Singtel’s FY16 results came in within expectations. Revenue eased 1.5% to S$16,961m, about 4% below our forecast, mainly due to the 9% depreciation in the A$ against the S$; in constant currency terms, operating revenue would have been up 4%.

Reported net profit rose 2.4% to S$3,871m, while underlying net profit was up 0.7% at S$3,805m, or just 0.1% below our forecast. Singtel declared a final dividend of S$0.107/share, bringing the total payout to S$0.175 for FY16, both unchanged from FY15.

Going forward, Singtel expects consolidated revenue and EBITDA for the group to both grow by low single digit; capex spend will be around S$2.8b (versus S$2.4b in FY16); free cash-flow to be around S$1.5b, and S$1.2b of dividends from its regional associates. We will have more after the analyst briefing later. For now, we keep our BUY rating but place our SOTP-based fair value of S$3.96 under review.

Source: OCBC Research - 12 May 2016