SINGAPORE (March 31): OCBC Investment Research is reiterating its “buy” recommendation on Singtel at a fair value of $4.25 given its long-term growth prospects as well as resilient earnings on the back of its diversified portfolio of businesses. 

“We remain positive over Singtel’s growing exposure to high growth areas – cyber security, digital marketing and data analytics,” elaborates lead analyst Eugene Chua in a report on Friday.

Chua believes Singtel is well-poised to benefit several trends including data analytics, internet of things (IoT) and digital security – through the group’s exposure from its cyber security unit, Trustwave; digital marketing entity, Amobee; and advanced analytics and intelligence unit, DataSpark.

Citing recent research data from Gartner, the analyst suggests that the worldwide business intelligence & analytics market, in addition to global spending on information security as well as enhancing detection & response capabilities, is set to grow substantially over the next few years.

“In our view, [Singtel’s] analytics capabilities are complementary to digital marketing effectiveness as customers are able to better utilize relevant data analytics to improvement the effectiveness of digital marketing campaigns,” says Chua.

Additionally, he believes potential special dividends arising from Singtel’s upcoming initial public offering of NetLink Trust – which the group has an undertaking to IMDA to divest its stake to less than 25% before April 22, 2018 – would help to limit investors’ downside risks.

“For 3QFY17, revenue and EBITDA of NLT grew 12% and 11%, respectively, while net profit rose 42% to S$32m. Management has also said the proceeds raised from the IPO may be used for M&A, and excess capital could be returned to shareholders,” notes the analyst.

As at 12.01pm, shares of Singtel are trading 2 cents lower at $3.91.