Negatives and concerns. (1) Weak Singapore economy weighs on revenues – we agree but see cost controls minimizing EBITDA damage. (2) No growth in Optus – yes, but largely in expectations which by the way also reflect nothing for NBN opportunities and mobile consolidation: longer term positives? (3) M&A initiatives – always on the cards, value for price will be key; (4) Defensive stock a source of funds into market rallies – we are seeing that now.
What to watch with 4Q results due May 14th? We see FY10 guidance as a focal point. Many moving parts into our 11% recurring EPS growth view for FY10E include: (1) NBN impact in Singapore (margin,capex); (2) Optus – does mobile focus move back to margins (versus rev), in which case our 3.5% EBITDA growth view could have upside (our estimates incorporate A$/S$ parity); (3) Associates up 23%yoy (after 21% fall in FY09) as Telkomsel recovers.
We see capital management delivery as unlikely. We think SingTel prefers to keep its powder dry into uncertain markets and dynamic investment prospects. We see 7.7cents in final DPS (60% payout, interim DPS was 6.5cents). For 4Q specifically, we see S$924m (-5%yoy) in recurring profits; S$1.06bn in EBITDA (-9%yoy). We see associates contribution at S$536m (-17%yoy, +10%qoq).
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