Singtel: Morgan Stanley maintains Overweight on SingTel after Optus cuts price for all unlimited data bundle plans from A$115 to A$90.
The price cut puts Optus’ plans near the best value in the market, significantly cheaper than comparable plans of Telstra, Foxtel and iiNET (though still higher than that of smaller players Dodo and TPM). As such, Optus is expected to gain market share against the larger operators.
However, SingTel may be faced with profit dilution from AUD depreciation in the near term.
According to MS estimates, SingTel is a value buy trading at 16.5x FY16E P/E, below sector average of 20x, and yields 4.6%, above sector average of 3.4%. Furthermore, there is upside risk to dividends.
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