Brokers’ take: Phillip Securities upgrades Singtel to ‘buy’ after recent price weakness

PHILLIP Securities has upgraded its call on Singtel to “buy” from “accumulate”, in view of the telco’s attractive valuations amid its recent price weakness.

However, the research house shaved its target price to S$2.80 from S$2.84, pegging it to six times the enterprise value to earnings before interest, taxes, depreciation and amortisation (Ebitda), in line with peer valuation for Singtel’s core Singapore and Australia businesses, at S$0.90 per share.

The lower price target comes in the wake of updated FY2024 revenue and Ebitda forecasts, noted the brokerage in its Wednesday (Aug 23) report.  

Analyst Paul Chew noted Singtel’s growth areas to be its technology services arm NCS; its standalone infrastructure unit Digital InfraCo; Telkomsel, its regional associate in Indonesia; and Bharti Airtel, its associate company. 

Chew flagged Optus, the Singtel-owned Australian telco, as “the weakest spot for the group” against the backdrop of a tumbling Australian dollar, higher wages and electricity costs, as well as competitive pricing and subdued consumer sentiment. 

“Any growth will be offset by weakness in Optus and Singapore Singtel’s legacy enterprise business. We believe these factors will keep Singtel’s growth outlook muted.”

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Separately, UOB Kay Hian, in an Aug 22 report, maintained its “buy” call and target price of S$3.15, despite cutting its estimated FY2024 earnings slightly by 2 per cent. 

Its analysts noted: “In our view, Singtel remains an attractive play against elevated market volatility, underpinned by improving business fundamentals.”

Singtel shares were up 0.4 per cent or S$0.01 at S$2.34 as at 11.15 am on Thursday.