SINGTEL (SGX:Z74)
SingTel - NEXT Growth Engine, NCS Set To Contribute A Bigger Slice Of Pie
- Recent NCS acquisitions have bolstered SingTel (SGX:Z74)’s plan to seek out new regional businesses. Integrating digital, cloud and platform services (NCS NEXT) with existing capabilities should support higher margins.
- We continue to like SingTel’s ability to:
- capitalise on regional leadership via exclusive tie-ups with private, public and associates’ businesses;
- drive new growth engines;
- unlock infrastructure asset value to drive growth.
Digitalisation of enterprises not in full swing
- We think digital transformation for enterprises is still in its early stage. According to IDC (International Data Corporation), 28% of organisations in APAC are in the most progressive stages of digital transformation maturity.
- The 3 sectors that currently drive NCS’ business are:
- healthcare & transport;
- financial, industrial and commercials; and
- communications, media and technology.
- This has led to an unprecedented demand surge for digital and technology services, accelerated by COVID-19. While projects can be deployed within 3-5 years, adapting to change can be slow, extending the runway.
- With Asia-Pacific countries only realising the need to digitalise, it becomes clear that NCS is riding a multi-year trend.
Sustainable margins needed for re-rating
- Technology proliferation started before the pandemic demonstrate:
- comparable growth in bookings as peers;
- faster-than-expected revenue growth; and
- sustained margin expansion as NEXT’s services form a bigger proportion of NCS’ revenue.
- Reiterate price of S$2.98.
- See
Kelvin Tan
Maybank Research
|
https://www.maybank-ke.com.sg/
2022-04-07
SGX Stock
Analyst Report
2.980
SAME
2.980
