All analysts have kept "buy" on the telco, with some seeing Singtel as their top picks amongst the Singapore telco sector.
Globe and Telkomsel also led to associate earnings waning 6.2% q-o-q, which was partly cushioned by Bharti and AIS. To him, Singtel’s 9MFY2022 results fell short of his expectations, with its earnings running at 62% of his full-year estimates. “We do however see likely tailwinds into the associates into 4Q22 with AIS guiding for material revenue growth expansion and Indonesia now consolidating into 4 operators with Indosat & Hutch finally merging in January 2022,” he writes.
In his report on Feb 16, Tan says Singtel’s operational revenue should improve further as its associates earnings recover from lockdowns. Stabilising economic conditions should also drive the telco’s operational revenue upwards, he adds. “We expect net debt to EBITDA, including associate dividends, to remain healthy at 1.6 times to 2.2 times in FY2021-FY2023; providing support to its fixed DPS commitment,” says Tan.
“Barring unforeseen circumstances, Singtel still expects to pay dividends at the upper half of its dividend policy range of between 60%-80% of FY2022’s underlying profit,” notes the team who remains “constructive” on Singtel and its process of unlocking value and capital recycling. Investment risks, to them, include a prolonged drag from Covid-19, further cuts to its dividend, stronger-than-expected competition in Singapore and Australia and the inability to unlock value from initiatives.
“Mobile earnings expanded in Singapore, Australia and India. The Philippines was the key drag. Rising ARPU and cost controls were the key drivers of earnings growth,” notes Chew on Singtel’s results. “Enterprise earning was sluggish from legacy services and lower project wins.”