SingTel (SGX:Z74)'s 1QFY24 (Apr to Jun 2023) revenue and EBITDA were within expectations at both 23% of our FY24e forecast. The 9% decline in the Australian dollar and drop in Optus margins were the drag on earnings.
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Optus remains the weakest spot for the group with EBIT declining 28% y-o-y in local currency terms to S$56mil. Despite the larger revenue and market size, Optus EBIT is only 23% of Singapore operations.
Upgrade SingTel to BUY with lower target price of S$2.80 (previously S$2.84).
Valuations are attractive but any re-rating for SingTel will come from its S$6bn asset monetization efforts, better cost controls at Optus, mobile price restoration and broadband growth.
The Positives
Stellar performance for Bharti.
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The earnings growth at Bharti was before the exceptional loss of S$114mil from a devaluation of the Nigerian Naira (14 June) and fair value loss from its foreign currency convertible bonds.
Digital Infraco, the new source of growth.
Read more at SGinvestors.io.
Above is an excerpt from a report by Phillip Securities Research. Clients of Phillip Capital may be the first to access the full PDF report @ https://www.stocksbnb.com/.
