SingTel

SingTel: Morgan Stanley expects strong operational trends in both Singapore and Australia in 3QFY15. House expects Singapore revenue to grow 4% YoY, driven by mobile ARPU growth. Optus mobile service revenue to recover and post a 3% YoY growth in AUD terms, albeit AUD devaluation would adversely impact the translated earnings. However, on the group level, strengthening THB, INR, and PHP against SGD would help to mitigate part of the FX risk. Morgan Stanley reckons SingTel has an attractive dividend yield of 4.8% for FY16e, with growth potential of 9% EPS CAGR FY2015-18e. The counter also has good diversified EM exposure, where mobile data penetration is still relatively low, while steady cash flow stream from Singapore business provides support to dividend. An upside catalyst would be an opportunity to monetize investments in its digital business. House maintains OVERWEIGHT with TP of $4.60.