We expect ST&rsquo s HoldCo discount to narrow to 10%-15% with improving core EBIT. ST&rsquo s HoldCo discount has narrowed to 34% in Feb 2025 from a high of 53% in Nov 2023, comparable to its five-year average of 34%. This reduction is driven by growth in core operating profit from Singapore and Australia, which are expected to generate the majority of the free cash flow (FCF) for dividend payouts. The HoldCo discount was below 10% before FY18, which, in our view, can be achieved again if FCF of the core business improves sharply.

 

 

 

We have revised our core EBIT and underlying earnings for FY25F by 8% and 3% following the upgraded management guidance. ST has raised its FY25F core EBIT growth forecast to the high teens to low twenties, up from the low double digits previously, following 20% growth in 9M25. This revision surpasses the consensus estimate of 14% growth for FY25F. Our revised core EBIT estimate for FY25F stands at SGD1,346mn, reflecting 17% y/y growth from FY24, compared to our earlier projection of 8%. Additionally, we have updated our underlying earnings estimate for FY25F to SGD2,503mn, implying 11% y/y growth from FY24, up from our previous expectation of 8%.

 

 

Maintain BUY with a higher TP of SGD3.93 (prev: SGD3.82). The higher TP stems from an 8% and 3% rise in our core EBIT and underlying earnings estimates, respectively, for FY25F. After applying a 20% HoldCo discount, Singtel&rsquo s regional associates are valued at SGD3.17 (prev: SGD3.12). Our fair value for Singtel&rsquo s core business in Singapore and Australia is SGD0.76 per share (prev: SGD0.70). Bharti comprises 53% of our SOTP valuation. Singtel is a cheap proxy to Bharti, especially with its core operating profit resuming growth, driven by NCS, data centre, and cost-cutting measures.