SingTel - Phillip Securities 2021-08-17: Thanks Again, Airtel & AUD$

SINGTEL (SGX:Z74) | SGinvestors.io SINGTEL (SGX:Z74)

SingTel - Thanks Again, Airtel And A$

  • SingTel (SGX:Z74)'s 1QFY22 revenue/EBITDA met our expectations at 25%/24% of FY22e estimates.
  • Bharti Airtel’s (BHARTI IN) turnaround and an 11% y-o-y rise in A$ supported Optus earnings. We raise FY22e associate earnings by 6% to S$2bn.
  • 1QFY22 EBITDA for Australia consumer was better than expected on account of higher ARPUs. In comparison, EBITDA for enterprise was lower than modelled.
  • Our FY22e EBITDA forecast is unchanged but PATMI raised by 4% with Airtel’s improvement. We upgrade SingTel to ACCUMULATE. SOTP-based target price for SingTel is raised to S$2.52 from S$2.32 with better associate valuations.



SingTel's 1Q22 - The Positive


Jump in Australia EBITDA.

  • Mobile revenue was resilient, growing 5% y-o-y to A$1.26bn. EBITDA rose 23% y-o-y to S$506mn. Reasons mentioned were a cessation of fee waivers and rebates and lower bad-debt provisions. We believe SingTel’s S$305mn of impairments and payroll charges in 4Q21 also helped to lower its cost structure.


SingTel's 1Q22 - The Negative


Enterprise growth was sub-par.

  • Earnings growth in the enterprise segment has been below our expectations. Despite high demand from data centres and cyber security, legacy carriage business from voice and roaming remains a drag on earnings.


Outlook

  • The bright spots remain Airtel and Australia. We expect the corporate exercise at NCS and disposal of infrastructure assets to provide share-price catalysts in the short term.

Upgrade SingTel to ACCUMULATE with higher target price of S$2.52






Paul Chew Phillip Securities Research | https://www.stocksbnb.com/ 2021-08-17
SGX Stock Analyst Report ACCUMULATE UPGRADE NEUTRAL 2.520 UP 2.320



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