As observed by the wave of raised target prices across the board following the telco’s 1HFY2025 ended Sept 30 results, which features higher ebit guidance and a higher interim dividend, the $5 mark is something within easy reach, given how Singtel shares have gained 55.66% since the start of the year to close at $4.81 on Nov 20.
On Nov 12, Singtel reported earnings of $3.4 billion for 1HFY2025, up 176% y-o-y. The numbers were distorted by a $2.05 billion one-off gain from the sale of a partial
stake in Airtel in May and the Intouch-Gulf merger. Singtel’s mobile revenue in its home market was down, but growth in its overseas associates more than offset the decline. As such, Singtel reported underlying earnings of $1.35 billion, up 14% y-o-y, driven by 12% growth in regional mobile associates, as various markets undergo “repair”, and a 23% jump in subsidiaries, including the enterprise services arm NCS and Optus in Australia.
In line with the trend of Temasek-linked companies paying more dividends, Singtel, 50.29% held by Singapore’s state investment agency, declared an interim dividend of 8.2 cents per share, up from 17% y-o-y.
From the perspective of Paul Chew of PhillipCapital, the “growth profile” of Singtel no longer leans heavily on its stake in Bharti Airtel, but also its holdings in Thailand and NCS. Chew points out that Thailand is seeing mobile price repair and that NCS is gaining momentum with a bigger order book. On account of higher mark-to-market valuations of its associates, and prospects of the data centre ventures as the next growth driver, Chew has raised his target price for Singtel from $4.86 to $5.35.
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Prem Jearajasingam of CGS International is flagging the growing monetisation potential from Singtel’s 27.5% stake in Bharti Airtel, whose share price has gained by more than a third year to date. Assuming Singtel further trims its stake in its India-listed associate to match the Mittal family’s stake, that could suggest another $13 billion in proceeds, he estimates.
In contrast, Singtel’s management has held on to its medium-term $9 billion asset recycling target and has qualified that it is in no hurry to divest its stake in Bharti Airtel. Jearajasingam believes that further sales would be “opportunistic” and will be timed to fund other growth plans, such as the potential purchase of a stake in STT Global Data Centres, supposedly in conjunction with another existing shareholder, KKR, which happens to be Singtel’s existing joint venture partner too in a data centre venture, Nxera.
To reflect higher valuation from Singtel’s stake in Bharti Airtel, Jearajasingam has raised his target price from $4.80 to $5.20. He points out that Singtel is already trading at 23.7 times FY2027 earnings, which is two standard deviations above its post-2009 trading range. However, the value of its associates, plus a FY2026 yield of 4.3%, provides valuation support. Further upside is expected from improved earnings and higher payout ratios as Singtel continues asset monetisation.
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The most bullish call thus far, in terms of target price, is that from OCBC Investment Research, which cheers the revised FY2026 ebit guidance from “high single-digit” growth to a new range of “high single-digit to low double-digit” growth. The bottom line is further boosted by a larger dividend hoard of $1.1 billion, up from $1 billion, which Singtel expects to collect from its associates. From a previous fair value of $5.10, OCBC now sees Singtel worth $5.75. “The upgrade reflects robust performances in 1HFY2026 and stronger contributions from regional associates.”
However, OCBC points out that risks do remain for this counter. For one, the outages at Optus had put the company under the spotlight and could result in regulatory costs and higher operating expenses. Singapore’s consumer mobile business also faces a competitive environment and softer roaming demand. Nonetheless, the company can show strong execution and is giving improving earnings visibility.
