SingTel - Maybank Research 2023-08-21: Weakness Down Under Drag Core Earnings

• SingTel (SGX:Z74)'s 1QFY24 (Apr to Jun 2023) PATMI of S$483m (-23% y-o-y) missed our and consensus expectations, achieving 20% of FY24 forecasts. The drop was mainly attributed to net exceptional loss (US$88m) due to steep devaluation of the Nigerian Naira against the US$. Exclude this, PATMI would be in line with consensus.
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• Maintain BUY rating on SingTel with SOTP-based target price of S$3.10.

Weakness in Australia impacts core business

• SingTel's 1QFY24 operating revenue and EBITDA fell 2.7% and 7.7% y-o-y, respectively, due to a 9% depreciation in the Australian dollar and inflationary cost pressures.
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• Singtel Singapore operating revenue fell 1.8% due to continued erosion of voice revenue and intense price competition in mobile but EBITDA held steady (-6% y-o-y) on roaming recovery and cost discipline.
• SingTel’s growth engines Digital InfraCo and NCS continue to deliver with EBIT improving 40% and 7.4% y-o-y, respectively. During the quarter, Digital InfraCo delivered solid growth, largely from the data centre business through price renewals and NCS saw strong bookings of S$691m, with a pipeline of projects in various sectors.
• Notably, contributions from SingTel's regional associates rose 1.1% y-o-y, particularly Airtel’s continued momentum in India (+95% y-o-y) as it increased quarterly ARPU reaching Rs.200, which is the highest among its peers, and strong 4G subscriber additions with post-paid net additions at an all-time high.

Exceptional loss due to devaluation of Nigerian Naira

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Kelvin Tan Maybank Research | https://www.maybank-ke.com.sg/ 2023-08-21 SGinvestors.io

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