Towards Financial Freedom

SingTel - 9MFY14 Results Flash - Some FX Reprieve

kiasutrader
Publish date: Thu, 13 Feb 2014, 11:58 AM
At  69-73%,  SingTel's  9MFY14  results  were  slightly  below  our expectations  but  in  line  with  consensus.  The  improvement  in  Optus' cost structure  and a steadier  SGD/AUD  mitigated a  seasonally weaker Singapore  business.  Our forecast  is under review  pending the results call with management later today. SingTel stays NEUTRAL on lack of rerating catalyst and competitive headwinds.
  • Broadly in line. SingTel's 3QFY14 core earnings of SGD910m  (+3.9% y-o-y,  2.8%  q-o-q)  brought  9MFY14  core  earnings  to  SGD2.69bn (+3.1% y-o-y). A reprieve is seen from the recovery in the  AUD and INR vs  the  SGD  q-o-q  (feeding  into  1QCY14),  although  the  IDR  and  THB depreciated another 2-10% q-o-q.
  • Seasonal uptick in mobile revenue. As expected, SingTel's consumer revenue  (-11% y-o-y)  was  clipped  by the  double-digit  decline  in Optus (80% of revenue) from lower mobile termination rates (MTR). It rose 4% q-o-q  on the high base of seasonal sales in 4QFY13. Group  enterprise revenue was stable  on the back of the cautious business environment. The  improved cost structure  (mostly  at  Optus)  contributed to  the  y-o-y EBITDA growth but was down q-o-q on seasonality.  
  • Associate  contribution  up  4%  y-o-y.  Bharti  Airtel  (BHARTI  IN,  NR) posted  an  improved showing  (higher  ARPU and data usage),  but rising competition and 3G related costs  dragged down  Advanced Info Service (ADVANC TB, BUY, TP: THB2.48)'s contribution (+1% y-o-y). Telkomsel (+15% y-o-y) benefited from a stable market and higher data usage.   
  • Digital  business  (GDL)  in  embryonic  stage.  Although  revenue momentum  improved  further  in  3QFY14  (+14.3%  q-o-q/+40%  y-o-y), EBITDA  losses  widened  to  SGD114m  in  9MFY14  from  SGD72m  in 1HFY14. The bulk of the revenue came from Amobee.  
  • Guidance tweaked. Management has reiterated its broad guidance of: i) Singapore revenue to increase by low single-digits,  ii) Optus revenue to decline by mid-single digits,  and  iii) GDL to incur start-up losses.  It has,however tweaked guidance for  group consumer revenue to "decline by low double-digits" from a "decline of high single-digits".
  

 



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Source: OSK
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