All in, Singtel's underlying profit is set to grow at a CAGR of 10% between FY2025 and FY2028, with contributions too from its core business and stronger contributions from its network of regional associates, according to HSBC analysts Piyush Choudhary, Rishabh Dhancholia and Abhishek Jhanwar in their Sept 1 report following Singtel's Aug 28 investor day.
Given the growing earnings, HSBC believes Singtel will be able to give more dividends as a portion is linked to its operating profitability. As such, HSBC has raised its dividend projection for the current FY2026 and coming FY2027 by 6% to 18 cents and 19 cents respectively. Singtel paid a total of 15 cents for FY2025.
As also shown from the Aug 28 investor day, Singtel has an asset monetisation pipeline of $9 billion and up to $5 billion from the proceeds will be used to pay out the so-called value realisation dividend of and buyback shares worth up to $2 billion, with the remaining $2 billion used to fund new growth.
NCS and Nxera, the regional data centre subsidiary, are both seen to chip more to Singtel's overall ebitda, from 14% in the most recent FY2025 to as high as 30 to 35% in the medium term.
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By tapping AI-led cost efficiency, Singtel is putting in place a new cost savings programme which will be announced by the end of FY2026.
Singtel expects its Digital InfraCo to grow its revenue at a CAGR of 20% between FY2026 and FY2029 and generate more than $300 million in ebitda come FY2028.
Singtel's domestic business is seen to return to both revenue and ebit growth from FY2028, as will Optus, as "market repair" continues. In addition, Singtel sees more growth from its enterprise businesses across the region as well.
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Besides taking into account higher dividends Singtel will pay its shareholders, the HSBC analysts expect the telco's regional associates to pay higher dividends too, which leads to a lower holding company discount of 25% from 30%.
All in, HSBC has derived a new target price of $4.75.
Singtel shares changed hands at $4.38 ahead of the lunch break, up 1.15% for the day and up nearly 42% year to date. It is now at its highest level in more than a decade.
