CGS International
June 17, 2025
SingTel’s Dividend Appeal: Attractive Yields, Limited Upside, and Asset Monetization in Focus for 2025
Overview: SingTel’s Strategic Position in 2025
SingTel enters FY26 with an enhanced focus on shareholder returns, driven by an ambitious asset recycling program and a commitment to delivering attractive dividends. Following its latest results, CGS International maintains a Hold call on SingTel, citing strong dividend yields but limited share price upside due to elevated valuations.
- Current Price: S\$3.95
- Target Price: S\$4.10 (revised up from S\$4.00)
- Market Cap: S\$65.2bn (US\$51.0bn)
- Recommendation: Hold
- Dividend Yield (FY26F): 5.0%
- Consensus Ratings: Buy 15, Hold 2, Sell 1
- Major Shareholders: Temasek Holdings (52.0%), Capital Group (3.4%), Blackrock (1.8%)
Dividend Strategy: Asset Recycling Fuels Attractive Yields
SingTel has increased its asset recycling target to S\$9bn over the next 3-4 years (previously S\$6bn), aiming to sustain dividend yields above 5% at least through FY28. Value realisation dividends (VRD) are projected at:
- FY26: 6.0 Scts/share
- FY27: 5.6 Scts/share
- FY28: 5.0 Scts/share
This brings the total VRD over FY24–28 to S\$4.15bn.
A new S$2bn share buyback program is set to further enhance shareholder value by supporting EPS growth and smoothing out dividends post-2028, even after the conclusion of the SingTel28 five-year plan. Management emphasizes the need for a sustainable dividend trajectory to avoid a sharp drop in payouts and share price once the VRD period ends.
Valuation Analysis: Premium Multiples Cap Upside
SingTel’s CY26F P/E of 21.6x is more than one standard deviation above its post-2009 mean, placing it at the higher end of its historic trading range and capping near-term share price appreciation unless significant asset value is unlocked. The current valuation reflects market optimism about future asset monetization but also signals limited further upside barring major portfolio moves.
Asset Monetization and Portfolio Adjustments
The company’s asset recycling strategy is focused on selective divestments:
- SingTel aims to reduce its Bharti Airtel stake from 28.3% to about 23%, aligning with the Mittal family’s shareholding.
- There are no plans to significantly reduce core associate stakes.
- The 7.7% stake in Gulf Development, worth S\$2.3bn (~S\$0.14/share), is identified as a monetization target. This potential has already been factored into the revised asset recycling goal.
Core net profit forecasts for FY26/27/28 have been adjusted to -4.1%/-2.3%/+2.5%, reflecting the deconsolidation of Intouch post-merger with Gulf. DPS estimates for the same period have been raised by 4.8%/1.0%/6.1% on higher VRD expectations.
Financial Performance and Forecasts
| Year (Mar) |
2024A |
2025A |
2026F |
2027F |
2028F |
| Revenue (S\$m) |
14,128 |
14,146 |
14,549 |
15,183 |
15,581 |
| Operating EBITDA (S\$m) |
3,597 |
3,792 |
3,987 |
4,211 |
4,279 |
| EBITDA Margin |
25.5% |
26.8% |
27.4% |
27.7% |
27.5% |
| Net Profit (S\$m) |
795 |
4,017 |
4,930 |
3,108 |
3,432 |
| Core EPS (S\$) |
0.14 |
0.15 |
0.17 |
0.19 |
0.21 |
| DPS (S\$) |
0.15 |
0.17 |
0.20 |
0.21 |
0.22 |
| Dividend Yield |
3.8% |
4.3% |
5.0% |
5.3% |
5.7% |
| ROE |
8.9% |
9.7% |
10.3% |
11.2% |
12.5% |
Key ratios highlight improving profitability and capital efficiency, with returns on equity and operating margins trending upward as core and associate earnings recover.
Peer Comparison: SingTel Among ASEAN Telcos
SingTel’s premium valuation is underscored by a comparison with regional peers. While its dividend yield is competitive, its P/E and EV/EBITDA multiples are on the higher end, reflecting market confidence in its asset recycling and earnings growth strategies.
