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Singapore Airlines (SIA SP)

4QFY17: Shock Earnings Miss Amid Yields and Cost Mismatch

SIA surprised with a loss of S$138m vs our expectation of an $8m profit as the parent airline swung to a loss. While SIA managed to boost load factor, this was achieved at the expense of yields, which fell by a whopping 7.5% yoy in Feb 17. SIA and other regional carriers need to cut capacity to boost yields. Maintain HOLD. But we cut our target price to S$10.10, still valuing SIA at 0.7x FY18F book value-ex SIAEC.


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4QFY17: All good but for Airtel

■ 4QFY17 results were in line, bringing FY17 core net profit to 2% above our forecast.

■ Singapore’s EBITDA was flat yoy. Digital Life (DL)’s negative EBITDA narrowed 7.5% yoy.

■ Optus’ EBITDA was also flat yoy. Both postpaid & prepaid saw strong net adds qoq.

■ Associates’ earnings fell 1.3% yoy, dragged largely by Airtel.

■ Maintain Add with unchanged target price of S$4.10. Attractive yields of 4.7-5.1%.


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Global Logistic Properties Ltd: Healthy set of FY2017 results

GLP’s 4QFY17 PATMI increased 62% YoY to US$247.1m mainly due to higher asset values as we saw portfolio cap rates compress over the quarter in Japan, US and Brazil. On a core basis, however, after adjusting for non-recurring items, 4QFY17 earnings fell 5% YoY mainly due to lower contributions from the group’s second US portfolio after its syndication in 2QFY17. In terms of the topline, 4QFY17 revenues increased 14.0% to S$226.9m mostly due to rent growth and lease-up after the completion and stabilization of Chinese development projects, financial services income from China and higher fund management fee income. Overall we judge this quarter’s number to be broadly in line with expectations. Management logistic facilities globally, with the group’s average lease ratio at a healthy 91% as at end Mar 2017 (albeit down 1% QoQ due to some weakness in China), and group new and renewal leases up 35% YoY to 13.3m sqm, 6.3% growth in same-property NOI and 8.9% rent growth in renewal leases. Regarding the ongoing strategic review, GLP reports that it remains in discussion with several shortlisted parties following its evaluation of non-binding proposals received and the due diligence reports continued customer demand for its process is ongoing. Management reiterates that there is no assurance that any transaction will materialize from the review. An ordinary dividend of 6.0 S-cents per share has been proposed. Maintain HOLD with an unchanged fair value estimate of S$2.87.


Golden Energy & Resources

Sizable Increase In Production To Continue

bigmachine4.17We initiate coverage on GEAR with a TP of SGD0.71 (63% upside), implying 14.7x FY17F and 12.4x FY18F P/Es respectively. It booked strong 1Q17 coal production of 3m tonnes (47.8% YoY) and we believe that there would be continued growth, after appointing two coal industry veterans to the board of directors of Golden Energy Mines earlier this year. One of them, Mr Raden Utoro, had been instrumental in increasing the coal production of KPC – a coal mining company with one of the world’s largest open-pit mining – to >60 mtpa from 2 mtpa.


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CNMC Goldmine Holdings

Earnings under pressure

Downgrade to HOLD with TP cut to S$0.31; Steep cuts to FY17F/18F earnings of 98%/55% on low ore grades.

1Q17 earnings was below expectations as lower ore grades weighed on gold production and sales. 1Q17 net profit was US$54,834, helped by unrealised forex gains of US$0.31m; excluding this, CNMC would have recorded a second consecutive quarter of losses. Until a sustainable improvement in ore grades can be delivered, we lower our gold output estimates, and combined with a higher operating cost base, we cut FY17F/18F earnings by 98%/55% to US$0.3m/US$5.7m. Hence, we arrive at a lower TP of S$0.31, based on a blend valuation of DCF (WACC of 10.7%, terminal growth of 1%) and 14x FY18F PE. We are suspending coverage on the stock due to lack of earnings visibility.


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LionelLim8.16Check out our compilation of Target Prices