Date: October 24, 2024
Broker: CGS International Securities

Earnings Preview for 1H FY25

SingTel is expected to report strong core net profits for the first half of the fiscal year 2025, driven primarily by robust EBIT growth and operational efficiencies.

Key Financial Expectations

1. Core Net Profit:

   • Expected to be in the range of S$1.20 billion to S$1.22 billion, marking a 7-9% year-on-year increase.
   • The growth is primarily attributed to strong EBIT performance, which is forecasted to grow by 18% year-on-year.

2. EBIT and Operational Performance:

   • EBIT growth remains a key driver of SingTel’s financial performance, supported by effective cost management.
   • The company’s focus on concerted operating expense (opex) cuts has contributed to improved margins.

Strategic Moves and Business Adjustments

1. Operational Efficiency:

   • The removal of losses from Trustwave, which was divested in January 2024, has helped uplift the company’s operating profit margin (OPM) for both its Singapore and Optus segments.
   • These strategic adjustments have allowed SingTel to improve its financial metrics and streamline operations.

2. Positive Outlook for Share Price:

   • Recent softness in SingTel’s share price presents an opportunity for investors to accumulate.
   • The company’s target price has been raised to S$3.70, reflecting higher valuations of its associates, including Bharti, Intouch, and AIS.

Analyst Insights

CGS International analysts reiterate their “Add” rating on SingTel, emphasizing the company’s strong EBIT momentum and strategic cost-cutting measures. The optimistic forecast for core net profit and EBIT growth underscores the company’s potential for continued success in the upcoming fiscal period.

Conclusion

SingTel’s financial outlook for the first half of FY25 reflects solid growth driven by robust EBIT performance and strategic operational adjustments. With strong associate valuations and a focus on efficiency, the company is well-positioned for sustained profitability, making it an attractive proposition for investors.