SingTel (SGX:Z74)’s 3QFY23 (Oct-Dec 2022) & 9MFY23 results were light against our forecast (consensus miss) on weak regional currencies.
The lifting of China borders, closure of Optus’ cyber security incident (contained in 3QFY23), scaling up of NCS and continued robust Airtel growth should fuel SingTel's robust FY23-25F core earnings CAGR of 14%, with dividend upside from asset recycling.
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Downside risks: Competition, underperforming earnings and continued FX woes.
FX weakness and NCS investments mask robust associate showing
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SingTel's 9MFY23 core earnings of S$ of S$1.56bn (+7.4% y-o-y) made up 70% of our forecast (consensus: 67%). 9MFY23 consolidated revenue fell 5.1% but would have improved by some 5% on constant currency (excluding National Broadband Network or NBN migration revenue and Amobee), mainly from a stronger Optus (+2.2% in AUD terms) and NCS (+18%). Associate share grew 13.3% in 9MFY23 (+18% on constant currency) with Airtel (+109% y-o-y) as the key standout.
We retain our forecast as the AUD/S$ has rebounded ~4% from Oct 2022, lows and on expectations of a further recovery in roaming revenues.
Singapore consumer 9MFY23 EBITDA up 11%, Optus cyber-attack issue looks to be behind.
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Above is an excerpt from a report by RHB Securities Research. Clients of RHB may be the first to access the full PDF report @ https://www.rhbtradesmart.com/.
