SINGAPORE (May 22): CIMB maintains its “add” call on Singtel with a target price of $4.10 given potential rerating catalyst of a special dividend after the IPO of NetLink Trust.

Singtel’s 4QFY17 core net profit rose by 0.8% y-o-y, came in line with analyst Foong Choong Chen’s forecast.

For the Singapore segment, 4QFY17 EBITDA was flat y-o-y, with Consumer EBITDA rising 4.9% y-o-y, Enterprise EBITDA easing 0.7% y-o-y and Digital Life’s negative EBITDA narrowing 7.5% y-o-y. Lower taxes and net interest cost led to core net profits rising by 16.6% y-o-y.

Australian division Optus faced a flat quarter of a 1% q-o-q increase in service revenue, with higher NBN (New Broadband Network) revenue being offset by a lower enterprise and consumer mobile revenue.  However, Optus experienced strong growth for postpaid subscribers with a 83,000 q-o-q increase.

Associate earnings fell by 1.3% y-o-y, due mainly to Bharti Airtel’s large 61% decline in earnings, and to a lesser extent AIS and Globe whose earnings fell 21.3% and 17% respectively. These declines were slightly bolstered by higher contributions from Telkomsel, who witnessed a 17.5% increase in earnings. According to Foong, FY17 associate earnings were 3% ahead of his forecast.

“Due to the small earnings revision, we have kept our SOP-based target price of S$4.10.” says Foong.

Shares of Singtel are currently trading at $3.76.