In its Sept 19 note, OCBC attributes this to better-than-expected earnings; strong cash flow and disciplined capital management, which reinforce confidence in sustained dividend growth.
Also, growth potential from data centres and artificial intelligence (AI) tailwinds is another plus point, especially seen in the context of its defensive nature of the counter amid market volatility.
"Looking ahead, we remain positive and see further upside," says OCBC, citing drivers such as growing revenue and improving ROIC at Optus thanks to average revenue per user (ARPU) growth, margin gains and lower capex intensity.
Singtel's network of regional associates are enjoying recovery too, as their respective markets enjoy further mobile price repair.
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OCBC believes that potential market consolidation in Singapore and growth in enterprise services, as well as robust opportunities in data centres and AI-related businesses and last but not least, sustained dividend growth, will lend further support.
From an initial asset monetisation target of $6 billion, Singtel has raised this number to $9 billion, with $4 billion realised. This is a number which Singtel views as "conservative with potential upside."
Divestments will come from selling down stakes in operating companies, regional associates, including Bharti Airtel, non-core assets, and infrastructure assets.
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Proceeds from the divestments will go towards dividends, growth initiatives, and share buybacks.
According to OCBC, the Singtel management is confident in sustaining its value realisation dividend programme comfortably over the medium term, likely through FY2030.
Meanwhile, its plan to buy back up to $2 billion worth of shares, announced in May, has yet to start, and when so, offers further upside potential.
Singtel's enterprise services unit, NCS, is seeing stronger traction in its AI-related services which could further enhance its operational momentum. Singtel is aiming to deliver more than 200MW of regional DC capacity by 2026 and has raised its medium-term capacity goal to over 400MW.
Factoring in lower holding company discount, WACC assumptions and stronger earnings prospect, OCBC has raised its fair value to $5.10 from $4.51.
"We believe downside protection is provided by its ~4% dividend yield, further supported by its buyback programme against a backdrop of declining rates," adds OCBC.
Singtel shares closed at $4.41, up 1.38% for the day and up 42.72% year to date.
