SINGAPORE (Aug 15): RHB is keeping Singtel at “neutral” but raising its target price to $4.00, from $3.70 previously.

Singtel’s valuations are “already fair,” says RHB’s Singapore research team in a report on Aug 12. The Telco’s share price has risen 19% year-to-date, outperforming the benchmark Straits Times Index by 17%, RHB added.

Singtel reported underlying earnings growth of 7% for the first quarter ended June to $954 million from a year ago.

Operating revenue declined 7.1% to $3.9 billion. However, good performance from Singtel's regional associates lifted the bottom line.

(See <a href="http://www.theedgemarkets.com.sg/sg/article/singtel%E2%80%99s-1q-underlying-earnings-7-954-mil">Singtel’s 1Q underlying earnings up 7% to $954 mil</a>)

“We expect mobile revenue momentum [in Singapore] to remain weak on the back of ARPU dilution from SIM-only plans and structural roaming revenue pressure,” says RHB.

Average revenue per user (ARPU) fell 5.4% y-o-y to $70.

In Australia, Optus’s underlying mobile service revenue momentum remains “positive”, says RHB, after excluding the impact of lower mobile termination rates and despite stronger competition.

“Optus added 251,000 4G subscribers (subs) to 4.87 million in the June quarter, or 52% of total mobile subs,” RHB says. “We expect the robust subs momentum to continue with the introduction of English Premier League (EPL) content in July, providing greater value proposition to subs.”

As at 1.33pm, Singtel is trading 1.4% higher at $4.31.

Singtel kept at ‘neutral’ on fair valuations

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Singtel kept at ‘neutral’ on fair valuations

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