Singtel reported 3QFY15 revenue of S$4427.0m, up 3.8% YoY and 2.7Q QoQ, led by strong mobile data growth across businesses and also robust demand for new smartphones like the Apple iPhone 6 and 6+. However, due to the weaker AUD, EBITDA slipped 2.8% YoY (-7.9% QoQ) to S$1228.7m. Aided by stronger associates contribution (+38.3% YoY, +9.8% QoQ), net profit grew 11.2% YoY (-6.6% QoQ) to S$969.8m; underlying net profit was up 6.6% YoY (-0.9% QoQ) at S$969.8m. 9MFY15 revenue rose 1.3% to S$12884.0m, meeting 77% of our full-year forecast, while underlying net profit was up 5.2% at S$2829.8m, or about 76% of our FY15 estimate. SingTel has affirmed its previous guidance given in Nov; adding that it now expects mobile service revenue from Australia to grow by low single-digit. But a weakening AUD remains a near to medium-term concern, and with a pretty decent gain of 18.8% since our upgrade on 13 Feb 2014, we believe most of the positives have been priced in – downgrade to HOLD with a lower SOTP-based fair value of S$4.16.
3QFY15 results in line with forecast
Singtel reported 3QFY15 revenue of S$4427.0m, up 3.8% YoY/+2.7% QoQ, led by strong mobile data growth across businesses and also robust demand for new smartphones like the Apple iPhone 6 and 6+. But due to a weaker AUD, EBITDA slipped 2.8% YoY (-7.9% QoQ) to S$1228.7m. Aided by stronger associates contribution (+38.3% YoY, +9.8% QoQ), net profit grew 11.2% YoY (-6.6% QoQ) to S$969.8m; underlying net profit was up 6.6% YoY (-0.9% QoQ) at S$969.8m. 9MFY15 revenue rose 1.3% to S$12884.0m, meeting 77% of our full-year forecast, while underlying net profit was up 5.2% at S$2829.8m, or about 76% of our FY15 estimate.
Reaffirms earlier guidance; tad more upbeat on Optus
Going forward, SingTel has reaffirmed its guidance from last Nov – namely revenue from core business (Group Consumer and Group Enterprise) to be stable and EBITDA to grow by low single digit; Group Digital Life revenue to exceed S$300m, and negative EBITDA to hit S$200-250m. It has kept capex at S$2.3b (with S$1.4b for Australia); and expects group free cash flow to be stable with S$1b from associate dividends. Still, it is more upbeat on Optus, where it now expects mobile service revenue to increase by low single digit level versus a decline of low single digit level previously.
Positives likely priced in
While results were mostly in-line with our expectations, we opt to leave our forecasts unchanged for now. As before, we think that the weakening AUD against the SGD could remain a near to medium-term concern – in 3QFY15, the average weighted AUD rates used in operating revenue was 4.4% YoY lower and 4.3% lower in underlying net profit, respectively. Separately, since our upgrade to Buy on 13 Feb 2014, Singtel’s share price has appreciated 18.8% to a new 5-year intraday high of S$4.17 today; also just above our revised SOTP-based fair value of S$4.16. As we believe that most of the positives have been priced in, we downgrade our call to HOLD.
Singtel reported 3QFY15 revenue of S$4427.0m, up 3.8% YoY/+2.7% QoQ, led by strong mobile data growth across businesses and also robust demand for new smartphones like the Apple iPhone 6 and 6+. But due to a weaker AUD, EBITDA slipped 2.8% YoY (-7.9% QoQ) to S$1228.7m. Aided by stronger associates contribution (+38.3% YoY, +9.8% QoQ), net profit grew 11.2% YoY (-6.6% QoQ) to S$969.8m; underlying net profit was up 6.6% YoY (-0.9% QoQ) at S$969.8m. 9MFY15 revenue rose 1.3% to S$12884.0m, meeting 77% of our full-year forecast, while underlying net profit was up 5.2% at S$2829.8m, or about 76% of our FY15 estimate.
Reaffirms earlier guidance; tad more upbeat on Optus
Going forward, SingTel has reaffirmed its guidance from last Nov – namely revenue from core business (Group Consumer and Group Enterprise) to be stable and EBITDA to grow by low single digit; Group Digital Life revenue to exceed S$300m, and negative EBITDA to hit S$200-250m. It has kept capex at S$2.3b (with S$1.4b for Australia); and expects group free cash flow to be stable with S$1b from associate dividends. Still, it is more upbeat on Optus, where it now expects mobile service revenue to increase by low single digit level versus a decline of low single digit level previously.
Positives likely priced in
While results were mostly in-line with our expectations, we opt to leave our forecasts unchanged for now. As before, we think that the weakening AUD against the SGD could remain a near to medium-term concern – in 3QFY15, the average weighted AUD rates used in operating revenue was 4.4% YoY lower and 4.3% lower in underlying net profit, respectively. Separately, since our upgrade to Buy on 13 Feb 2014, Singtel’s share price has appreciated 18.8% to a new 5-year intraday high of S$4.17 today; also just above our revised SOTP-based fair value of S$4.16. As we believe that most of the positives have been priced in, we downgrade our call to HOLD.
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