SingTel's 1QFY22F group EBIT (including regional associates’ PAT) likely rose 2-4% y-o-y (down 1-3% q-o-q) to S$540m-550m, in line with our estimates.
We see this being driven by stronger associate and Optus Consumer earnings, as well as narrower Digital Life losses y-o-y.
Reiterate ADD on SingTel with an unchanged SOP-based target price.
SingTel's 1QFY22F Earnings Likely Grew Y-o-y, in Line With Forecast
SingTel (SGX:Z74) will release its 1QFY22 (April 2021 to June 2021) business performance update on 12 Aug.
Based on its associates’ reported results and our estimates for Singapore and Optus, we believe SingTel's 1QFY22F group EBIT (including regional associates’ PAT) rose 2-4% y-o-y to S$540m- 550m, mainly due to better earnings from associates and Optus Consumer, plus narrower Digital Life losses. Q-o-q, we think group EBIT to ease 1-3%. 1QFY22F group EBIT may be broadly in line at 20-21% of our FY22 forecast (Bloomberg consensus: 18- 19%), as we expect associate earnings to improve further in 2Q-4QFY22F.
Singapore Earnings May be Down on COVID-19 & Less JSS Credits
1QFY22F Singapore Consumer EBIT likely fell 23-29% y-o-y (down 1-8% q-o-q) due to recovery in ICT project delivery.
Meanwhile, Digital Life LBIT likely narrowed 39- 51% y-o-y (narrowed 26-41% q-o-q) on higher revenue/improved margin.
Optus Consumer to Rebound on Higher Mobile Revenue & Lower Cost
Despite lower NBN migration to frontline healthcare workers, and opex (onshore care agents and bad debt provisions) related to COVID-19.
Bharti Turnaround May Have Lifted Associate Earnings Y-o-y
We see SingTel's 1QFY22F associate profits (ex-Singapore, in S$ terms) rising 29-33% y-o-y, on a turnaround in Bharti’s contribution to view.
Reiterate ADD on SingTel
We maintain our earnings forecasts, pending the release of SingTel’s results.
Key re-rating catalysts: FY22F core earnings per share rebound and asset monetisation.
Current SingTel's share price implies an FY22F EV/EBITDA of just 3.0x for Singtel Singapore and Optus, with decent FY22-24F yields of 4.2-6.3% p.a.
Downside risk: price wars in its operating markets.
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....