CGS-CIMB Research analysts Foong Choong Chen and Sherman Lam Hsien Jien have kept their ‘add’ call and target price of $3.10 for Singapore Telecommunications (Singtel) ahead of its 2HFY2021 ended March results release on May 27.

The analysts believe Singtel’s 2HFY2021 core net profit will come in at $930 million - $940 million, an 18%-19% decline y-o-y, mainly due to Telkomsel, Optus, Globe and Singapore operations. However, the anticipated core net profit represents an 11%-12% growth h-o-h, which the analysts attribute to improved Bharti and Optus performances.


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In addition, the projected core net profit is also 10%-11% ahead of their full-year forecasts, due to smaller-than-expected losses from Bharti.

While Singtel has flagged that the 2HFY2021 results will include net exceptional losses of $839 million, the analysts say they “are not too concerned”, given that the losses are mainly non-cash charges.

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For its Singapore operations, Choong and Lam predict core net profit to decline 25%-27% y-o-y, which they attribute to border closures impacting roaming and SIM card sales, strong mobile competition, continued decline in the carriage business and increased depreciation.

Subsidiary Optus’ core net profit is anticipated to drop 67%-68 y-o-y to around $53 million - $55 million on lower national broadband migration (NBN) fees, lower device sales, and higher NBN-related traffic cost. “However, this is a turnaround from the $27 million loss in 1HFY2021, which we think may be led by increased take-up of its higher-margin Optus Choice postpaid plans, seasonally higher device sales and lower staff cost,” the analysts note in a May 21 research note.


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Choong and Lam predict associate contributions to dip 4%-5% y-o-y, mainly driven by lower earnings from Telkomsel, though cushioned by narrower losses from Bharti of $20 million - $25 million. On a h-o-h basis, associate profits are expected to rise 5%-7%.

The analysts have kept their forecasts, rating, and target price unchanged. They note that Singtel’s current share price implies an FY2022 EV/EBITDA of just 3.8x for Singtel Singapore and Optus, with “decent” FY2021-FY2023 yields of 3%-6%.

As at 2.53pm, shares in Singtel are up 1 cent or 0.41% higher at $2.44