SINGTEL
Singapore Telecommunications
Z74.SI
Singtel - Steady Growth Likely in FY17; BUY
- S$0.107/share final dividend
- Sees low single-digit revenue growth
- Still positive on Enterprise business
FY16 results within expectations
- Singtel’s FY16 results were within expectations.
- Revenue eased 1.5% to S$16,961m, about 4% below our forecast, mainly due to the 9% depreciation in the A$ against the S$; in constant currency terms, operating revenue would have been up 4%.
- Reported net profit rose 2.4% to S$3,871m, while underlying net profit was up 0.7% at S$3,805m, or just 0.1% below our forecast.
- Singtel declared a final dividend of S$0.107/share, bringing the total payout to S$0.175 for FY16, both unchanged from FY15.
Guiding for steady growth in FY17
- Going forward, Singtel expects both consolidated revenue and EBITDA for the group to grow by low single digit; this likely driven by its Group Enterprise business, where both operating revenue and EBITDA are expected to increase by low single digit.
- For its Group Consumer business, Singapore is likely to remain stable; however, Australia could see A$800m revenue decline due to fall in mobile termination rates, but is not expected to have a material impact on Optus’ EBITDA.
- For Group Digital Life, revenue from Amobee Group is likely to grow by mid single digit; but expects negative S$150-180m EBITDA due to ramp-up of HOOQ operations. Capex spend will be around S$2.8b (versus S$2.4b in FY16); free cash-flow to be around S$1.5b, and S$1.2b of dividends from its regional associates.
- Management also mentioned that it will be looking to divest its stake in NetLink Trust to less than 25% by 22 Apr 2018, as per its undertaking to IDA.
Keep BUY with new S$4.09 fair value
- As before, we believe that Singtel is probably the least affected by the entrance of a 4th telco here; nevertheless, we will be on the look-out for potential disruptions in the Singapore mobile market.
- Updating the share prices of its listed associates, and also making some minor tweaks to our estimates for FY17, our SOTP fair value improves from S$3.96 to S$4.09.
- Maintain BUY.
Carey Wong
OCBC Securities
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http://www.ocbcresearch.com/
2016-05-12
OCBC Securities
SGX Stock
Analyst Report
4.09
Up
3.96