• Singtel’s 1QFY3/19 core net profit fell 19.3% y-o-y. Results were below expectations.
• Singapore EBITDA eased 3.8% y-o-y on weaker consumer and enterprise business.
• Optus’s core net profit fell 5.9% y-o-y due to higher depreciation and interest cost.
• Associate contributions were lower by 25.5% y-o-y, mainly due to Telkomsel and Airtel.
• Maintain ADD with a 5% lower target price of S$3.70. Attractive yields of 5.5% p.a.

1QFY19 Results Missed

Singtel’s 1QFY19 core net profit was below expectations, forming 20%/20% of our/consensus FY19F forecasts. Core net profit fell 19.3% y-o-y (-10.7% q-o-q) mainly due to lower share of associate earnings (-25.5% y-o-y). 

Optus’s contribution and Singapore's profits were also lower by 9.1% y-o-y and 4.2% y-o-y, respectively. In constant currency terms, core net profit was down 16.6% y-o-y.

Source: CGS-CIMB Research - 09 Aug 2018