SingTel Earnings: Weak Australian Dollar Offset by Lower Depreciation and Interest Expenses

We maintain our fair value estimate for narrow-moat Singtel at SGD 2.52 following the release of first-quarter results. Revenue was slightly lower than our expectations, but profits were above them. SingTel’s first-quarter fiscal 2024 operating revenue declined 2.7% year on year with EBITDA down 7.7% year on year. Assuming constant currencies, revenue would have been up 2.5% and EBITDA down 3.1%. Note, underlying net profit rose 19.9% mainly on the back of significant reductions in depreciation and net interest expense. Our fair value estimate implies a price/earnings ratio for Singtel of 19 times, which is slightly ahead of its average over the past 10 years. On our valuation, the associate businesses are worth around 80% of the total value of Singtel with the remainder from Singtel’s consolidated Singapore and Australian businesses. Our forecasts assume a fiscal 2024 dividend of 10.1 cents per share, which would imply around 4% dividend yield.