In-Depth Analysis of Latest Financial Results: Frasers Logistics, Singapore Post, SIA Engineering, CapitaLand Investment, and Others

Broker: UOB Kay Hian

Date: Thursday, 07 November 2024

Frasers Logistics & Commercial Trust (FLT SP)

Logistics Properties Propel Growth and Rental Reversion

Frasers Logistics & Commercial Trust (FLT) achieved impressive rental reversion rates of 39%, 58.1%, and 31.1% for their logistics properties in New South Wales, Victoria, and Queensland respectively in 4QFY24. The trust has successfully backfilled vacant space, restoring occupancy in Australia to 100%. With a low aggregate leverage of 33.0% and a substantial debt headroom of S\$801 million, FLT is well-positioned for future growth.

FLT reported a DPU of 3.32 S cents for 2HFY24, a slight decrease of 5.7% year-on-year, mainly due to increased finance costs. Despite this, the trust’s revenue and adjusted NPI grew by 8.4% and 3.7% respectively, driven by new acquisitions and developments.

Logistics properties continued to drive positive rental reversions, with properties in New South Wales, Victoria, and Queensland showing strong performance. The logistics properties also maintained full occupancy across Australia, Europe, and the UK.

In Singapore, FLT is focused on backfilling vacant spaces at Alexandra Technopark (ATP) after Google Asia Pacific vacated large tracts. The trust has secured tenants for parts of these spaces but faces tough competition from other business parks.

FLT’s key financials for the year ending 30 September 2024 include a net turnover of S\$447 million, EBITDA of S\$279 million, and a net profit of S\$148 million, reflecting solid operational performance despite increased costs.

Singapore Post (SPOST SP)

1HFY25: Results Miss Despite Strong Growth

Singapore Post (SPOST) saw a significant increase in core PATMI by 87.6% year-on-year for 1HFY25, driven by strong contributions from its Australia and Singapore businesses. Despite this, the results missed expectations due to higher-than-expected interest costs and softer performance in the Singapore letter & mail and Australian 3PL business segments.

Revenue grew by 20% year-on-year to S\$992.4 million, with the Australia segment surging 44.1% due to the consolidation of Border Express (BEX). The Singapore business also showed robust growth, benefiting from a postal rate hike in 3QFY24. However, the international business faced challenges, with a 26.8% decline in cross-border volumes.

SPOST declared an interim dividend of 0.34 S cents, reflecting a 30% core PATMI payout ratio, up from 0.18 S cents in 1HFY24. Key financial metrics include a net turnover of S\$1,687 million, EBITDA of S\$173 million, and core PATMI of S\$41 million for FY24.

SIA Engineering (SIE SP)

1HFY25: Earnings A Slight Miss; Investing For Long-term Growth

SIA Engineering (SIAEC) reported a slight miss in its 1HFY25 core net profit, which stood at S\$70.4 million, or 45% of the full-year forecast. The miss was attributed to supply chain constraints and gestation costs related to new business expansion initiatives.

Revenue for 1HFY25 grew by 12.1% year-on-year to S\$576.2 million, driven by increased flight activities at Changi Airport, which reached 96% of pre-pandemic levels by September 2024. However, operating profit remained subdued due to high operating leverage and start-up costs for new projects, including an airframe MRO facility in Subang, Malaysia.

JVs and associates continued to be key contributors, with overall profit contributions reaching S\$58.6 million for 1HFY25. SIAEC maintained a net cash position of S\$488 million as of end-1HFY25, and declared an interim dividend of 2 S cents.

CapitaLand Investment (CLI SP)

Executing Well Operationally But Cautious On 2025

CapitaLand Investment (CLI) reported a 3Q24 business update with revenue slightly lower than expected at S\$2.26 billion, up 1% year-on-year. The company exceeded its capital recycling target by divesting S\$4.1 billion worth of assets year-to-date.

Operational highlights included improved performance in commercial and lodging management segments, with 9M24 revenue up 12% and 14% year-on-year respectively. CLI also signed up over 10,200 new units and opened over 7,200 units during the same period.

Going forward, CLI remains cautious about the 2025 earnings outlook but continues to focus on strategic expansions and capital recycling. The company plans to lower its leverage and explore new opportunities in Japan, Australia, and Southeast Asia.

Internet – China

Revitalising Momentum Evident In Initial Phase Of 11.11 Campaign

The initial phase of the 11.11 campaign in China showed promising signs of high single-digit GMV growth for 2024. National daily parcel volumes surged by 49% year-on-year, with total online sales reaching Rmb845 billion by 30 October. Home appliances led the sales with Rmb132.4 billion, followed by mobile devices and apparel.

Government trade-in subsidies and platform discounts played a key role in boosting consumer demand. Traditional e-commerce platforms accounted for 80.3% of sales, while livestreaming e-commerce represented 19.7%. JD saw robust sales growth in 3C digital products and home appliances, driven by subsidised campaigns and competitive pricing strategies.

Other platforms, including Taobao, Tmall, PDD, Kuaishou, and Douyin, also reported strong sales figures, driven by various promotional activities and government subsidies. The overall e-commerce landscape in China is expected to see continued growth, supported by favourable policies and consumer demand.

LINK REIT (823 HK)

1HFY25: DPU Up 3.7% yoy, Meeting Expectations; Enhancing Resilience Amid Macro Headwinds

LINK REIT reported a 3.7% year-on-year increase in DPU for 1HFY25, meeting expectations. The Hong Kong malls achieved a rental reversion of 0.7%, while the China portfolio saw organic revenue growth of 6.5%. The trust maintained operational resilience despite macroeconomic challenges.

Total revenue for 1HFY25 grew by 6.4% year-on-year to HK\$7,153 million, driven by strong growth in non-rental income and the full consolidation of SH Qibao Plaza. However, property valuations decreased by 2.1% due to cap rate expansion, and net gearing ratio increased to 20.6%.

Management remains cautious about the Hong Kong retail market but is committed to the LINK 3.0 strategy, focusing on expanding into major APAC markets. The trust aims to buffer near-term challenges with non-rental income and yield-accretive deals.

Prudential (2378 HK)

Solid NBP Growth On Improved Sales And Margins Across Few Markets

Prudential reported an 11% year-on-year growth in new business profit (NBP) for 9M24, driven by improved sales momentum in China, Hong Kong, and Indonesia. The NBP margin also increased by 1.8ppt year-on-year, thanks to a favourable product and channel mix shift.

Annual premium equivalent (APE) sales grew by 10% year-on-year in 3Q24, with significant contributions from China and Hong Kong. In Hong Kong, APE sales grew by 12% year-on-year, while CITIC Prudential Life in China delivered a 12% year-on-year increase in NBP.

Prudential also announced a capital injection of US\$176 million into CITIC Prudential Life, improving the solvency ratio. The company targets 9-13% NBP growth in 2024, indicating a strong outlook for the coming quarters.

The detailed analysis of these companies provides valuable insights into their financial health, growth strategies, and future outlooks. Investors should consider these factors when making informed decisions about their investments.