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Monday, 10 April 2017

Singtel

11/4/2017
Accumulate:
  1. Attractive dividend yield 4.5% and stable
  2. Singapore defensive stock - Telco sector with strong fundamentals
  3. Growth story - developing countries, Cloud and Cyber Security
Metrics
  • Market Cap S$63.4bn, Float 50.05%
  • Last done (as of 11/4/2017): S$3.88
  • PE 16.2, PB 2.33, EV/EBITDA 10.5
  • 10 year: Revenue CAGR ~2.4%, Earnings CAGR ~2.4%
  • Total Debt to Equity 41.8%
  • Dividend yield 4.5%, Dividend CAGR 3.4% and stable
  • ROE 14.8%, ROA 3.8%
Operations
  • Business segments:
    • Group Consumer - Mobile, Broadband, Fibre, Data, Pay-TV
    • Group Enterprise - Networks, Smart Cities, Cloud Computing, Cyber Security, Business Mobility, IT Services, Data Centres, Satellite Communications
      • 13 Data Centres in Asia Pacific
      • 2015 acquisition of Trustwave, the largest independent managed security services provider in North America
    • Group Digital Life - Digital Marketing (Amobee), Geoanalytics (Dataspark), Accessing Innovation (Innov8), Mobile Video Streaming (HOOQ)
  • Ownership companies: 
    • 33% Airtel - #1 in India, 24% market share, has business in Africa
    • 100% Singtel - #1 in Singapore, 50% mobile market share, 76% broadband market share
    • 47% Globe - #2 in Philippines, 46% market share
    • 23% AIS - #1 in Thailand, 47% market share
    • 35% Telkomsel - #1 in Indonesia, 48% market share
    • 100% Optus - #2 in Australia, 30% market share
  • Net profit: Australia 24%, Singapore 29%, 47% Rest of world
Growth story
  • Growth in developing countries mobile usage - India, Thailand, Philippines, Indonesia. Singtel investing heavily to meet rising demand, S$8bn capital expenditure in FY2016
  • Cloud computing demand growing - US$175bn in 2015 to US$204bn in 2016
  • Cyber security demand growing - US$15bn in 2015 to US$27bn in 2019
Risks
  • Highly competitive mobile and broadband market
  • Economic, Regulatory, Political risks
  • Failure to expand/acquire new businesses
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