SingTel posted FY14 revenue of S$16848.1m, down 7.3%, but was just 0.8% above our forecast, while reported net profit edged up 4.1% to S$3652.0m, and was just 0.5% shy of our estimate. Excluding exceptionals, core net profit came in around S$3611m, almost unchanged from FY13. SingTel declared a final dividend of S$0.10/share, bringing its total payout to S$0.168, or a payout ratio of 74% of underlying profit. For FY15, SingTel expects its core business revenue to remain stable while EBITDA to grow by a low single-digit level. It expects to spend S$2.3b as capex, with S$900m for Singapore and the rest for Australia. As SingTel also expects free cashflow to remain stable, it has kept its dividend payout at 60-75% of underlying net profit. As guidance is largely in line with our forecast, we opt to keep our estimates largely unchanged. Our SOTP-based fair value improves from S$3.74 to S$4.00 as we roll forward our DCF model to FY15 and update the share price of its listed associates. Maintain BUY, supported by a decent prospective yield of 4.4%.
FY14 results within forecast
SingTel posted FY14 revenue of S$16848.1m, down 7.3%, but was just 0.8% above our forecast, while reported net profit edged up 4.1% to S$3652.0m, and was just 0.5% shy of our estimate. Excluding exceptionals, core net profit came in around S$3611m, almost unchanged from FY13. SingTel declared a final dividend of S$0.10/share, bringing its total payout to S$0.168, or a payout ratio of 74% of underlying profit.
Guiding for a mostly stable FY15 outlook
For FY15, SingTel expects its core business revenue to remain stable while EBITDA to grow by low single-digit level. In its core business, it will continue to drive profitable revenue growth and operational efficiencies with scale and a competitive cost structure. The Singapore mobile revenue is likely to see mid single-digit level growth; but Australia mobile revenue could decrease by low single-digit level. In its digital business, SingTel intends to leverage on its unique telco assets to create innovative and differentiated digital services that will enhance its core business and deliver new revenue streams. Overall, it expects to spend S$2.3b as capex, with S$900m for Singapore and the rest for Australia (not counting another S$900m for spectrum payments). As SingTel also expects free cashflow to remain stable (was S$3391m in FY14), buoyed by an expected S$1.0b of ordinary dividends from its regional associates, SingTel has kept its dividend payout at 60-75% of underlying net profit.
Maintain BUY with new S$4.00 fair value
As guidance is largely in line with our forecast, we opt to keep our estimates largely unchanged. Our SOTP-based fair value improves from S$3.74 to S$4.00 as we roll forward our DCF model to FY15 and update the share price of its listed associates. Maintain BUY, supported by a decent prospective yield of 4.4%.
SingTel posted FY14 revenue of S$16848.1m, down 7.3%, but was just 0.8% above our forecast, while reported net profit edged up 4.1% to S$3652.0m, and was just 0.5% shy of our estimate. Excluding exceptionals, core net profit came in around S$3611m, almost unchanged from FY13. SingTel declared a final dividend of S$0.10/share, bringing its total payout to S$0.168, or a payout ratio of 74% of underlying profit.
Guiding for a mostly stable FY15 outlook
For FY15, SingTel expects its core business revenue to remain stable while EBITDA to grow by low single-digit level. In its core business, it will continue to drive profitable revenue growth and operational efficiencies with scale and a competitive cost structure. The Singapore mobile revenue is likely to see mid single-digit level growth; but Australia mobile revenue could decrease by low single-digit level. In its digital business, SingTel intends to leverage on its unique telco assets to create innovative and differentiated digital services that will enhance its core business and deliver new revenue streams. Overall, it expects to spend S$2.3b as capex, with S$900m for Singapore and the rest for Australia (not counting another S$900m for spectrum payments). As SingTel also expects free cashflow to remain stable (was S$3391m in FY14), buoyed by an expected S$1.0b of ordinary dividends from its regional associates, SingTel has kept its dividend payout at 60-75% of underlying net profit.
Maintain BUY with new S$4.00 fair value
As guidance is largely in line with our forecast, we opt to keep our estimates largely unchanged. Our SOTP-based fair value improves from S$3.74 to S$4.00 as we roll forward our DCF model to FY15 and update the share price of its listed associates. Maintain BUY, supported by a decent prospective yield of 4.4%.
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