SingTel - RHB Invest 2023-02-17: Skewed By FX, Optus Cyber Issues Behind

• 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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Singapore Research RHB Securities Research | https://www.rhbgroup.com/ 2023-02-17 SGinvestors.io

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