Reports » Singapore

Singapore stock market and companies daily report (Singapore Airlines, StarHub, GLP) (February 03, 2012)

Contributed by Shares Investment

SIA’s 3Q12 Earnings Beset By High Fuel Costs
Persistently high jet fuel prices have eaten into Singapore Airlines’ (SIA) 3Q12 profit as the national carrier registered a 53% slump in earnings figures. SIA’s bottom line fell to $135.2 million versus $288.3 million a year ago as overall fuel bill surged by a third to $1.51 billion. Fuel accounted for 40% of SIA’s expenditure, up 7% from a year ago. SIA’s top line did not fare much better as weak growth in passenger carriage saw revenue barely increasing 1% to $3.88 billion. Amongst its subsidiaries, SIA Cargo put a huge lag on SIA’s overall performance as the subsidiary recorded $40 million worth of operating losses. While cargo load factor slipped 0.3 percentage points to 64.7%, cargo breakeven load factor rose by eight percentage points to 69.2% due to a combination of higher unit cost and weaker yields. SIA opines that the air cargo market will remain weak going forward as indicators such as the purchasing managers indices continue to slip into contraction territory amid weak consumer demand globally.
Significance: Uncertainty in the global economy as well as the protracted European debt crisis is expected to continually plague SIA. Coupled with stubbornly high and volatile oil prices as well as anemic forward bookings, the national carrier opines that 4Q12 performance will remain weak.

StarHub’s 4Q11 Earnings Record Growth
StarHub recorded steady growth in most of its business segments as earnings for FY11 grew to $315.5m, up 19.9% from FY10. Full year operating revenues rose 3.3% to $2.31 billion as its mobile business remained a key revenue driver, contributing $1.22 billion to StarHub’s top line. A key factor in its mobile business growth was an increase in average revenue per user (ARPU) as Singapore’s smartphone-savvy population continued to spend more on mobile services and data. Mobile post paid revenue grew 6% while non-voice services contributed 39.8% of ARPU for the customer segment in 4Q11. StarHub’s broadband business grew 2.4% for the year as subscriptions to its next-generation fibre nationwide broadband (NBN) begun contributing to its data and Internet services portfolio. Perhaps the only blotch in its earnings report card came from the pay tv segment which declined 5% in FY11 owing to lower subscription in its sports group as it lost exclusive broadcast rights to the Barclays English Premier League (BPL) to SingTel.
Significance: StarHub remains optimistic about FY12 despite a prospect of continued low single digit growth in its top line. Notably, it intends to maintain its annual cash dividend payout of $0.20 in 2012.

GLP To Commence Development Of Okayama Logistics Facility
Global Logistics Properties (GLP) plans to commence developing a 79,023 square metre facility in Okayama, Japan in June this year. This will be its second project under its joint venture with the Canada Pension Plan Investment Board and is expected to come onstream in February 2013. The total development cost of the project is estimated to be US$103 million ($128.6 million). Miki Masato, President of GLP Japan, mentioned that GLP expects to create significant value for shareholders with the completion of this new project as the firm sees strong demand from customers as well as the fact that there has been no new supply of large-scale, multi-tenant facilities in the Okayama region for an estimated 4 years. In testament of the pent up demand in that region, GLP has already pre-leased 39% of GLP Soja and has received indicative interest of over five times the remaining leasable area.
Significance: It is notable that GLP’s other existing assets in the Okayama area are already operating at 100% occupancy. Together with the strong interest it has so far received for GLP Soja, GLP can expect its new project to contribute significantly to its financial performance.