Growth in data centre, NCS, and Optus are expected to drive a core business net profit CAGR of 10% over FY25-28F for Singtel (SGX:Z74).
The uplift in Singtel's core net profit is underpinned by projected core EBIT growth of 9% over FY25-FY28F, supported by 5% and 15% growth in Singapore and Optus EBIT over FY25-28F, respectively.
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Re-rate Singtel's core business at 18.5x 12-month forward P/E.
The value of Singtel's associates has increased by 62%, from S$42bn (S$2.52 per share) in July 2017 to S$68bn (S$4.12 per share) as of June 2025.
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This is partially offset by a drop in our fair value of its Telkomsel’s stake from S$18bn to S$8bn due to a decline in growth prospects leading to de-rating of P/E.
However, Singtel’s core business valuation, at S$28bn (S$1.65 per share) in 2017, has declined by ~80% to S$5.5bn (S$0.33 per share) as of June 2025.
We expect the value of the core business to grow by ~300% over the next 12 months, propelled by growth in the data centre, NCS, and Optus.
Our 12-month forward P/E of 18.5x is at a 5% premium to its peer average of 17.5x, as we project a core earnings CAGR of 10% for Singtel over FY25-28F, vs peers’ 7% CAGR due to data-centre and NCS leading to higher growth.
We project Optus EBIT CAGR of 15% over FY25-28F.
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Above is an excerpt from a report by DBS Group Research. Clients of DBS may access the full PDF report @ https://www.dbs.com/insightsdirect/.
