SingTel - RHB Invest 2024-05-24: Value Realisation; Maintain BUY

• We view SingTel (SGX:Z74)’s new absolute commitment on surplus cash to be returned and the sharpened narrative on earnings delivery positively. FY24 return on invested capital (ROIC) expanded further to 9.3% and is expected to rise to above 10% in FY25F, based on our estimate.
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Resilient growth.

• SingTel's 4QFY24 core PAT (stripping out S$2.5bn in impairments and one-offs in 2HFY24) of S$579m (+3% q-o-q, +19% y-o-y) brought FY24 core PAT to S$2.26bn (+10.1%), 3% ahead of our forecast albeit a slight consensus miss (95%).
• Operating revenue and EBITDA fell 3.4% and 2.4% y-o-y with the 6% AUD against the S$. However, lower depreciation expense and net financing cost bolstered the bottomline.
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Key FY24 results highlights & takeaways:

1. Singapore. EBIT narrowed 5.2% from higher network and digital investments. Mobile revenue grew 3%, helped by the recovery in roaming revenue. Notable synergies from the consumer and enterprise integration should be seen into FY25;
2. Optus turned in flat revenue and EBIT. EBITDA was stable on cost optimisation. Further price uplifts in the market with the cost savings executed should see stronger EBIT uplift in FY25F (FY24: +0.5%);
3. Associate contributions (+2.2% y-o-y) were lifted by Airtel India, Advanced Info Service (ADVANC TB) and Globe, albeit partially offset by lower Telkomsel contributions;
4. Digital Infraco grew 8% on data center (DC) revenue growth of 10% from price uplifts and higher utility revenue. EBITDA fell 4% from capacity build-up.

New ST28 plan sees more capital management upside with a focus on earnings delivery.

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Singapore Research RHB Securities Research | https://www.rhbgroup.com/ 2024-05-24 SGinvestors.io

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