Singtel

Singtel: CS note that Rp has appreciated 5.0% against USD during 3Q12 (mainly in 2H of September 2012), a recovery from the sharp 8.3% depreciation in 2Q12. AUD also appreciated 1.3% QoQ while THB appreciated 3.2% QoQ against USD during 3Q12. However, on an average basis and against SGD, Rp continued to depreciate by 1.8% QoQ (albeit slower compared to 7.0% QoQ depreciation in 2Q12) and 14.2% YoY, while average Rp also depreciated by 3.4% QoQ and 7.4% YoY against SGD. These adversely affect SingTel’s profit contributions from Telkomsel and Bharti for its 2Q3/13 results (to be announced in November 2012). Overall, house positive on SingTel’s key associates Telkomsel, AIS, and Globe, while SG business should continue to deliver solid cash flow. However, remain negative on Bharti given high (and not fully understood by market) regulatory and competitive risks. Given near-term currency headwinds and cautious view on Bharti, prefer to invest directly in individual associates except Bharti. Maintain NEUTRAL with $3.36 TP.