Simons Trading Research

Author: simonsg   |   Latest post: Fri, 13 Dec 2019, 4:31 PM


SingTel - Excessively High Street Numbers, Unsustainable Dividends

Author:   |    Publish date:

  • Trim FY20F/21F earnings by 5%/3%, bringing us 10%8% below consensus.
  • We estimate that SINGTEL (SGX:Z74) may reduce dividend per share to 13-15 Scts in FY21F to maintain its credit rating.
  • Maintain HOLD with a lower Target Price of S$3.12.

Outlook Still Challenging, Dividends Unsustainable

  • Regional associates’ profit contribution has been a critical factor driving Singtel’s share price, via changes in the holding company (Holdco) discount. After a 10% reduction in the value of SingTel’s core business, Holdco discount hovers at ~13% (vs. 15% historical average) and may widen given
    1. lack of clarity on Bharti Airtel’s path to profitability, and
    2. meager growth from Telkomsel, which is losing revenue share in Indonesia.
  • We estimate that SingTel may reduce its dividend per share to 13-15 Scts in FY21F to maintain its credit rating. However, we expect earnings growth to resume in FY21F. See SingTel's dividend history.
  • Negatives are mostly priced in, in our view.

Where We Differ: Our Revised FY20F/21F Earnings Forecasts Are 10%/8% Below Consensus

  • We factor in
    1. 2% core EBITDA growth in FY20F (4% earlier) vs. management guidance of high single-digit growth due to weak Australian economy and Aussie dollar, and
    2. lower expectations from associates given a longer-than-expected recovery in Bharti’s profitability.


Source: DBS Research - 10 Oct 2019

Share this
Labels: SingTel

Related Stocks

Chart Stock Name Last Change Volume 
SingTel 3.39 0.00 (0.00%) 18,083 

  Be the first to like this.


135  132  161  675 

Top 10 Active Counters
 Rex Intl 0.186+0.007 
 Golden Agri-Res 0.220.00 
 YZJ Shipbldg SGD 1.13+0.04 
 Artivision Tech 0.003-0.001 
 Ascendas Reit 2.91-0.08 
 CapitaMall Trust 2.42-0.04 
 Genting Sing 0.93-0.005 
 ThaiBev 0.92+0.01 
 Mapletree Com Tr 2.26-0.02 
 SingTel 3.390.00 
Partners & Brokers