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Singapore Telecoms Sector - Nowhere near the bottom

Shared By Stock Fanatic on Saturday, July 14, 2018 | 14.7.18

Mobile: More downside to pricing. We believe TPG is likely to aggressively target the low-tier and mid-tier data segments as the data price curve has flattened over the last three years. Further, legacy revenues (caller id and voice overage) are set to decline as TPG is expected to charge only for data. Our global peer RoIC comparison shows that the Singapore telecoms market continues to see an excess return, reflecting the potential for further price cuts. We expect the mobile sector’s revenue to decline at a three-year CAGR (2017-20E) of c.5% (post IFRS 15), mainly led by the decline in ARPU. Read More

StarHub Ltd - Current dividends are not sustainable

StarHub's stock price has corrected by c.56% since Jan-2015 due to increasing competition and the concerns surrounding the entry of TPG. We see further downside in StarHub's stock price as we believe it is not yet fully baking in the financial impact from the entry of TPG. Read More

Asia Pacific Equity Strategy - Sectors – how far from trough valuations?

Sector with PB at all-time lows is Telcos. Given the twin fears of an allout trade war and EM contagion, we looked yesterday at which countries were the closest to trough valuations How far from trough valuations? In this note, we look at what sectors are the closest to trough valuations. Figure 1 highlights that it is the defensive sector—Telcos—whose PB has fallen to all-time lows of 1.53x. But before investors rush to buy Telcos, we highlight that ROE is also at all-time lows. We reiterate our UNDERWEIGHT call on Telcos. Read More

Asia Pacific Equity Strategy - How far from trough valuations?

PB of 1.67x still far from previous lows. Given the twin fears of a trade war and EM contagion, we look at how far valuations and specifically priceto-book is from previous lows. While our note on net foreign selling highlights foreign investor capitulation (and only the fifth such episode since 1997), Figure 1 highlights that the current PB of 1.67x is still far from the previous lows. The two most recent lows were 1.28x in August 2015 (Yuan devaluation) and 1.47x in January 2014 (post Fed taper of 2013). The current ROE of 11.2% is similar to the ROE at the January 2014 low but higher than the ROE of 10% seen at the August 2015 lows. Read More

Asia Pacific Equity Strategy - Net foreign selling in Emerging Asia ex-China rises to US$28 bn over last five months

US$28.4 bn of net foreign selling over the past five months. With net foreign selling in Emerging Asia ex-China accelerating over the past three trading days to US$3 bn, Figure 1 highlights cumulative net foreign selling of US$28.4 bn over the past five months. While Taiwan (US$9.1 bn) and Korea (US$5.3 bn) have accounted for half the net foreign selling, Figure 1 also highlights that no market has been spared. Net foreign selling over the past five months was US$5 bn in Thailand, US$3.3 bn in Indonesia, US$2.6 bn in India, US$1.9 bn in Malaysia and US$1.2 bn in the Philippines. Read More

Singapore office REITs - Rent growth may not fully translate to DPU growth

● Our channel checks suggest that 
(1) while there has been some expansion from the existing tenants, this has been partly offset by tenants giving back space. 

(2) Coworking space has been a key demand driver. 

(3) Landlords have continued to raise asking rents, although take up has slowed partly due to tenants starting to show resistance to the higher rents. Read More

Singapore Market Strategy - Institutional net selling accelerates and corporate share buyback slowing

During the week of 18 June, institutional net selling rose to S$48.5 mn from S$9.5 mn a week ago. Retail investors continued to support the market with net buying of S$260 mn, vs S$370 mn a week ago. Top institutional net buy stocks are DBS, UOB, CMT, GGR and CDL, and top institutional net sell stocks are ST, CAPL, OCBC, STH and SPOST. Read More

Asia Pacific Equity Strategy - Foreign investor capitulation approaching February 2016

Third biggest episode of foreign investor capitulation. With net foreign selling of US$32 bn over the last five months, Figure 1 highlights that net foreign selling in Emerging Asia ex-China ex-Malaysia has now dropped to -0.5% of market capitalisation. This makes the current episode the third biggest in terms of capitulation and it is fast approaching the -0.6% seen in the February 2016 episode. The biggest episode though was in 2008. Read More
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