Buzzing with news. Over the past few weeks, Yellow Pages (YP) has
hogged the headlines with almost daily updates of the boardroom saga
between two key shareholders and some directors. For a group that has
been fairly quiet on the corporate front, we watched with interest as Yellow
Pages saw a dramatic increase in daily announcements and news. This
came about as two non-executive directors, Stanley Tan Poh Leng and
Pang Yoke Min, have requested for an EGM to remove several existing
directors. While it did turn out to be fairly protracted event, as mentioned in
our earlier report, the ending was almost too quiet after the bevy of news.
To cut a long story short, both shareholders withdrew their EGM motion to
remove the directors, which even involved the Securities Investors
Association of Singapore (SIAS) and another key shareholder.
After the excitement, what is next for Yellow Pages? While we have
generally expected that Yellow Pages would carry on with business as
usual throughout this period, it may not necessary be so in terms of the
group's future business strategy. In terms of canvassing and its traditional
core operation, we do not expect any major disruptions to the daily running
of this household brand name. However, with an impending change in CEO
and the possible injection of new director(s), shareholders can certainly
look forward to the possibility of the group exploring other new business
areas. We believe one positive outcome from the month-long chronicle of
events, which highlighted several key issues, is that there is a good chance
that Yellow Pages will emerge from this with improved operational scope
and perhaps a new growth angle.
Retains our HOLD rating. Recently, Yellow Pages posted FY07 net
earnings of S$12.6m, down 13.1% on revenue of S$59.1m, up 1.6%. This
is slightly above expectation and together with its results, it dished out an
additional 4 cents, giving total full year DPS of 7.5 cents. At Friday's closing
price of S$1.37, yield is an attractive 5.5%. We are still expecting flat
growth for FY08 and FY09. We maintain our HOLD rating, but as we roll
into FY08, and using the same 6% yield as an indication, we are raising
our fair value estimate from S$1.24 to S$1.34, while waiting for possible
exciting developments from YP for potential upward revisions in earnings
prospects.
No comments:
Post a Comment