Upgrade M1 and Singtel to BUY.
To derive our new TPs, we conservatively assumed 100% probability for a 4th telco (versus 80% earlier) and modelled 10% adverse impact on M1’s revenue in 2022 (previously:14% in 2020), 4% adverse impact on StarHub’s revenue (6% previously) and 1% adverse impact on Singtel’s revenue.
We upgrade M1 to BUY with revised DCF based (WACC 6.8%, terminal growth 1%) TP of S$3.60 (from S$3.65) implying 8% upside potential and 6% yield.
We also upgrade Singtel to BUY with SOP based revised TP of S$4.40 (from S$4.45) on valuation grounds as it is trading at 18% discount to its regional peers.
We mantain HOLD on StarHub with revised DCF based (WACC 6.5%, terminal growth 0%) TP of S$4.10.
Under the scenario of no new license award by IDA, our TPs would be raised to S$4.05 for M1, S$4.30 forStarHub and S$4.45 for Singtel.
Source: DBS Group Research
Related Posts:
- Research Reports by OCBC (2015-06-05) - BUY Singtel, M1, UOB
- Research Reports by OCBC (2015-06-08) - BUY SMRT, HOLD Lippo Malls Indonesia Retail Trust
- Research Reports by Maybank KimEng (2015-06-04/05) BUY Sarine Tech, Q&M Dental Grp, HOLD SATS Limited
