SingTel - Maybank Research 2022-04-07: NEXT Growth Engine, NCS Set To Contribute A Bigger Slice Of Pie

SINGTEL (SGX:Z74) | SGinvestors.io 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:
    1. capitalise on regional leadership via exclusive tie-ups with private, public and associates’ businesses;
    2. drive new growth engines;
    3. 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:
    1. healthcare & transport;
    2. financial, industrial and commercials; and
    3. 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

Kelvin Tan Maybank Research | https://www.maybank-ke.com.sg/ 2022-04-07
SGX Stock Analyst Report BUY MAINTAIN BUY 2.980 SAME 2.980