UOBKayhian on 14 Feb 2014
(ST SP/BUY/S$3.57/Target: S$3.94)
FY14F PE (x): 22.9
FY15F PE (x): 24.4
SingTel reported underlying net profit of S$910m (+4% yoy) for 3QFY14. Group Consumer. Revenue contracted 11.4% yoy due to decline in mobile business in Australia and a weaker Australian dollar, which depreciated 8.8% yoy. SingTel added 29,000 mobile subscribers in Singapore and subscriber base expanded 5.5% yoy. On the other hand, Optus lost 64,000 subscribers and subscriber base contracted 1.4% yoy. EBITDA was flat as Optus imposed aggressive cuts in selling & admin expense and cost of sales. Upgrade to BUY. We have changed our methodology for valuing SingTel from sum-of- the-parts to DCF. Our new target price is S$3.94 (required rate of return: 6.7%, terminal growth: 1.0%).
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