The weekly round-up provides summaries and interesting snippets from various companies during the week.
Suntec REIT (SGX: T82U)
Suntec REIT reported its fiscal 2021 first half (1H2021) earnings, and the REIT enjoyed a recovery of sorts.
Gross revenue for the half-year increased by 11.6% year on year to S$166.8 million, underpinned by the resilient performance of the office portfolios in Singapore, Australia and the UK.
The increase in revenue was also contributed by newly acquired assets and completed developments, helped by lower rent assistance provided to tenants due to COVID-19.
Net property income jumped by nearly 24% year on year to S$112.6 million, lifting distributable income by 14.6% year on year to S$118.2 million.
As a result, distribution per unit (DPU) surged by 26.1% year on year to S$0.04154.
Suntec REIT’s recent divestments of 9 Penang Road and Suntec City Office strata units have helped to recycle capital for accretive acquisitions such as the one of Minster Building in the UK.
The REIT’s aggregate leverage is rather high at 43.1% as of 30 June 2021, though a tad lower than the 44.3% logged three months earlier.
The cost of debt remains low at 2.41% while its adjusted interest coverage ratio stands at 2.8 times.
Singapore Exchange Limited (SGX: S68)
Right after we wrote about Singapore Exchange Limited, or SGX, and the expansion of its suite of products, the bourse operator surprised the market with an acquisition.
The group will expand its reach into the foreign exchange (FX) over-the-counter (OTC) market with the acquisition of MaxxTrader for US$125 million.
MaxxTrader is a provider of FX pricing and risk solutions for sell-side institutions such as banks and broker-dealers.
The company was incorporated in 2008 and has more than 75 employees spread out across Singapore, India, Hong Kong, the US, the UK, and Japan.
With a strong sell-side client base of over 100 global and regional banks and dealers, MaxxTrader complements the buy-side clientele of BidFX, an electronic FX trading solutions provider that was acquired by SGX last year.
The acquisition is in line with SGX’s plan to build an integrated offering combining FX Futures and FX OTC, and it will set up an electronic communication network (ECN) in Singapore soon to realise this vision.
The total addressable market for the ECN is expected to hit US$1 trillion in average daily volume (ADV).
The transaction comes with a performance-based earn-out of up to US$35 million should predetermined targets for the calendar year 2021 and 2022 be achieved.
SGX expects MaxxTrader can chalk up a revenue compound annual growth rate (CAGR) of 14% to 15% or even higher, while ADV is expected to grow at more than 25% CAGR in the medium-term.
Importantly for investors, this acquisition is slated to be earnings per share accretive from year one, excluding the effects of one-off transaction costs.
SATS Ltd (SGX: S58)
SATS Ltd, a leading provider of food solutions and airline gateway services, reported its fiscal 2022 first quarter (1Q2022) earnings.
Travel revenue witnessed a healthy improvement as the number of flights and meals served increased year on year compared to the low base in the prior year.
13,900 flights were handled during the quarter, more than doubling the 6,600 in the first quarter of last year (1Q2021).
Meals served jumped by 37.1% year on year to 12.9 million, while there were 900,000 passengers handled, up more than four-fold from a low of 200,000 in 1Q2021.
The bright spot for SATS is cargo. Cargo revenue jumped by 62% year on year in 1Q2022, and the majority of SATS’ cargo associates were profitable during the quarter.
On the back of stronger operational statistics, group revenue jumped by 31.6% year on year to S$275.6 million, boosted by a 41.9% year on year rise in travel revenue.
Operating profit stood at S$3.5 million for the quarter, reversing the operating loss of S$36 million in 1Q2021.
Net profit stood at S$6.4 million, also a reversal from the S$43.7 million loss chalked up in 1Q2021.
However, the group would have incurred a net loss of S$35 million if not for continued government reliefs for the beleaguered airline sector.
The outlook remains murky as SATS is uncertain when air travel can resume again.
Non-travel-related businesses, however, made up 46% of the group’s revenue, lending some resilience against the continued border closures and restrictions.
SATS continues to grow its food catering arm with its recent acquisition of Food City in Thailand, and the group is also supporting the growth in e-commerce with a cloud-based cargo handling system.
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Disclaimer: Royston Yang owns shares of Suntec REIT, Singapore Exchange Limited and SATS Ltd.
