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UBS upgrades SingTel (Z74.SG) to Buy from Neutral, raises its target to $3.53 from $3.40; after SingTel’s shares underperformed the MSCI AXJ Telecom Index and Singapore market by 11% in 2010.
“We expect SingTel to perform better in 2011 driven by an improving outlook for (associate) Bharti Airtel.” The house tips the regulatory and competitive environment to improve for Bharti this year, noting SingTel’s 32% stake accounts for 28% of SingTel’s price target, while both stocks have historically shown good correlation.
“We expect SingTel to perform better in 2011 driven by an improving outlook for (associate) Bharti Airtel.” The house tips the regulatory and competitive environment to improve for Bharti this year, noting SingTel’s 32% stake accounts for 28% of SingTel’s price target, while both stocks have historically shown good correlation.
“We view SingTel as a defensive investment option to play Bharti.”
On Singapore’s National Broadband Network, says it will take time to have a meaningful impact (potentially 2012 vs 2011); “This delay is positive for SingTel because it gives SingTel the time to lock-in subscribers.”
It adjusts FY11/12/13 EPS estimates to $0.244/0.266/0.301 from $0.240/0.264/0.300, and adds, trading at 11.7X forward P/E, below the past 5-year average of 13.0X, valuation is supportive.
Singtel shares rise 0.7% to $3.09.
