SingTel announced results last Wednesday and the shares have added 2% since. Macquarie Equities Research (MER) released a research note on 12th Nov reiterating its ‘Outperform’ rating on SingTel and a 12-month price target of $4.34 on the counter. Taking yesterday’s close, SingTel is 10.4% away from MER’s target price. Some excerpts can be found below…
 
Event
SingTel announced 2Q15 results pre-market. Reported 2Q FY15 net profit of S$1,038m brought 1H15 profits to S$1,873m. Underlying profits (excluding one off gains) of S$979m (+11% QoQ)  brought 1H FY15 profits to S$1,860m representing 51% of our FY15 estimates. An interim dividend of 6.8 cents was also announced.
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Impact
Overall results were inline, with key trends also moving inline with expectations.
In Singapore, SingTel continued to deliver mobile revenue growth (+1.8% pcp), with growth in subs (including prepaid) and stable ARPUs. Handset subsidies did pick up, inline with peers on the back of the iPhone6 launch but were still down 11% YoY. Pay TV revenues were flat with subscriber growth of 1k QoQ to 419k even as competitor STH raised its own pay TV base QoQ.
 
Optus too delivered results that were inline with MER’s FY15 estimates of 51% at the earnings before interest, tax, depreciation and amortization (EBITDA) level.
 
Exceptional gains of S$59m in the quarter were likely due to the paring down of its stake in SingPost.
 
Management has maintained its guidance for the FY.
 
MER’s action and recommendation
MER reiterates its Outperform recommendation on SingTel.
 

Source: Macquarie Research - 20 Nov 2014