- In line with Singtel’s ST28 growth plan, the group continues to improve its ROIC through better core operational performance while doubling down on its future growth drivers, NCS and Nxera.
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FY26: On stronger footing, ROIC target of double digits.
- Singtel (SGX:Z74) has driven its ROIC from 7.3% in FY22 to 9.6% in FY25. We are confident the group can achieve low double-digit ROIC in the medium term. This is to be driven by:
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- a total of S$600m cost-out programme by FY26,
- better contributions from its regional associates, led by Airtel; and
- robust revenue growth from NCS and Nxera (infrastructure company).
Asset monetisation pot: Raising the bar…
- Singtel’s value-unlocking initiatives remain on track – with management officially raising the pipeline target from S$6b to S$9b. Based on our estimates, however, the pipeline size may be as high as S$15b.
- The additional S$6b, we believe, will likely come from paring down its 28% effective stake in Bharti Airtel (Bharti) – we expect equal stake with the founding Mittal family (22% total effective stake) over the next 2-3 years. Given that Bharti’s share price has risen to all-time highs, we estimate that Singtel could gain S$4b in cash by selling a 3% stake.
- Also, we believe there are various non-core fixed assets (including landbank) that can be monetised over the medium term (3- 5 years).
…for sustainable value-realisation dividends (VRD).
- Read more at SGinvestors.io.
