SingTel - Maybank Kim Eng 2021-08-12: A Good Start; NCS Is Making Progress

SINGTEL (SGX:Z74)

SingTel - A Good Start

SingTel (SGX:Z74)'s 1QFY22 (Apr 2021 to Jun 2021) core PATMI of S$451m (+31% y-o-y) was broadly in line with MKE/ street estimate, driven by broad-based growth across all business segments. Our P&L forecasts are unchanged but we raised SingTel's SOTP-based target price to S$2.83 after accounting for revised valuation estimates for regional associates.

SingTel's 1QFY22 revenue rose 8% y-o-y to S$3.8b on broad-based growth across all business segments amid improving operating environment as compared to last year. The performance was mainly driven by an improvement in Australia consumer (+8% y-o-y) due to higher postpaid ARPU (+14% y-o-y) as a result of increased penetration of Optus Choice plans.
Also, the group is seeing robust growth from NCS (+6% y-o-y to S$528m) and rebound in Amobee (+56% to S$236m) with the recovery of advertising spending in the US.
SingTel's 1QFY22s EBITDA of S$997m (+11% y-o-y) was underpinned by the improvement in Australia. Excluding Optus NBN migration revenue and Job Support Scheme (1QFY22: S$6m, 1QFY21: S$69m), underlying EBITDA would have jump 31% y-o-y. Regional associates’ solid contribution (+38% y-o-y to S$514m) was driven by BHARTI (BHARTI IN)’s turnaround from net loss last year on the back of sustained momentum in India and Africa.

5G ARPU is starting to rise NCS remains on track, with digital, cloud, platforms & cybersecurity (+31% y-o-y) making up 45% of its business revenue.

Overall, we are seeing green shoots emerging despite the challenging operating environment. SingTel could see sustained EPS recovery momentum, driven by:
1. turnaround in BHARTI’s profit;
2. increase in ARPU from 5G plans; and
3. return of roaming revenues with the gradual re-opening of travel borders.
This is coupled further in 2Q-4QFY22E.
See

Kareen Chan Maybank Kim Eng Research | https://www.maybank-ke.com.sg/ 2021-08-12

SGX Stock Analyst Report BUY MAINTAIN BUY 2.83 UP 2.810