CGS International
June 17, 2025
SingTel’s Dividend Yields Shine but Valuations Cap Further Upside: In-Depth Analysis of Singapore’s Leading Telco and ASEAN Peers
Executive Summary
Singapore Telecommunications Limited (SingTel), a telecom giant in Southeast Asia, continues to offer attractive dividend yields supported by a robust asset recycling strategy. However, current valuations limit further upside potential for investors. In this comprehensive analysis, we examine SingTel’s latest strategic and financial adjustments post-4QFY25 results, evaluate its performance in the context of ASEAN telco peers, and review ESG commitments and emerging risks. This report is provided by CGS International, dated June 17, 2025.
SingTel: Hold Recommendation with Improved Target Price
- Recommendation: Hold (No change)
- Target Price: S\$4.10 (previously S\$4.00)
- Current Price: S\$3.95
- Market Cap: US\$50,981m (S\$65,225m)
- Dividend Yield: Estimated above 5% for FY26-28F
- Consensus Ratings: 15 Buy, 2 Hold, 1 Sell
Asset Recycling Strategy Fuels Dividends and Buybacks
SingTel has elevated its 3-4 year asset recycling target from S\$6bn to S\$9bn, providing ample liquidity to support robust dividend payouts and a new S\$2bn share buyback program. The company forecasts value realisation dividends (VRD) of 6.0/5.6/5.0 Singapore cents per share for FY26/27/28F, totalling S\$4.15bn over FY24-28F. The buyback strategy aims to cancel acquired shares, enhancing EPS and smoothing long-term dividend sustainability, even after the conclusion of the SingTel28 five-year plan in 2028.
- Management is cautious about overpaying VRDs to avoid a sharp drop in dividends and share price post-VRD period.
- While there is balance sheet headroom for more VRD, management prioritises dividend trajectory stability.
Valuation Constraints and Asset Monetisation Opportunities
Despite the attractive dividend yield, SingTel’s shares are trading at 21.6x CY26F P/E, more than one standard deviation above its post-2009 mean, capping upside potential. The market anticipates significant asset value realisation for any further price appreciation:
- SingTel targets reducing its Bharti Airtel stake (currently 28.3%) to align with the Mittal family’s c.23% holding, but no significant reduction in core associate stakes is planned.
- The only notable monetisation target is SingTel’s 7.7% stake in Gulf Development, worth S\$2.3bn or S\$0.14 per share, which has been factored into the asset recycling target.
Core net profit forecasts are adjusted to reflect the deconsolidation of Intouch after its merger with Gulf, and DPS estimates for FY26/27/28F are raised to account for higher VRD.
Upside and Downside Risks
- Upside: Large-scale asset monetisation and significant profit growth from key markets.
- Downside: Sharp appreciation of the Singapore dollar, increased competition in core markets, and adverse regulatory changes.
Financial Summary for SingTel
|
Mar-24A |
Mar-25A |
Mar-26F |
Mar-27F |
Mar-28F |
| 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 |
| Operating 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 |
| Dividend Per Share (S\$) |
0.15 |
0.17 |
0.20 |
0.21 |
0.22 |
| Dividend Yield (%) |
3.80% |
4.30% |
5.02% |
5.33% |
5.69% |
| ROE (%) |
8.9% |
9.7% |
10.3% |
11.2% |
12.5% |
RNAV Valuation Breakdown
- Enterprise Value: S\$19,706m
- Net Cash/(Debt): -S\$8,647m
- Regional Investments: S\$79,211m
- Total Equity Value (post 25% HoldCo discount): S\$67,702m
- Shares Outstanding: 16,505m
- Value per Share: S\$4.10
Performance Against ASEAN Telco Peers
| Company |
Ticker |
Rec. |
Price (LC) |
Target (LC) |
Market Cap (US\$m) |
CY25F P/E |
CY26F P/E |
P/BV CY25F |
P/BV CY26F |
ROE CY25F |
ROE CY26F |
EV/EBITDA CY25F |
EV/EBITDA CY26F |
Div Yield CY25F |
Div Yield CY26F |
| Telekom Malaysia |
T MK |
Add |
6.66 |
8.70 |
6,027 |
13.6 |
11.9 |
2.3 |
2.2 |
17.3% |
18.9% |
5.8 |
5.0 |
4.3% |
5.0% |
| Axiata Group |
AXIATA MK |
Add |
2.15 |
3.37 |
4,657 |
34.8 |
23.1 |
0.9 |
0.9 |
2.6% |
