[SINGAPORE] Analysts are bullish on Singtel as the telco’s shares soared last week after it reported earnings that showed it returned to profitability for its second half ended March.
On Thursday (May 22), the group posted a S$2.8 million net profit, reversing from a S$1.3 billion loss for the year-ago period, as it proposed a S$0.10 per share final dividend and unveiled its maiden S$2 billion share buyback programme.
The telco’s shares has been doing well this year. They soared to a five-year high of S$3.99 on May 22. The stock was also one of the top performing Singapore stocks for the first quarter of 2025. Its shares closed at S$3.88 on Friday.
Both maintained their “buy” calls.
A NEWSLETTER FOR YOU
Friday, 8.30 am
Asean Business
Business insights centering on South-east Asia’s fast-growing economies.
Financial services firm Morningstar on Monday increased its fair value estimate for Singtel to S$3.60 per share from S$3.47, citing forecasts of “high single-digit (increases)” in operating profits.
“Singtel looks expensive compared with global peers on a 12-month forward price-to-earnings ratio of around 20 times. However, we believe this to be partially a function of the higher growth outlook through recovery in Optus and forecast cost reductions,” said Morningstar senior equity analyst Dan Baker.
Highlighting that Singtel’s share buyback plan adds to its strong capital management narrative, RHB analysts said: “We stay positive on its outlook with improving return on invested capital, capital management upside, and operational execution as re-rating catalysts.”
‘Accretive’ S$2 billion share buyback programme: RHB
Singtel’s S$2 billion share buyback programme over the next three years is set to strengthen its capital management efforts and be “earnings per share accretive”, said RHB analysts.
This follows the raising of its capital recycling target to S$9 billion, up from S$6 billion.
RHB analysts noted that more than half of Singtel’s original S$6 billion target has been achieved, including gains from its recent S$2 billion sale of its 1.2 per cent stake in Airtel.
“We view the new three-year share buyback programme positively to drive further shareholder value accretion,” they said.
Forecasts for growth on data-centre contributions, mobile revenue recovery
Noting Singtel management’s guidance for high single-digit growth in core Ebit in FY2026, DBS and Morningstar think the telco is set for growth.
With FY2026’s growth led by cost savings, core Ebit growth for FY2027 could come in at a “similar pace”, driven by “sharp growth in data-centre contribution and a recovery in mobile revenue”, said DBS analysts.
This comes as Optus logged higher mobile service revenue of 4 per cent, driven by price uplifts in its postpaid segment, and as it repriced more than 70 per cent of its back book.
“Besides, we are hopeful of mobile sector consolidation in Singapore over the next 12-18 months,” DBS added.
Similarly, Morningstar believes that Singtel’s Ebit guidance for FY2026 is “reasonable”, given the mobile price hikes for Optus alongside its focus on cutting costs for the fiscal year by S$200 million.
Morningstar’s Baker pointed out that Singtel’s management raised its medium-term (three to four year) asset sales target to S$9 billion from S$6 billion previously.
“Of the additional S$3 billion, S$2 billion is being allocated to a share buyback over three years, with the remainder likely to be reinvested in growth businesses like data centres,” Baker said.
Over the next five years, Singtel’s compound annual growth rate for core business operating profit could come in at 11 per cent, he added.
