A Quick Take on the recent results of some companies I own

Quite a number of my holdings released results over the past two weeks. The companies are
Starhub, AIMSAMPIREIT, Saizen REIT, Silverlake, new purchase GLP, CitySpring, Starhill, CCT, K-Green, First REIT, GRP, ST Engg

Time is really tight for me, with family commitments due to Chinese New Year, with my recent take up of being a trainer for a sec sch's Junior Physics Olympiad team and the long hours spent on preparation of materials, with my continuous authoring of my planned A level physics guidebook, and with my engineer work.

I took a quick look at the recent results, and but I know time doesn't allow me to do and post a detailed analysis on each and every counter. The main thing I garnered was buying cheap defensive blue chips giving good dividends in a recession seldom go wrong.

My comments collated over the last few weeks:

1) Starhub
Overall, the results are in line with expectations. Dividends remain at 5c for this stable defensive counter, and intends to remain the same for FY2011.

This is one counter where I had been truly successful by being contrarian. Most of my purchases were done when they announced a loss of EPL contract to Singtel. I still remember that was the time where many analysts were calling for SELL because of the EPL loss.

Starhub was distributing 4.5cts dividends per quarter at that time, and on the following quarter, started distributing 5cts per quarter. The analysts that were calling for SELL immediately decry that this is not sustainable, and maintained SELL.

Quiet Good News for Starhub

Financial numbers should never be the absolute decision maker/trigger when determining whether to buy into a business. Here's one quiet good news from Starhub:

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StarHub secures deal from Marina Bay Sands

SINGAPORE : Info-communications provider StarHub said on Wednesday that it has secured a deal from Marina Bay Sands to provide telecommunications and entertainment services.

It added that the services will extend to both Marina Bay Sands (MBS) Expo and Convention Centre and its luxury hotel rooms and suites.

StarHub did not disclose the actual value and the period of the deal, but said it was a multi-year, multi-million dollar agreement.

In a statement, StarHub said the services will include mobile voice and data services, high-speed broadband and Internet lines.

Quick updates

Rather busy, and fell ill. So I shall log down my personal quick views of some of my stocks which has just reported their results.

Starhub
5cts dividend announced.
Net profit fell, EPS drop to 3.39 cts. However, this is because Starhub does not amortize the smartphones sold over 2 years, but recognized it immediately. I expect a much higher EPS over the next few quarters because of this.

A few things to take note for the following quarter:
(i) How loss of EPL will affect its pay TV revenue
(ii) How Next Generation Network will affect Starhub
(iii) How the new law that enables M1 to join the payTV will affect Starhub.

Overall, I will treat this is neutral and within expectations.

StarHub 2010 First Quarter Results

StarHub Reports 2010 First Quarter Results

* Operating Revenue Increased 5% To S$557 Million
* FCF Per Diluted Share Increased 4% To 6.97 Cents
* Interim Quarterly Dividend Of 5.0 Cents Per Share

Singapore, 6 May 2010 – StarHub Ltd today announced its results for the quarter ended 31 March 2010. Total operating revenue increased 5% to S$557 million from S$531 million. The quarter saw a high post-paid mobile net add of 27,000 customers. The higher investment cost for acquisition and retention for smartphone customers resulted in the Group’s EBITDA contracting to S$118 million. Consequently, profit before taxation was at S$53 million year-on-year (YoY) and net profit after tax decreased to S$43 million. Free cash flow at S$120 million was 4% higher compared to last year’s S$115 million. Capital expenditure was 4% lower at S$49 million compared to the same period last year.

Starhub's Potential for growth

Background:
Starhub signed a network leasing agreement back in 2002 with Singtel when it merged with SCV, which relegated StarHub to the sidelines of the lucrative corporate broadband market.

'What made it (the agreement) worse was that it contractually prevented StarHub from taking the benefits of a high-speed cable broadband network beyond the residential community,' Mr Clontz said.

While StarHub could choose to lay its own cables to link up non-residential buildings, the prohibitive cost meant the firm largely stayed within its consumer boundaries in its first decade. However, the operator will get a chance to banish old demons come end-2012 when Singapore's new fibre-optic broadband highway - dubbed the Next-Gen NBN (National Broadband Network) - becomes fully operational.

Starhub's Dividend Yield

On Starhub's dividend yield, there have been concerns that it is unsustainable, leading to the 'stagnancy' of Starhub's share price. The main reasons given are

(i) eroding market share for mobile and broadband subscribers
(ii) loss of EPL and ESPN rights for pay TV
(iii) EPS is below 20 cents

I shall attempt to look at each of those points in a layman method.

Operation Fund Switch 1

Sold my 16 lots of Macquarie International Infrastructure Trust at 50 cents (60% profit) finally. This translates to a profit of about $3k plus.

Used funds to buy 4 lots Starhub at $2.100 today. I did it by jumping the queue at lunch time to grab the $2.100 lots on sale.

This........ is my Operation Fund Switch 1. I do not treat it as a new purchase, but merely a transfer of funds from 1 security to another.

Random Thoughts: Stars stars stars

Recently, I shared that I will still be waiting for Starhub at $1.88 and Starhill at $0.50... Why?

I combined a little FA with a little TA to derive these values.

My FA is purely (and simply) dividend investing... I believe in the long term dividend sustainability of these two companies...

Starhub is a telco, which is defensive in nature. It is in their culture to lead the market (they are the first to have pay TV, free incoming calls, free dial up internet in SG). Hence I believe they have the capability to sustain dividends via their innovativeness. 10.5% yield is attractive.

Singtel vs Starhub

With Starhub being part of my dividend basket, I feel that it is necessary to look into the recent hoo-ha about the pay-TV competition between these two firms.

Starhub lost the rights to broadcast EPL, ESPN, STAR Sports and STAR Cricket to Singtel, who outbid Starhub for them, and this explains the plunge of Starhub from $2.16 to $1.94, which rebounded to $2 today.

This raises the question... is an oligopoly the way to go for Pay-TV market in Singapore? Competition is usually good for consumers, as we learn from basic Economics 101. However, in this case, it seems that competition might just not be good for consumers because, also from Economics, Singapore is so small that this market might be a natural monopoly.