Singtel

Singtel: Annouced 3Q results, slightly ahead of expectations, with Net Profit at $998.2m vs consensus estimates of $925m and flat YoY byt +11.8%QoQ. Strong performance was due to strong growth in rev in SG and Aus, despite declining contributions from associates in India and Indonesia….

Operating revenue rose 5.7%YoY to $4.70b, while Pretax profit from SingTel's regional mobile associates fell 12.5% to $518m. Bharti''s contributions fell 21.7% to $184m as the result of its acquisition of South Africa''s Zain telecom, while Indonesia's Telkomsel saw a 9.9% drop to $214m…..

Result brings 9M11 Rev to $13.4b, +8.3%YoY, while Net Profit at $2.8b, -2.9%YoY, due to lower associates rev, while EBITDA Margins remained fairly stable at 27.8% vs 9M10 of 28.3%. Balance sheet remains strong, with a Net Gearing of 20%, giving space for the Telco to utilize its debt structure for strategic acqusitions and expansions….

Going forward, grp maintains its previous guidance of mid single digit rev growth in Aus and SG, with shrinking margins in Singapore but stable free cashflow. On balance, its various businesses are doing well though not spectacularly at the operating level, while associates will be dragged down via continuing earnings dilution by Bharti Africa and Bharti's 3G spectrum acquisition….

Kim Eng maintains hold rating on stock, given the lack of a compelling catalyst and the decent dividend support of 5.4%, as house do not see it breaking beyond this trading range, while Morgan Stanley remains Overweight with $3.65 TP. We note that grp has offered little in the way of guidance, with no indication of any special div. Earnings may provide an impetus for short-term bargain-hunting, but with no compelling reason to be bullish in the longer run.