SingTel - Maybank Research 2022-02-16: On The Verge Of Recovery

SINGTEL (SGX:Z74)

SingTel - On The Verge Of Recovery

SingTel (SGX:Z74)'s 3QFY22 core PATMI of S$1,688m (+37% y-o-y) was broadly in line with street/slightly behind MIBG estimate, driven by the expansion of consumer business across Singapore and Australia. Associates’ pre-tax profits rose (+17% q-o-q, 20% y-o-y) as Airtel demonstrated sustained profit turnaround with strong performance in both India and Africa.

SingTel's 9MFY22 consolidated group revenue fell to S$3,913m (-7.7% q-o-q) on lower NBN migration revenue and equipment sale while EBITDA rose 6.1% q-o-q.
Singapore mobile service revenue was stable with more adoption of higher ARPU 5G plans and higher roaming from increased international travel. Though Optus operating revenue fell 11% y-o-y, EBITDA rose steadily on healthy growth (+5.1%) in mobile.
Group Enterprise operating revenue fell (-3.1% q-o-q, -0.9% y-o-y) attributed to lower usage and pricing pressures in its legacy carriage business.
NCS’ revenue rose (6.4% q-o-q, 8.3% y-o-y) driven by various growth engines (Digital, Cloud, Platforms and Cyber) which contribute 49% of operating revenue. NCS’ bookings amounted to a strong S$611m with a pipeline of projects in various sectors.

Pre-tax contributions from SingTel's regional associates rose (16.4% q-o-q, 19.6% y-o-y) driven by Bharti Airtel (BHARTI IN, Current Price: INR711, BUY, Target price: INR890). Airtel posted Typhoon Odette and weaker consumer spending due to COVID-19.

SingTel's operational revenue should improve further as associate earnings recover from lockdowns and as economic conditions stabilise. Easing border restrictions should after inputting higher valuation for regional associates.
See
SingTel remains our Top Pick within the telco sector. Re-iterate BUY call. We transfer coverage to Kelvin Tan.

Kelvin Tan Maybank Kim Eng Research | https://www.maybank-ke.com.sg/ 2022-02-16

SGX Stock Analyst Report BUY MAINTAIN BUY 2.98 UP 2.830