Furthermore, net profit fell as the share of results from the regional associates decreased by 19.8% to S$2,051m. The weaker performances of the associates were due to the depreciation of the regional currencies and the poor performances by Telkomsel, Globe and AIS.
Dividend. SingTel announced a final dividend of 6.9 cents per share. Together with the interim dividend of 5.6 cents per share, the total dividend is 12.5 cents per share for FY2009. The dividend amount was the same as FY2008.
Profit margin. Net profit margin increased from 21.6% in 3Q FY2008 to 25.3% in 4Q FY2008 mainly due to better performances from its Singapore and Australian operations as well as its regional mobile associates. Based on a year-on-year comparison, it fell from 26.7% in FY2007 to 23.1% in FY2008 because of the negative impact from the economic downturn and the depreciation of the foreign currencies.
The actual revenue and net profit were 1.1% below and 3.6% above our forecasts respectively. Revenue was slightly lower because of the greater than expected depreciation of the Australian dollar. Net profit was higher as the earnings of the regional mobile associates came in above our forecasts.
FY2010F Outlook. The company expects the operating revenue for the Singapore and Australian businesses to grow at single-digit level and low single-digit level respectively. Moreover, the contributions from the regional mobile associates are likely to be affected by the fluctuations in the regional currencies. Its dividend policy is to pay 45% to 60% of underlying earnings.
Maintain BUY recommendation and target price at S$3.80. As the revenue and net profit of SingTel came in close to our expectations, we maintain our target price of S$3.80 based on the discounted cash flow method. SingTel remains a buy as its business continues to grow in Singapore and Australia with profit contributions from its regional mobile associates.
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