3.9% |
3.5 |
3.1 |
4.5% |
4.8% |
| CelcomDigi Bhd |
CDB MK |
Hold |
3.81 |
4.00 |
10,539 |
24.5 |
20.1 |
2.8 |
2.7 |
11.3% |
13.6% |
9.6 |
8.9 |
3.9% |
4.8% |
| Maxis Berhad |
MAXIS MK |
Hold |
3.68 |
3.93 |
6,797 |
19.3 |
18.8 |
4.8 |
4.7 |
24.4% |
25.0% |
9.0 |
8.6 |
4.8% |
5.2% |
| SingTel |
ST SP |
Hold |
3.95 |
4.10 |
50,981 |
24.1 |
21.5 |
2.4 |
2.4 |
10.0% |
10.9% |
14.6 |
13.4 |
4.3% |
5.0% |
| Starhub |
STH SP |
Hold |
1.13 |
1.30 |
1,521 |
12.9 |
11.5 |
3.1 |
2.9 |
24.0% |
25.8% |
6.5 |
6.1 |
6.1% |
6.9% |
| PT Telkom |
TLKM IJ |
Add |
2,740 |
3,250 |
16,688 |
10.9 |
10.4 |
1.8 |
1.8 |
17.5% |
17.5% |
4.3 |
4.3 |
7.5% |
7.8% |
| Indosat |
ISAT IJ |
Add |
2,090 |
2,170 |
4,144 |
12.7 |
10.1 |
1.9 |
1.7 |
15.6% |
17.9% |
4.3 |
4.0 |
4.5% |
5.6% |
| XLSmart Telecom Sejahtera |
EXCL IJ |
Add |
2,220 |
2,550 |
2,484 |
222.0 |
21.5 |
0.9 |
0.8 |
0.5% |
4.0% |
4.7 |
4.3 |
0.3% |
2.8% |
| Adv Info Services |
ADVANC TB |
Hold |
282.00 |
291.00 |
25,861 |
21.1 |
21.0 |
8.3 |
8.0 |
39.7% |
38.7% |
8.7 |
8.1 |
4.2% |
4.3% |
| True Corp |
TRUE TB |
Hold |
12.00 |
13.50 |
12,784 |
35.9 |
21.3 |
5.2 |
4.6 |
14.9% |
23.0% |
7.3 |
6.7 |
1.4% |
2.3% |
Operational and Financial Trends
- Revenues from core Singapore and Australian businesses are forecasted to rebound from FY24/25 lows, with EBITDA improvements in both regions.
- Associate earnings, especially from Bharti Airtel, are bolstering group profitability.
- ROE is on an upward trajectory, underpinned by margin expansion and increased earnings from both core and associate operations.
ESG Leadership and Key Risks
- SingTel ranks among ASEAN’s top telcos for sustainability, achieving 77th place in the 2025 Corporate Knight’s Global 100 Most Sustainable Corporations Index.
- The company targets net-zero emissions by 2045, ahead of many regional peers, with a 7% YoY drop in carbon emissions in FY24 (26% lower than FY15 levels).
- Initiatives include internal carbon pricing, ESG-linked remuneration, and eco-friendly innovations (e.g., half-sized SIM cards).
- Potential risks include cyber-attacks and network outages, which have led to regulatory fines (notably, a A\$12m fine for Optus in 2023) and ongoing legal proceedings.
- Future increases in Singapore’s carbon tax and stricter regulations around data centres may impact earnings, though such risks are not yet factored into financial forecasts due to SingTel’s relatively low emissions profile.
Balance Sheet and Key Ratios
|
Mar-24A |
Mar-25A |
Mar-26F |
Mar-27F |
Mar-28F |
| Total Assets (S\$m) |
46,198 |
46,783 |
48,794 |
48,513 |
48,269 |
| 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 Cash Per Share (S\$) |
-0.22 |
-0.33 |
-0.22 |
-0.25 |
-0.29 |
| BVPS (S\$) |
1.51 |
1.57 |
1.69 |
1.67 |
1.66 |
| ROIC (%) |
3.25 |
4.57 |
4.60 |
5.08 |
5.50 |
| Revenue Growth (%) |
-3.40 |
0.13 |
2.85 |
4.36 |
2.62 |
| Operating EBITDA Growth (%) |
-2.41 |
5.42 |
5.15 |
5.62 |
1.61 |
Key Operational Metrics
- Singapore total mobile subscribers: 4.6m (Mar-28F)
- Optus (Australia) total mobile subscribers: 11.5m (Mar-28F)
- Singapore blended mobile ARPU: S\$24.9 (Mar-28F)
- Optus blended mobile ARPU: A\$32.5 (Mar-28F)
Conclusion: Attractive Yields, But Wait for a Catalyst
SingTel stands out in the ASEAN telco landscape for its reliable dividend yields and proactive asset management. However, investors should be aware that current valuations reflect much of the near-term optimism, and further upside will likely require significant asset monetisation or a material uplift in earnings from key markets. The company’s industry-leading ESG initiatives, stable shareholder structure (with Temasek holding 52%), and improving operational performance offer downside protection, while regulatory, competitive, and currency risks remain areas to watch for prudent investors.
Stock Rating Framework
- 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 follow a similar overweight, neutral, and underweight framework, aligning investment positioning to market benchmarks.
