SingTel reported a 7.3% YoY decline in 3QFY14 revenue to S$4263.3m, while core earnings (excluding exceptionals) climbed 5.5% to S$872.3m. For 9MFY14, revenue slipped 7.2% to S$12719.7m, meeting 75% of our full-year forecast, while core earnings rose 3.1% to S$2690m, or about 73% of our FY14 estimate. Going forward, the outlook is getting slightly more mixed. While the telco still expects consolidated revenue to decline by mid-single digit level and EBITDA to decline by low single-digit level; SingTel now guides for Group Consumer revenue to fall by low double-digit level versus high single-digit previously, though EBITDA’s decline remains at low single-digit level. It has reduced its capex guidance back to S$2.2b from a previously revised S$2.5b. Otherwise, the rest of its guidance remains unchanged. Our SOTP-based fair value eases from S$3.81 to S$3.74, mainly weighed by the recent pullback in the market value of its listed associates. But with a total return of >10%, we upgrade our call from Hold to BUY from a valuation perspective.
9MFY14 results mostly in line
SingTel reported a 7.3% YoY decline in 3QFY14 revenue to S$4263.3m, mainly due to weaker regional currencies once again; reported net profit though rose 5.5% to S$872.3m, while core earnings excluding exceptional items climbed 4.1% to S$910m, mainly aided by an improved Airtel performance. For 9MFY14, revenue slipped 7.2% to S$12719.7m, meeting 75% of our full-year forecast, while reported net profit rose 4.3% to S$2753.7m; core earnings rose 3.1% to S$2690m, or about 73% of our FY14 estimate.
Slightly more mixed outlook
Going forward, the outlook is getting slightly more mixed. While the telco still expects consolidated revenue to decline by mid-single digit level and EBITDA to decline by low single digit level; SingTel now guides for Group Consumer revenue to fall by low double digit level (due to weaker AUD) versus high single digit previously, though EBITDA’s decline remains at low single digit level. It has reduced its capex guidance back to S$2.2b from a previously revised S$2.5b. Otherwise, the rest of its guidance remains unchanged.
Renewed focus on Optus
Over in Australia, we note that Optus saw a 1.4% YoY fall in its total mobile subscriber base in 3QFY14; broadband customers fell 2.4% YoY in the quarter. But going forward, SingTel says it will focus on driving customer growth in Australia, both in the consumer mobile and broadband space. Management is hopeful that it will start to see results soon. However, it notes that the enterprise segment remains cautious, with many firms still focused on containing cost.
Upgrade to BUY with S$3.74 fair value
Our SOTP-based fair value eases from S$3.81 to S$3.74, mainly weighed by the recent pullback in the market value of its listed associates. But with a total return of >10%, we upgrade our call from Hold to BUY from a valuation perspective.
SingTel reported a 7.3% YoY decline in 3QFY14 revenue to S$4263.3m, mainly due to weaker regional currencies once again; reported net profit though rose 5.5% to S$872.3m, while core earnings excluding exceptional items climbed 4.1% to S$910m, mainly aided by an improved Airtel performance. For 9MFY14, revenue slipped 7.2% to S$12719.7m, meeting 75% of our full-year forecast, while reported net profit rose 4.3% to S$2753.7m; core earnings rose 3.1% to S$2690m, or about 73% of our FY14 estimate.
Slightly more mixed outlook
Going forward, the outlook is getting slightly more mixed. While the telco still expects consolidated revenue to decline by mid-single digit level and EBITDA to decline by low single digit level; SingTel now guides for Group Consumer revenue to fall by low double digit level (due to weaker AUD) versus high single digit previously, though EBITDA’s decline remains at low single digit level. It has reduced its capex guidance back to S$2.2b from a previously revised S$2.5b. Otherwise, the rest of its guidance remains unchanged.
Renewed focus on Optus
Over in Australia, we note that Optus saw a 1.4% YoY fall in its total mobile subscriber base in 3QFY14; broadband customers fell 2.4% YoY in the quarter. But going forward, SingTel says it will focus on driving customer growth in Australia, both in the consumer mobile and broadband space. Management is hopeful that it will start to see results soon. However, it notes that the enterprise segment remains cautious, with many firms still focused on containing cost.
Upgrade to BUY with S$3.74 fair value
Our SOTP-based fair value eases from S$3.81 to S$3.74, mainly weighed by the recent pullback in the market value of its listed associates. But with a total return of >10%, we upgrade our call from Hold to BUY from a valuation perspective.
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