CIMB RESEARCH on 15 Oct2012
FY2012 earnings came in largely in line, at 95 per cent of our and consensus estimates. We tweak our FY2013 to 2015 numbers slightly on lower circulation revenue leading to a marginally lower sum-of-the-parts target price. Our "outperform" rating is maintained.
Operating profit came in slightly higher than last year, but earnings were lower y-o-y on weaker investment income. Management guided that newsprint charge-out rates have come down slightly and, if they stay around the current level, margins are likely to creep up in H2 2013.
FY2012 saw the property arm continue to provide robust growth, offsetting the gradual decline in circulation revenue. Ad revenue was down due to fewer property advertisements after the government introduced cooling measures.
We expect the property arm to continue being the star performer in FY2013. This year saw rental increases at both Paragon and Clementi Mall on the back of a full year of operations. As Clementi Mall matures, rentals will continue to see good upside. The expected completion of Seletar Mall by end-FY2014 should further increase the group's recurring earnings base.
We think there is a chance dividends may increase on higher recurring profit as Clementi Mall matures. The 24 cents of dividend declared represents a yield of 6 per cent. The balance sheet is still in good shape; net gearing stands at 0.4x.
OUTPERFORM
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