Following SingTel's 2QFY15 results conference call, we continue to believe its Australian business is now on a firmer footing and set for stronger growth in FY16-17. Associate earnings should continue growing as currencies stabilise. Singapore profits will be dragged down by pressure in the enterprise business as well as wider Digital Life losses. We trim our FY15-17 EPS forecasts by 1.6-2.0% to take into account SingTel's revised guidance for Digital Life losses of S$200m-250m this year.
However, we raise our SOP-based target price by 10 Scts to S$4.25 after updating our valuation for higher target prices for Bharti, AIS and SPOST. SingTel remains an Add, with continued earnings recovery as a potential catalyst.
Read more »