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
- We upgrade SingTel to ACCUMULATE from NEUTRAL on the back of its recovery underway, led by Airtel, Bharti and later, border reopening, which should help to improve mobile revenue.
- Our SOTP-based valuation is based on 6x EV/EBITDA for SingTel’s core Singapore and Australia businesses, at S$0.77 per share. Associates are marked to market at S$1.75 per share with a 20% discount to reflect volatility in their share prices.
- See
Paul Chew
Phillip Securities Research
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https://www.stocksbnb.com/
2021-08-17
SGX Stock
Analyst Report
2.520
UP
2.320
