Singapore Telecommunications Ltd (Z74) (2024)

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SGD 2.54 +0.02(0.79%)

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Company Report

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Singapore Telecommunications Ltd (Z74) (1)

Singtel Earnings: Solid Guidance With Cost Reductions to Come; Increasing Fair Value to SGD 2.50

Dan Baker

We increase our fair value estimate for narrow-moat Singtel to SGD 2.50 from SGD 2.40 previously following the release of a fiscal 2024 result that was broadly in line with our expectations. The increase was due to the increased share prices of its listed associates since the previous update, particularly Bharti Airtel, and an increase in underlying earnings due to reduced depreciation following SGD 513 million of asset write-downs made in fiscal 2024 partially offset by higher capital expenditure in fiscal 2024. Along with the asset write-downs, Singtel put through a SGD 2.6 billion goodwill impairment with the fiscal 2024 result mostly related to Optus, as previously announced. Management guided to high-single-digit to low-double-digit EBIT growth in fiscal 2025, boosted by SGD 200 million of cost savings in Singtel Singapore and Optus and reduced depreciation. The sale of Trustwave, which contributed a SGD 133 million loss in fiscal 2023, should also help. Capex in fiscal 2024 is expected to be SGD 2.8 billion with around SGD 1.8 billion of that considered “core” and SGD 1 billion to be invested in data centers and satellites. This will be topped up by spectrum payments of AUD 1.5 billion for 900 megahertz in Australia and SGD 0.4 billion for 700 MHz spectrum in Singapore.

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Price vs Fair Value

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Z74 is trading at a 836% premium.

Price

SGD 2.54

Fair Value

SGD 3.60

Uncertainty

Low

1-Star Price
SGD 5.37

5-Star Price
SGD 1.00

Economic Moat
Tpszg

Capital Allocation
Gymckmvj

Bulls Say, Bears Say

Bulls

Management is disciplined in capital management initiatives.

Bears

Increased competition and irrational discounting will result in lower pricing and higher acquisition costs to defend market share in Singapore.

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News

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  • Singtel Swings to Loss in Second Half; Raises Payout
  • Singtel Taps Head of Australia's Broadband Operator for Optus — Update
  • Singtel Taps Australian National Broadband Network CEO to Head Optus
  • Singtel Warns of Losses in Fiscal Second-Half; No Impact on Payouts
  • TPG Telecom Agrees A$1.17 Billion Regional Network Sharing With Optus — Update
  • TPG Telecom Agrees A$1.17 Billion Regional Network Sharing With Optus
  • Singtel to Launch Nvidia-Powered Cloud Computing Offering
  • Singtel Earnings Weighed by Australia Outage, India One-Offs — Update

Trading Information

Previous Close Price
SGD 2.52
Day Range

SGD 2.512.54

52-Week Range

SGD 2.252.68

Bid/Ask
SGD 2.53/SGD 2.54

Market Cap
SGD 41.94 Bil

Volume/Avg
23.1 Mil/34.5 Mil

Key Statistics

Price/Earnings (Normalized)
18.50

Price/Sales
2.98

Dividend Yield (Trailing)
4.13%

Dividend Yield (Forward)
4.13%

Total Yield
4.13%

Company Profile

Singapore Telecommunications is Singapore's leading telecoms company. It owns extensive wired and wireless networks offering data and voice services to a broad customer base. Singtel's diverse investment portfolio spreads across the region. The firm wholly owns Optus in Australia and minority equity stakes in Airtel (29%) in India; Telkomsel (35%) in Indonesia; Globe Telecom (47%) in the Philippines; and Advanced Information Services (23%) and Intouch (21%) in Thailand. Singtel is majority-owned by the Singapore government.

Sector
Communication Services

Industry
Telecom Services

Stock Style Box
Large Value

Total Number of Employees
24,112

Competitors

  • StarHub Ltd CC3
  • Vodafone Group PLC ADR VOD
  • Telstra Group Ltd TLS

Valuation

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Metric

Z74

CC3

VOD

Price/Earnings (Normalized)

18.5010.4111.12

Price/Book Value

1.755.960.38

Price/Sales

2.980.910.61

Price/Cash Flow

9.975.532.06

Price/Earnings

Z74

CC3

VOD

Financial Strength

Metric

Z74

CC3

VOD

Quick Ratio

1.261.170.57

Current Ratio

1.351.441.31

Interest Coverage

2.995.641.45

Quick Ratio

Z74

CC3

VOD

Profitability

Metric

Z74

CC3

VOD

Return on Assets (Normalized)

4.85%4.65%1.60%

Return on Equity (Normalized)

9.03%40.78%3.89%

Return on Invested Capital (Normalized)

6.74%8.07%3.80%

Return on Assets

Z74

CC3

VOD

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Singapore Telecommunications Ltd (Z74) (2024)
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