Friday, 15 August 2014


Kim Eng on 15 Aug 2014

  • Singapore consumer business outperformed, offsetting a weak Optus in Australia under restructuring.
  • Singapore mobile continued to do well. Optus’s mobile turning around.
  • Maintain BUY and SOTP-based TP of SGD4.32. Forecasts largely maintained. Catalysts include Optus’s turnaround.
Within expectations
1QFY3/15 met expectations. Singapore revenue rose 3.6% YoY, driven by mobile and pay TV. Australia revenue fell 7.9% on weak mobile operations and currency depreciation. Group revenue fell
3.4% YoY while core net profit slipped 1.8% YoY (23% of FY15E forecast). Revenue would have been stable and net profit up 4.9% if not for AUD weakness.

Guidance unchanged; Optus to fare better
SingTel maintained full-year guidance of stable revenue and EBITDA. We expect 4% YoY core earnings growth this year, a reversal from the last three years’ declines. We forecast 8% growth for next year as Optus should be able to fare better after its restructuring. Maintain BUY with a slightly lower SOTP-based TP of SGD4.32 from SGD4.35, after making minor changes in currency assumptions.

SingTel’s Singapore postpaid mobile revenue (+3% YoY) has not slowed down, unlike StarHub’s (revenue +0.8%). Its flat prepaid mobile also outperformed StarHub’s -11% and M1’s -8%. We expect its new Wifi Combo plans to boost ARPUs. There are also signs of stabilisation in Australia as Optus’s mobile revenue dipped just 0.8% vs -2% in 4QFY3/14 and -4% in 3QFY3/14. We continue to expect an Optus turnaround in FY3/16E.

Singapore Enterprise’s EBITDA was down 8% due to greater NBN competition and a large low-margin government contract. Group Digital L!fe losses widened YoY to SGD45m but narrowed QoQ, in line with guidance of 20% lower losses for the full year.

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