SingTel - UOB Kay Hian 2024-08-16: Strong 1QFY25 As Margins Expand, On Track To Exceed FY25 Guidance (2024)

SGinvestors.io

• For 1QFY25, SingTel (SGX:Z74) reported lower overall operating revenue (-2.1% y-o-y) but higher EBITDA (+8.4% y-o-y) and underlying net profit (+5.6% y-o-y), forming 24%/26%/23% of our full-year forecasts respectively and in line with our expectations.
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Stable results.

• On the back of SingTel’s ongoing cost savings initiatives, 1QFY25 EBITDA was driven by the core businesses, Optus (+4.2% y-o-y) and Singtel Singapore (+3.5% y-o-y), coupled with robust growth from the group’s growth engine NCS (+12.6% y-o-y). As a result, 1QFY25 EBITDA margin expanded by 2.7ppt y-o-y.
• Driven by market repair across regional markets, pre-tax contributions from regional associates were largely stable (+0.5% y-o-y) on a constant currency basis, driven by strong performances from Advanced Info Service (AIS) and Globe.

Optus: Strong performance.

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• Supported by ongoing cost optimisation efforts, 1QFY25 EBITDA also grew 4.6% y-o-y with EBITDA margins expanding 2.1ppt y-o-y.
• Postpaid ARPU was higher q-o-q at A$43/month (4QFY24: A$42/month) on the back of the higher prices while postpaid subscribers increased 10,000 q-o-q.
• Although prepaid ARPU fell q-o-q to A$19/month (4QFY24: A$20/month), number of subscribers increased 23,000 q-o-q.
• Moving into 2QFY25, management expects mobile service revenue to continue its growth from the price uplifts while also riding the momentum of key enterprise wins.

Singapore: Better margins.

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Chong Lee Len UOB Kay Hian Research | Llelleythan Tan Yi Rong UOB Kay Hian | https://research.uobkayhian.com/2024-08-16