SingTel

SingTel: posted stable 2QFY14 net profit of $870m (+0.2% y/y), and core net profit of $884m which beat consensus estimates of $862m, as strong domestic sales in Spore and successful cost management in Australia helped offset the negative impact of a stronger SGD. The AUD, IDR and INR each depreciated by 10% y/y against the SGD, otherwise in constant currency terms, SingTel’s net profit would have grown 7%. Group revenue declined 9% to $4.16b, due mainly to the weaker AUD. In constant currency terms, revenue declined 3% amid a cautious business environment and lower mobile revenue from its Optus unit in Australia. Nevertheless, net profit of Optus rose 33% to A$218m despite a 5% decline in revenue to A$2.12b, after cost-saving efforts helped reduce operating expenses by A$202m Overall, the group delivered a strong operating performance, strengthening its core business further and making progress with strategic initiatives in the digital space. Spore continues its momentum in winning share in mobile and home bundle services. To drive profitability in the mobile business, Optus is focused on capturing mobile data usage through the introduction of new data plans. The group affirms its outlook given in Aug. SingTel previously projected a “mid-single digit” decline in group revenue and a “low-single digit” drop in EBITDA. SingTel declared an interim dividend of 6.8cts, the same as last year, and representing 61% of underlying earnings for 1HFY14. The counter trades at 15.9x annualized 1H14 P/E, 2.6x P/B.