SingTel's Australia and Singapore business trades in line with its widest P/E discount to peers in the nine years we keep data for. In both the prior cases of such a spread being reached, SingTel outperformed peers by 25%+ in the following year.
There are reasons to be bullish:
1) FX headwinds are abating;
2)we believe the company is well positioned to grow in Australia, and
3) we recently turned bullish on Bharti, and now have Buy's on all three listed associates plus Telkom.
The company appears attractive vs. the 19x P/E of the regional market, despite leaking out 9% of EBIT to Digital Life - and we expect Digital Life to either become profitable or be restructured.
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