SingTel

SingTel: FYMar11 results within expectations.
Revenue up 7% to $18b, net profit -2% to $3.8b. SingTel benefited from higher margins in Australia, while Spore performance was largely flat. But associates were a drag, down 11% in FY11, due to lower earnings from Telkomsel and Globe, and net loss and related acquisition financing costs at Bharti Africa…

Guidance for FY12 generally weaker than FY11 but appears to be within expectations. Mgt expects revenue for Singapore and Australia to grow at low single digit level (FY11 growth rates were 7% and 4% rptvly); EBITDA for Singapore to be stable, Australia to grow at low single digit level (FY11 growth rates were -2% and +8% rptvly). Capex guidance is $900m in Spore and $1.2b in Australia...

Cashflow remained strong with net debt to EBITDA of 0.8x, low relative to comfort level of up to 1.5x.
Eyes likely to be on the dividend surprise. SingTel announced a special div of 10cts along with final div of 9 cts. Combined with interim div of 6.8cts, total yield is 8.2%.
Morgan Stanley reiterates Overweight and $3.70 TP. Says the special div may be a catalyst to help narrow the valuation gap vs listed components, which has increased in recent months to as high as 20%.