Singtel has raised its FY2025 guidance for core ebit from low double digits to high teens to low 20s. It is also looking to pay a total dividend (including value realisation dividend) of 16.5 cents for FY2025, up from the 15 cents per share paid in the preceding financial year.
Following the results announcement, analysts have kept a positive stance on Singtel.
PhillipCapital analyst Paul Chew has maintained his “buy” call with a slightly higher target price of $3.77 from $3.44 previously due to “mark-to-market gains in associates”. “Multiple growth drivers are underway, including Optus, NCS and Bharti Airtel. We expect $6 billion monetisation to be gradually realised from stakes in Intouch and Bharti Airtel,” he says.
Maybank Securities has also kept its “buy” call with a target price $3.72, up from $3.65 previously. “We see potential for even higher capital return from Singtel’s various capital-recycling initiatives… a part of which will be realised by divesting a small stake in Bharti Airtel… which management noted remains on track,” wrote analyst Hussaini Saifee in a note on February 19.
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Similarly, DBS Group Research is retaining its “buy” call while raising its target price to $3.93 from $3.82 previously. Analyst Sachin Mittal attributes the revision to an 8% increase in core ebit and a 3% rise in underlying earnings estimates for FY2025.
He also expects the holding company (HoldCo) discount to narrow from 34% to 10% to 15% with improving core ebit. “The HoldCo discount was below 10% before FY18, which, in our view, can be achieved again if the free cash flow of the core business improves sharply.”
Meanwhile, HSBC Global Research and UOB Kay Hian (UOBKH) reiterate their “buy” calls with unchanged target prices of $3.70 and $3.58, respectively.
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“Our target price implies 11% upside from current levels. We expect dividends and profits to rise driven by growth in its core business and higher earnings from regional associates, supported by improving ARPU across countries,” note HSBC Research analysts Piyush Choudhary and Rishabh Dhancholia.
HSBC Research analysts also have an “upbeat” outlook for dividends due to rising underlying core earnings and a potential additional value realisation dividend from asset monetisation initiatives. “We forecast distribution per stapled security (DPS) to rise 6.7% y-o-y in FY2025 to 16.0 cents, and 6.1% y-o-y in FY2026 to 17 cents.”
As for UOBKH analysts, they continue to view Singtel as an attractive investment option in a volatile market, supported by improving business fundamentals and a decent FY2025 4.9% dividend yield. Key re-rating catalysts include successful monetisation of 5G, monetisation of data centres and/or NCS, and market repair in Singapore.
Dan Baker, senior equity analyst at Morningstar, gave a three-star rating to Singtel. He retained his $3.47 per share fair value estimate as Singtel’s associates are “performing well”.
“Singtel looks expensive compared with global peers on a 12-month forward price/earnings ratio of around 20 times. However, we see that as fair, given the higher growth outlook through recovery in Optus and forecast cost reductions,” he says.
As at 12.50pm, shares in Singtel are trading at $3.37 flat.
