{"id":17631,"date":"2024-08-16T07:00:26","date_gmt":"2024-08-15T23:00:26","guid":{"rendered":"https:\/\/www.smallcapasia.com\/?p=17631"},"modified":"2026-06-08T19:27:31","modified_gmt":"2026-06-08T11:27:31","slug":"singapore-telecommunications-yield-and-growth","status":"publish","type":"post","link":"https:\/\/www.smallcapasia.com\/zh-hans\/singapore-telecommunications-yield-and-growth\/","title":{"rendered":"Singapore Telecommunications &#8211; Yield and growth"},"content":{"rendered":"<p><em>Excerpts from CGS International report<\/em><\/p>\n<h2>Singapore Telecommunications (SGX: Z74)<\/h2>\n<ul>\n<li>Singapore Telecommunications (Singtel) 2HFY3\/24 core net profit of S$1.1bn met our forecast. FY24 core net profit of S$2.26bn formed 101.6% of our full-year estimate.<\/li>\n<li>Singtel said in FY24 briefing that core dividend payout of low-80% is sustainable and VRD of S$0.03-S$0.06\/share is over a 5-year horizon.<\/li>\n<li>DPS could range S$0.15-0.18 in FY25F, yielding 6.3%- 7.6%, higher than 4.7% for MSCI Singapore.<\/li>\n<li>Cost optimisation, revenue growth and absence of Trustwave losses likely to result in Singtel hitting double-digit EBIT growth in FY25F, in our view<\/li>\n<\/ul>\n<p>Maintain Add and SOP-based TP of S$2.84.<\/p>\n<h2>Capital management is key highlight<\/h2>\n<p>Key highlight from Singapore Telecommunication&#8217;s 2H24 results was its commitment to increase total ordinary dividends with the introduction of Variable Realisation Dividend (VRD) of S$0.03-S$0.06\/share p.a. over the next 5 years from excess capital from asset recycling.<\/p>\n<p>Management emphasised that VRD is not \u2018one-off\u2019 but programmatic. Singtel also targets FY25F dividends from regional associates of S$1.1bn (FY24: S$1.3bn which included Telkomsel\u2019s special dividend of S$0.2bn).<\/p>\n<p>In FY24, it declared a final DPS of S$0.06 and VRD of S$0.038, bringing total DPS to S$0.15. Management also said that core dividend payout of low-80% ahead (FY24: 82%) is likely to be sustainable based on underlying business performance.<\/p>\n<p>Based on our forecasts, total DPS could range S$0.15-0.18 in FY25F, yielding 6.3%- 7.6%, vs. 4.7% for MSCI Singapore stocks under our coverage.<\/p>\n<h2>Comfortable EBIT guidance<\/h2>\n<p>FY24 EBIT came in at S$1.1bn (+3.7% yoy) and management is targeting high-single digit to low-double digit EBIT growth in FY25F, driven by revenue improvements and cost savings of S$0.2bn in Singapore and Australia.<\/p>\n<p>The absence of Trustwave losses (FY24 EBIT loss: S$56m) also contributed to growth.<\/p>\n<h2>Decline in core capex for Optus; growth capex funded<\/h2>\n<p>Management expects total capex to grow to S$2.8bn in FY25F (FY24: S$2.1bn) with declines in core (Singapore and Optus) business capex. Notably, capex\/turnover ratio\u00a0 for Optus will decline to mid-teens in FY25F, from the current 20%.<\/p>\n<p>The capex for Optus includes partial payments for the A$1.5bn 900MHz spectrum. Singtel\u2019s S$1bn growth capex guidance is mainly for its regional data centre platform, as well as seeding pilot GPUaaS (GPU-as-a-Service) business.<\/p>\n<p>Management noted that c.S$700m of the growth capex is funded by KKR and a major customer.<\/p>\n<h2>Valuation\/Recommendation<\/h2>\n<p>Reiterate Add and SOP-based TP of S$2.84. We like Singtel\u2019s relatively attractive dividend yield and healthy earnings growth, backed by concerted cost cuts and associates\u2019 profit recovery.