Singtel - DBS Research 2025-02-20: HoldCo Discount At 34% Is Too High To Sustain

• The Holding Company discount at 34% is likely to narrow to 10- 15% with improving core EBIT which has a high correlation with Singtel's share price. We raise our FY25F/26F earnings forecast for Singtel by 3% each, considering upgraded guidance for FY25F core EBIT growth.

Singtel's 3QFY25 earnings in line with consensus estimate

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• Optus is benefiting from cost-cutting measures implemented in 2HFY24 (~10% staff reduction) and tariff hikes introduced in May 2024, seen in the 3% y-o-y rise in revenue to S$1,856mil (up 4.1% y-o-y in constant currency) while its EBIT rose 43% y-o-y to S$91mil (up 45% y-o-y in constant currency). The company raised its FY25F core EBIT growth guidance to high teens to low 20s (vs. low double digit earlier), given the 20% growth achieved in 9M25. This exceeds consensus estimate of 14% growth in FY25F.
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We expect Singtel’s HoldCo discount to narrow to 10%-15% with improving core EBIT.

• Read more at SGinvestors.io.

Sachin MITTAL DBS Group Research | https://www.dbs.com/insightsdirect/ 2025-02-20 SGinvestors.io

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