Singpost

Singpost: Announced 3Q12 results which were in-line. 3Q12 rev at $149.4m flat yoy and +6.1% qoq, while core net profit at $38.9m, -4.8% yoy and +18.5% qoq. Ebitda Margins however dropped at 35.5% vs 43.2% yoy.

Weaker margins due to lower margins from grp’s transshipment business and rising labour costs and according to grp, margins are not likely to improve significantly despite cost cutting measures.

Regional investments so far has also yielded unattarcative yields, with associate Co’s profits increasing from losses in 3Q11 to a $1m profit in 3Q12. Based on SingPost’s investments of around $65m to date, the estimated yield of 6.2% on an annualized basis suggests the risk-reward dynamics of these investments are rather unattractive, especially since its own div yield is higher at 6.4%.

Free cash flow for the fiscal year to date has reached around $75m (annualised FCF yield: 5.4%), just sufficient to cover Grp’s min dividend commitment of 5c per share (or $94m in total). SingPost has maintained a div payout of 6.25 c/share since FY08, translating into a regular dividend yield of 6.4%.

Ratings as follow:
Kim Eng maintains Buy on valuations with $1.09 TP.
JP Morgan maintains neutral with $0.90 TP.
DBSV maintains Hold with $0. 1.04 TP
UBS Maintains Neutral with $1.00 TP.