrial REIT announced a 12 percent growth in income distribution to $12.5 million for 1Q14 with a proposed distribution per unit (DPU) of 2.5 cents. The DPU of 2.5 cents comprises of an advanced distribution of 0.85 cents per unit paid on 18 June, and the remaining 1.65 cents for the rest of the quarter, to be paid on 20 September. Net property income grew 5.7 percent to $15.7 million, mainly due to the rental contribution from maturing of assets in the Phase One of 20 Gul Way. AIMS AMP is proceeding to the Phase Two Extension and Phase Three with an announcement to enter into a conditional development agreement with CWT earlier. Notably, AIMS AMP unveiled its plans to enter Sydney market in the coming year in view of the weaker Australian dollar and lower interest rate, as well as the presence of sponsors like AIMS Financial Group and AMP Capital Investor International Holding. “(Having the sponsors in Australia) is a bit like the REIT having a big army of people on the ground looking for potential opportunities,” cited chairman of the manager and director of AMP Capital, Andrew Bird.
Significance: The aggregate leverage of AIMS AMP stands at 25.4 percent as at 30 June. The venture to Australia is said to be able to generate a higher yield of 7.5 percent compared to 6 percent in Singapore. The company plans to carry on its local business as it increases the exposure of its portfolio in Australia, with plans of asset enhancement in three identified assets in Tuas, Clementi and Senoko South Road.
SIA Records 56.2% Jump In Q1 Profit
Singapore Airlines (SIA) reported a fiscal first quarter net profit of $121.8 million, a 56.2 percent growth year-on-year (y-o-y) from $78 million on the back of a 1.7 percent rise in group revenue to $3.8 billion. The significant increase in profit is mainly due to its non-operating gains in the sale of aircraft and its divestment gain in Virgin Atlantic of $335.8 million, which offset the impairment costs of $317.4 million. The operating profit for the group came in at $81.7 million, representing a 13.5 percent y-o-y increase. Commenting on the group’s outlook, SIA brought up the stiff competition faced by the airline from budget carriers and the rapidly expanding airlines in the Middle East would result in a smaller yield for the company. However, SIA expects a higher forward passenger booking for the next few months as compared to last year.
Significance: Credit Suisse analysts noted that SIA should generate better revenues on a brighter yield outlook as premium travel shows some improvement, offsetting a continued decline in freight and weaker contributions from regional operations such as SilkAir, where capacity growth has outpaced demand growth.
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