Kim Eng On SingTel

SingTel – 3QFY06 results (Stephanie Wong)
- Results in line with our expectation but ahead of consensus.
- Underlying net profit (before exceptionals) grew 4.1%yoy to $778m slightly ahead of
our forecast of $770m but exceeded market expectation of $755.4m by 3%.
- PBT from associates grew by a strong 35%yoy to $432m, underpinning the
respectable performance of the group. They now account for 42% of group PBT.
- Optus net profit fell 4.7%yoy to S$201m due to margin erosion.
- Free cash flow for the period totalled $514m of which 68% came from Singapore and
associates.
- With free cash flow for the 9-mth ended Dec 05 at a strong of $1.86b and healthy
balance sheet, the group has the capacity to pay a bumper special dividend or engage
in another capital reduction to reduce its cash pile, which is expected to increase to
$5b by FY Mar 06 ($0.30/share).
- Maintain BUY wilt 6-month price target of $2.80.