We reiterate our BUY on Singtel and raise our SOTP-based Singtel's target price to S$4.30 factoring in a 20% holdco discount (from 25% previously). We believe, Singtel’s holding company discount at 25-30% should narrow in light of improved operational performance, tight execution and clear and higher capital return initiatives.
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On firm footing – 5 out of 8 business segments.
Out of Singtel’s 8 businesses (4 core, 4 associates), 5 are on a firm footing.
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NCS’ bookings are up 5% y-o-y in FY25, which in turn paves the way for firm FY26 growth despite macro/trade uncertainty.
Nxera growth should benefit from the ramp up of data centers in Thailand and Singapore where 50- 80% of capacity is already presold.
Among associates, Airtel and AIS are forecast to deliver 20-25% PBT growth in 2025/FY26, helped by stable competition and operating leverage.
We see Globe, Telkomsel and Singapore mobile facing competitive and growth challenges. There is potential for competition to subside in Indonesia with telcos looking to raise starter packs to IDR30k/mth. Globe’s telco business slowdown remains a concern, but, its contribution is relatively small at 9% of group earnings while Globe’s fintech business, GCash, continues to progress well, offsetting telco weakness.
Cautious approach to growth investments.
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Above is an excerpt from a report by Maybank Research. Clients of Maybank Securities may be the first to access the full PDF report @ https://www.maybanktrade.com.sg/.
