- SingTel (SGX:Z74)'s 1HFY24 revenue and EBITDA were within our expectations at 46% of our FY24e forecast. EBITDA declined 5% y-o-y to S$1.78bn due to an 11% contraction in Optus earnings. Underlying net profit rose 11% to S$1.12bn despite a 4% point drag on currency.
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- We maintain BUY on SingTel with an unchanged target price of S$2.80.
- We believe SingTel is making significant strides in restructuring the entire group, monetising assets, and shedding unprofitable entities. Mobile competition in Australia is not abating and Optus needs to realign its cost structure to this reality. Underlying net profit in 1H24 fell 69% y-o-y to A$13mil.
The Positives
Increase in dividends and payout ratio.
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- SingTel also increased its committed dividend payout ratio to 70-90% of underlying net profit (previously 60-80%). Supporting SingTel's dividends was free cash flow (FCF) plus associate dividends and lease payments of S$817mil (1H23: S$1.29bn).
Strong margin expansion at NCS.
- Read more at SGinvestors.io.
