{"id":17168,"date":"2024-05-17T15:11:54","date_gmt":"2024-05-17T07:11:54","guid":{"rendered":"https:\/\/www.smallcapasia.com\/?p=17168"},"modified":"2026-06-08T19:56:47","modified_gmt":"2026-06-08T11:56:47","slug":"singtel","status":"publish","type":"post","link":"https:\/\/www.smallcapasia.com\/zh-hant\/singtel\/","title":{"rendered":"SingTel &#8211; Healthy core business"},"content":{"rendered":"<p><em>Excerpts from CGS International report<\/em><\/p>\n<h2>Singapore Telecommunications (SGX: Z74)<\/h2>\n<ul>\n<li>Singtel 3QFY24 core net profit of S$559m a slight miss on weak associate profits. Singtel guided for FY24 dividend payout to be at the upper end of 70-90%.<\/li>\n<li>SG business should benefit from absence of Trustwave losses and NCS ramp-up, while cost synergies from restructuring should materialise in FY25F.<\/li>\n<li>Optus recorded margin expansion on concerted cost cuts. While there was some churn in 3Q, postpaid subs have since returned to growth in Feb 2024.<\/li>\n<\/ul>\n<p>Reiterate Add with a lower TP of S$2.87 on lower associate profit estimates.<\/p>\n<h2>3QFY3\/24: steady SG, weaker Optus and associates<\/h2>\n<p>Singtel 3QFY3\/24 core net profit of S$559m (flat yoy) missed expectations as Bharti contribution was negatively impacted by FX losses for its African operations following devaluation of the Nigerian Naira.<\/p>\n<p>9MFY24 core net profit formed 74%\/72% of our\/Bloomberg consensus FY24F. Optus revenue declined 5% yoy in 3Q while SG revenue held steady.<\/p>\n<p>3Q group EBITDA rose to S$935m (+3% yoy) as the lower Optus contribution was offset by deconsolidation of Trustwave losses. 3Q share of associates\u2019 pre-tax profits fell 13% yoy on lower contribution yoy from Bharti (-21%), Telkomsel (-15%), AIS (-5%).<\/p>\n<h2>SG cost synergies to show more meaningfully in FY25F<\/h2>\n<p>Singtel Singapore\u2019s EBITDA margin saw some softness (-1.0% pt yoy) in 3QFY24, which we attribute to intense competition in the prepaid mobile space.<\/p>\n<p>We believe margin uplift should be more apparent in FY25F as Singtel works to integrate its consolidated Consumer and Enterprise businesses and realise cost synergies.<\/p>\n<p>Technology services subsidiary NCS saw 3QFY24 EBITDA margin up 3.2% pts yoy on concerted cost cuts, while bookings rose a strong 57% yoy; we expect NCS\u2019s margin improvement to carry on into FY25F on<\/p>\n<ul>\n<li>Increased scale (driving stronger operating leverage), and<\/li>\n<li>Cost optimisation efforts.<\/li>\n<\/ul>\n<p>Divestment of cybersecurity arm Trustwave would further support Singtel\u2019s SG margin expansion in FY25-26F via removal of c.S$115m in Trustwave\u2019s annual EBITDA losses.<\/p>\n<h2>Resilient Optus performance despite headwinds<\/h2>\n<p>Despite qoq churn in postpaid subs, Optus mobile service revenue still grew 3% yoy in 3Q on prepaid subs growth and stronger average revenue per user (ARPU).<\/p>\n<p>3Q EBITDA margin beat our forecast at 25.8% (+0.9% pts yoy); we think this reflects some success in the group\u2019s accelerated cost rationalisation.<\/p>\n<p>While FX headwinds will likely stay in FY25F, we believe cost cuts and capex rationalisation should accord gradual EBIT margin expansion ahead.<\/p>\n<p>Singtel booked a S$54m provision for the Optus network outage in Nov 23, which we think does not include any potential fines by the Australian government.<\/p>\n<h2>Valuation\/Recommendation<\/h2>\n<p>Reiterate Add as we still see a healthy earnings trajectory ahead, with potential for asset monetisation in the coming quarters. We lower our FY24-26F core EPS by 2-8% as we lower our Bharti estimates further.\u00a0Our SOP-based TP lowers to S$2.87 accordingly.<\/p>\n<figure id=\"attachment_17171\" aria-describedby=\"caption-attachment-17171\" style=\"width: 1527px\" class=\"wp-caption alignnone\"><a href=\"https:\/\/www.smallcapasia.com\/wp-content\/uploads\/2024\/05\/Singtel-share-price-chart.jpg\"><img fetchpriority=\"high\" decoding=\"async\" class=\"wp-image-17171 size-full\" src=\"https:\/\/www.smallcapasia.com\/wp-content\/uploads\/2024\/05\/Singtel-share-price-chart.jpg\" alt=\"Singtel share price chart\" width=\"1527\" height=\"480\" \/><\/a><figcaption id=\"caption-attachment-17171\" class=\"wp-caption-text\">Singtel share price chart<\/figcaption><\/figure>\n<p>You can find the full report <a href=\"https:\/\/www.smallcapasia.com\/wp-content\/uploads\/2024\/05\/Singtel-1.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) Singtel 3QFY24 core net profit of S$559m a slight miss on weak associate profits. Singtel guided for FY24 dividend payout to be at the upper end of 70-90%. SG business should benefit from absence of Trustwave losses and NCS ramp-up, while cost synergies from restructuring should [&hellip;]<\/p>\n","protected":false},"author":36,"featured_media":17174,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"fifu_image_url":"","fifu_image_alt":"","footnotes":""},"categories":[3055,3051],"tags":[231,881,1331,1943,2649,2803],"class_list":["post-17168","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-electronic-ai-technology-singapore","category-singapore","tag-singtel","tag-singapore-stocks","tag-singapore-stocks-to-buy","tag-singapore-stocks-ideas","tag-singapore-telecommunications","tag-telecommunication-stocks"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.smallcapasia.com\/zh-hant\/wp-json\/wp\/v2\/posts\/17168","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.smallcapasia.com\/zh-hant\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.smallcapasia.com\/zh-hant\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.smallcapasia.com\/zh-hant\/wp-json\/wp\/v2\/users\/36"}],"replies":[{"embeddable":true,"href":"https:\/\/www.smallcapasia.com\/zh-hant\/wp-json\/wp\/v2\/comments?post=17168"}],"version-history":[{"count":5,"href":"https:\/\/www.smallcapasia.com\/zh-hant\/wp-json\/wp\/v2\/posts\/17168\/revisions"}],"predecessor-version":[{"id":17176,"href":"https:\/\/www.smallcapasia.com\/zh-hant\/wp-json\/wp\/v2\/posts\/17168\/revisions\/17176"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.smallcapasia.com\/zh-hant\/wp-json\/wp\/v2\/media\/17174"}],"wp:attachment":[{"href":"https:\/\/www.smallcapasia.com\/zh-hant\/wp-json\/wp\/v2\/media?parent=17168"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.smallcapasia.com\/zh-hant\/wp-json\/wp\/v2\/categories?post=17168"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.smallcapasia.com\/zh-hant\/wp-json\/wp\/v2\/tags?post=17168"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}