| Company |
Ticker |
Rec. |
Price
(local) |
Target
Price |
Market Cap
(US\$m) |
CY25F P/E |
CY26F P/E |
P/BV (x) |
ROE
(CY26F) |
EV/EBITDA
(CY26F) |
Div Yield
(CY26F) |
| Telekom Malaysia |
T MK |
Add |
6.66 |
8.70 |
6,027 |
13.6 |
11.9 |
2.2 |
18.9% |
5.0 |
5.0% |
| Axiata Group |
AXIATA MK |
Add |
2.15 |
3.37 |
4,657 |
34.8 |
23.1 |
0.9 |
3.9% |
3.1 |
4.8% |
| CelcomDigi Bhd |
CDB MK |
Hold |
3.81 |
4.00 |
10,539 |
24.5 |
20.1 |
2.7 |
13.6% |
8.9 |
4.8% |
| Maxis Berhad |
MAXIS MK |
Hold |
3.68 |
3.93 |
6,797 |
19.3 |
18.8 |
4.7 |
25.0% |
8.6 |
5.2% |
| SingTel |
ST SP |
Hold |
3.95 |
4.10 |
50,981 |
24.1 |
21.5 |
2.4 |
10.9% |
13.4 |
5.0% |
| Starhub |
STH SP |
Hold |
1.13 |
1.30 |
1,521 |
12.9 |
11.5 |
2.9 |
25.8% |
6.1 |
6.9% |
| PT Telkom |
TLKM IJ |
Add |
2,740 |
3,250 |
16,688 |
10.9 |
10.4 |
1.8 |
17.5% |
4.3 |
7.8% |
| Indosat |
ISAT IJ |
Add |
2,090 |
2,170 |
4,144 |
12.7 |
10.1 |
1.7 |
17.9% |
4.0 |
5.6% |
| XL Smart Telecom |
EXCL IJ |
Add |
2,220 |
2,550 |
2,484 |
222.0 |
21.5 |
0.8 |
4.0% |
4.3 |
2.8% |
| Adv Info Services |
ADVANC TB |
Hold |
282.00 |
291.00 |
25,861 |
21.1 |
21.0 |
8.0 |
38.7% |
8.1 |
4.3% |
| True Corp |
TRUE TB |
Hold |
12.00 |
13.50 |
12,784 |
35.9 |
21.3 |
4.6 |
23.0% |
6.7 |
2.3% |
Operational Performance and Key Drivers
SingTel’s core businesses in Singapore and Australia are showing signs of recovery, with revenue and EBITDA expected to improve from their FY24/25 lows. Associate earnings, particularly from Bharti, are also on an uptrend, contributing to stronger group profitability.
- Singapore total mobile subscribers: 4.5–4.6m (FY24–28F)
- Optus (Australia) total mobile subscribers: rising from 10.5m to 11.5m (FY24–28F)
- Singapore blended ARPU: S\$24.7–24.9/month
- Optus blended ARPU: A\$32.0–32.5/month
Balance Sheet and Cash Flow Highlights
|
Mar-24A |
Mar-25A |
Mar-26F |
Mar-27F |
Mar-28F |
| Total Cash & Equivalents (S\$m) |
4,605 |
2,773 |
4,390 |
3,661 |
2,792 |
| Total Liabilities (S\$m) |
21,234 |
20,827 |
20,810 |
20,804 |
20,779 |
| Shareholders’ Equity (S\$m) |
24,928 |
25,891 |
27,911 |
27,629 |
27,402 |
| Net Gearing (%) |
14.6 |
20.7 |
12.7 |
14.8 |
17.4 |
Cash flow remains robust, supporting both dividend payments and capital expenditure, with free cash flow to equity forecasted at S$3.2bn in FY28F.
ESG: Leadership in Sustainability and Risk Factors
SingTel ranks among the top ASEAN telcos for sustainability, placing 77th in the Corporate Knights Global 100 Most Sustainable Corporations for 2025. The company targets net-zero emissions by 2045, decommissioning legacy assets and investing in employee training and digital business.
Recent incidents, such as Optus’s major cyber-attack (Sep 2022) and a nationwide network outage (Nov 2023), underscore operational risks. Regulatory fines, including a A$12m penalty for emergency service disruptions, highlight the financial and reputational risks associated with network reliability and cybersecurity.
SingTel’s environmental initiatives include:
- Internal carbon pricing
- ESG-linked executive remuneration
- Introduction of half-sized SIM cards
Carbon emissions have dropped 7% year-on-year in FY24 and are now 26% below FY15 levels. However, rising carbon taxes in Singapore and the growth of the data center business could pose future cost pressures.
Risks and Upside Drivers
Key upside risks include:
- Significant asset monetization exercises beyond current guidance
- Material improvement in core and associate operating profits
Notable downside risks:
- Appreciation of the Singapore dollar versus regional currencies impacting associate earnings
- Heightened competition in core markets
- Regulatory changes in key operating countries
Conclusion: Hold for Yield, Watch for Unlocking Value
With a robust dividend outlook and improving operational performance, SingTel remains a compelling yield play, but investors should temper expectations for capital gains unless further significant asset value is realized. The current premium valuation, combined with management’s cautious approach to associate divestments, suggests that upside will be driven primarily by execution on capital recycling and sustained profitability improvements.
Appendix: Stock Rating Definitions
- Add: Total return expected to exceed 10% over 12 months
- Hold: Total return expected between 0% and 10% over 12 months
- Reduce: Total return expected below 0% over 12 months
Sector and country ratings are also applied to guide portfolio positioning relative to benchmarks.
Distribution of Stock Ratings (as of March 31, 2025)
- Add: 71.0%
- Hold: 20.9%
- Reduce: 8.2%
