- Singtel's share price has rallied over 40% year-to-date, outperforming the Straits Times Index’s (STI) 14% gain. We attribute this outperformance to:
- better-than-expected earnings;
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- growth potential from data centres and artificial intelligence (AI) tailwinds and;
- its defensiveness amid market volatility.
More room of growth.
- Looking ahead, we remain positive and see further upside from:
- Optus’ revenue and ROIC improvement driven by average revenue per user (ARPU) growth, margin gains and lower CAPEX intensity;
- recovery in regional associates as industry mobile price repair progresses;
- potential market consolidation in Singapore and growth in enterprise services;
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- sustained dividend growth.
Capital recycling program remains on track
- Singtel has set a mid-term capital recycling target of S$9b (S$4b has been realised), which management views as conservative with potential upside. This will include divestments of stakes in operating companies, regional associates (including Bharti), non-core assets, and infrastructure assets. Proceeds will be redeployed towards dividends, growth initiatives, and share buybacks.
- Management is confident in sustaining its value realisation dividend programme comfortably over the medium term, likely through FY30. Meanwhile, the S$2b share buybacks programme has yet to commence, offering further upside potential.
Expanding DC capacity.
- Read more at SGinvestors.io.
