SingTel posted 1QFY15 revenue of S$4147.6m, down 3.4% YoY (but +0.5% QoQ), meeting around 24% of our full-year forecast, while reported net profit fell 17.4% YoY (down 7.1% QoQ) to S$834.6m; underlying net profit came in around S$881.0m, down 1.8% YoY and 4.2% QoQ, but also still met 24% of our FY15 estimate. Hence results are in line with our expectations. Going forward, SingTel expects consolidated revenue and EBITDA to remain stable; Core Business (Group Consumer and Group Enterprise) to see stable revenue, low single digit EBITDA growth; Group Digital Life to see 50% revenue growth, negative EBITDA to fall by 20%. As results were mostly in line with our forecast and guidance was also within our expectation, we opt to leave our estimates unchanged. Given that the stock price has rallied quite a bit since we upgraded our call on 13 Feb, and there is limited upside to our unchanged SOTP fair value of S$4.08, we now downgrade our call to HOLD. We would be buyers again closer to S$3.85 or better.
1QFY15 results in-line
SingTel posted 1QFY15 revenue of S$4147.6m, down 3.4% YoY (but +0.5% QoQ), meeting around 24% of our full-year forecast, while reported net profit fell 17.4% YoY (down 7.1% QoQ) to S$834.6m, weighed by an exceptional S$46m loss versus S$114m gain in 1QFY14; underlying net profit came in around S$881.0m, down 1.8% YoY and 4.2% QoQ, but also still met 24% of our FY15 estimate. Management attributed the lower underlying net profit to the depreciation of both the AUD and IDR; it noted that on a constant currency basis, underlying would have grown 4.9% on higher associates’ contributions.
Guides for stable revenue and EBITDA
Going forward, SingTel expects revenue from Core Business (Group Consumer and Group Enterprise) to be stable and EBITDA to increase by low single digit level. In particular, it expects Singapore mobile revenue to rise by mid-single digit level; but Australian mobile revenue could fall by low single digit level. Also guides for Group Digital Life to see 50% revenue growth; negative EBITDA to shrink by 20%. As such, consolidated revenue and EBITDA should remain stable. Guides for capex to be around S$2.3b, with S$900m for Singapore, rest for Australia; ordinary dividend from associates to be ~S$1b. As such, dividend payout is likely to remain around 60-75% of underlying net profit.
Limited upside – downgrade to HOLD
As results were mostly in line with our forecast and guidance was also within our expectation, we opt to leave our estimates unchanged. Given that the stock price has rallied quite a bit since we upgraded our call on 13 Feb, and there is limited upside to our unchanged SOTP fair value of S$4.08, we now downgrade our call to HOLD. We would be buyers again closer to S$3.85 or better.
SingTel posted 1QFY15 revenue of S$4147.6m, down 3.4% YoY (but +0.5% QoQ), meeting around 24% of our full-year forecast, while reported net profit fell 17.4% YoY (down 7.1% QoQ) to S$834.6m, weighed by an exceptional S$46m loss versus S$114m gain in 1QFY14; underlying net profit came in around S$881.0m, down 1.8% YoY and 4.2% QoQ, but also still met 24% of our FY15 estimate. Management attributed the lower underlying net profit to the depreciation of both the AUD and IDR; it noted that on a constant currency basis, underlying would have grown 4.9% on higher associates’ contributions.
Guides for stable revenue and EBITDA
Going forward, SingTel expects revenue from Core Business (Group Consumer and Group Enterprise) to be stable and EBITDA to increase by low single digit level. In particular, it expects Singapore mobile revenue to rise by mid-single digit level; but Australian mobile revenue could fall by low single digit level. Also guides for Group Digital Life to see 50% revenue growth; negative EBITDA to shrink by 20%. As such, consolidated revenue and EBITDA should remain stable. Guides for capex to be around S$2.3b, with S$900m for Singapore, rest for Australia; ordinary dividend from associates to be ~S$1b. As such, dividend payout is likely to remain around 60-75% of underlying net profit.
Limited upside – downgrade to HOLD
As results were mostly in line with our forecast and guidance was also within our expectation, we opt to leave our estimates unchanged. Given that the stock price has rallied quite a bit since we upgraded our call on 13 Feb, and there is limited upside to our unchanged SOTP fair value of S$4.08, we now downgrade our call to HOLD. We would be buyers again closer to S$3.85 or better.
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