Singapore Telecom：Profit Decreased in FY24, Expected to Improve in the Future
Company introduction
$Singtel(Z74.SG$ is a leading communications technology group in Asia that provides a range of services, including mobile communications, fixed lines, data services, Internet Protocol Television (IPTV), and Information and Communications Technology (ICT) services. Together with its wholly-owned subsidiary, Optus, and regional associates such as Airtel, AIS, Globe, and Telkomsel, they serve a mobile customer base exceeding 770 million across 21 countries. In terms of its revenue composition, Optus has the largest share, accounting for 50% of total revenue, followed by Singtel Singapore and NCE.
The company's revenue mainly comes from Australia and Singapore, with a small portion from the US and other countries.
Nowadays, Singtel leverages the power of new technologies, including 5G, to deliver an unparalleled network and innovative digital products and services that enhance the experiences of consumers as they embrace more digital and connected lifestyles.
JP Morgan Raises Profit Expectations and Target Price for Singtel
According to the latest financial report data for FY2024, Singtel currently has an adjusted EPS of SGD 0.14. For the next three years, JP Mongen has given growth expectations of SGD 0.16/0.21/0.24 per share. The main reasons are as follows:
Singtel's revenue growth is driven by several key factors. Firstly, the company's contribution to revenue from regional partners Airtel and AIS has increased, reflecting the company's influence and profitability in the regional market.
The company has monetized assets through its capital recycling program, which not only provides funds to support future growth opportunities but also increases the company's interest income.
Singtel has also implemented cost control measures aimed at saving approximately SGD 200 million in Singapore and Australia, which helps to improve the company's operational efficiency and profitability.
Singtel has adjusted its dividend policy, increasing the potential payout ratio of net profit to 70-90% and introducing a new value realization dividend. This indicates the company's commitment to increasing shareholder returns, which has led analysts to raise their earnings per share expectations.
The company's net debt decreased by 7% from the previous year to SGD 7.78 billion, indicating a more stable financial position. At the same time, the company's cash balance increased to SGD 4.63 billion, providing greater financial flexibility to respond to market changes and invest in new growth opportunities.
Based on optimistic expectations for the future, JP Morgan has raised Singtel's target price to SGD 3.16, while the current stock price is SGD 2.55, indicating some potential for upward movement. Overall, Singtel provides investors with a relatively safe and growth potential investment opportunity through its steady revenue growth and attractive dividend policy. The company's strategic focus on cost efficiency, asset monetization, and growth plans all support a positive outlook for its long-term value.
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