Friday, August 16, 2013

Singtel

Singtel: Group announced that it has entered into a conditional share purchase agreement with MacRitchie Investments to acquire 788,538 shares of Bharti Telecom (BTL) for $383.6m. The Acquisition represents approximately 3.62% of the equity shares in BTL. The Acquisition would allow SingTel to increase its effective stake in BAL, and is in line with SingTel’s strategic focus on maximising the value of its existing businesses, which includes reviewing opportunities to increase shareholdings in existing associates. Following the acquisition, SingTel's stake in BAL, which is linked to Bharti Airtel Ltd, will rise to 39.78%from 36.16%, while its effective interest in Bharti Airtel will rise to 32.34% from 30.76%. The Acquisition is not expected to have a material impact on SingTel’s earnings per share nor its net tangible assets for FY14. Deustche maintains Buy, TP $4.38. Note that positive view remains unchanged post this development. Remains focused on improving underlying momentum in SingTel’s key markets. Barclays maintains O/w, TP $4.00, given its “growth and yield” thesis. Forecast 3-year (FY13-16E) earnings CAGR at 10%; and a 70% payout delivers a yield of 4.7% for FY14E, rising to 5.5% in two years as earnings grow. Potential asset monetization points to the possibility of a special dividend in FY14E – a positive catalyst, if delivered.

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