<\/p>\n<p>Re-rating catalysts include material asset monetisation and meaningful margin improvement from cost optimisation. Downside risks include prolonged mobile pricing pressure and forex headwinds from a strong Singapore dollar.<\/p>\n<figure id=\"attachment_17632\" aria-describedby=\"caption-attachment-17632\" style=\"width: 1517px\" class=\"wp-caption alignnone\"><a href=\"https:\/\/www.smallcapasia.com\/wp-content\/uploads\/2024\/08\/Singtel-share-price-chart.jpg\"><img fetchpriority=\"high\" decoding=\"async\" class=\"wp-image-17632 size-full\" src=\"https:\/\/www.smallcapasia.com\/wp-content\/uploads\/2024\/08\/Singtel-share-price-chart.jpg\" alt=\"Singapore Telecommunications share price chart\" width=\"1517\" height=\"675\" \/><\/a><figcaption id=\"caption-attachment-17632\" class=\"wp-caption-text\">Singapore Telecommunications share price chart<\/figcaption><\/figure>\n<p>You can find the full report <a href=\"https:\/\/www.smallcapasia.com\/wp-content\/uploads\/2024\/08\/singtel.pdf\"><em>here<\/em><\/a> and the company website <em><a href=\"https:\/\/www.singtel.com\/about-us\/investor-relations\" target=\"_blank\" rel=\"noopener noreferrer nofollow\">here.<\/a><\/em><\/p>\n<p>[thrive_leads id=&#8217;15712&#8242;]<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Excerpts from CGS International report Singapore Telecommunications (SGX: Z74) Singapore Telecommunications (Singtel) 2HFY3\/24 core net profit of S$1.1bn met our forecast. FY24 core net profit of S$2.26bn formed 101.6% of our full-year estimate. Singtel said in FY24 briefing that core dividend payout of low-80% is sustainable and VRD of S$0.03-S$0.06\/share is over a 5-year horizon. [&hellip;]<\/p>\n","protected":false},"author":36,"featured_media":17636,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"fifu_image_url":"","fifu_image_alt":"","footnotes":""},"categories":[3052,3051],"tags":[881,1331,1943,2649,2803,2865,231],"class_list":["post-17631","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-stock-exchange-listed-companies-singapore","category-singapore","tag-singapore-stocks","tag-singapore-stocks-to-buy","tag-singapore-stocks-ideas","tag-singapore-telecommunications","tag-telecommunication-stocks","tag-singapore-telecommunications-share-price-chart","tag-singtel"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.smallcapasia.com\/zh-hans\/wp-json\/wp\/v2\/posts\/17631","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.smallcapasia.com\/zh-hans\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.smallcapasia.com\/zh-hans\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.smallcapasia.com\/zh-hans\/wp-json\/wp\/v2\/users\/36"}],"replies":[{"embeddable":true,"href":"https:\/\/www.smallcapasia.com\/zh-hans\/wp-json\/wp\/v2\/comments?post=17631"}],"version-history":[{"count":6,"href":"https:\/\/www.smallcapasia.com\/zh-hans\/wp-json\/wp\/v2\/posts\/17631\/revisions"}],"predecessor-version":[{"id":17641,"href":"https:\/\/www.smallcapasia.com\/zh-hans\/wp-json\/wp\/v2\/posts\/17631\/revisions\/17641"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.smallcapasia.com\/zh-hans\/wp-json\/wp\/v2\/media\/17636"}],"wp:attachment":[{"href":"https:\/\/www.smallcapasia.com\/zh-hans\/wp-json\/wp\/v2\/media?parent=17631"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.smallcapasia.com\/zh-hans\/wp-json\/wp\/v2\/categories?post=17631"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.smallcapasia.com\/zh-hans\/wp-json\/wp\/v2\/tags?post=17631"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}