---
endpoint: analytics
pattern: Telecoms
status: done
latency_ms: 134748
conversation_id: 7bf7046d-9ec9-497d-9d1d-6db029b620ab
citations: 0
created: 2026-05-31 18:56:28Z
---

# Is CLSA incrementally more positive/negative on Singtel. If so, why?

**Yes — CLSA is incrementally MORE positive on Singtel (Z74 SP).**

Lead analyst: **Daxin Lin (CLSA Singapore, daxin.lin@clsa.com)**. The two most recent dedicated Singtel notes (both dated 22 May 2025, post-FY25 results) and the 25 June 2025 Singapore Strategy note all reaffirm O-PF and frame the stock as a defensive compounder with a strengthening capital-return story.

## The headline incremental move

| Item | Prior view | New view (22-May-2025) | Direction |
|---|---|---|---|
| Rating | Outperform (O-PF) | Outperform (O-PF) – maintained | Unchanged |
| Target Price | **S$3.80** | **S$4.20 (+10%)** | **More positive** [1] |
| Forward div yield at TP | — | 4.7% | — [1] |
| FY26/27 PATMI | Base | **Trimmed c.3%** | Slightly more negative on near-term EPS [1] |
| FY28CL EPS introduced | — | **22.6¢** (vs FY26CL 17.9¢, FY27CL 20.4¢) | New longer-horizon visibility [8] |
| Capital recycling target | S$6bn | **S$9bn (S$4bn done)** | More positive [2] |
| New buyback | None | **S$2bn programme to FY28** | More positive [2] |
| FY26 Ebit ex-assoc guidance | n/a | **High single-digit growth (vs VA consensus ~5%)** | More positive [3] |
| FY28 Data Centre EBITDA | n/a | **To double from FY27 base** | More positive [3] |

CLSA explicitly states: *"We trim FY26/27CL PATMI by c.3% on the weaker 4Q, roll forward and introduce FY28CL forecasts. Our new TP is S$4.20."* [1]

## Why CLSA is more positive — the four pillars

**1. Capital-return story has been materially upsized**
- Management announced a **new S$2bn buyback programme to FY28** alongside results [2].
- Medium-term **capital recycling raised from S$6bn to S$9bn** (S$4bn already executed) [2].
- CLSA views this as **conservative**, noting Singtel could trim another **~5% of its Airtel stake (worth ~S$8bn)** to equalise with the Mittal Group [2].
- The FY25 DPS of **17.0¢ beat prior guidance of 16.5¢**, which CLSA reads as a confidence signal from management [2].
- In the 25-Jun Singapore Strategy update, CLSA identifies **~S$13bn of further recyclable assets** (5% Airtel S$8.3bn, Gulf Development S$2.07bn, Nxera, NetLink, Indara, SingPost) — i.e., the recycling pipeline has more room to run [7].

**2. FY26 guidance and DC growth runway support earnings re-acceleration**
- Management guided **high-single-digit FY26 Ebit growth vs Visible Alpha consensus of only ~5%** [3].
- A **S$200m cost-out programme (~6% post-tax contribution to earnings growth)** layered on top [3].
- **Data centre developments start contributing from FY27, with EBITDA set to double by FY28** — a new structural earnings leg [3].

**3. The 4Q miss is "quality of miss" — not the operating core**
- 4QFY25 missed consensus mainly on **lower Telkomsel and Globe associate contributions** (largely FX-driven) [4].
- The **growth engines (Digital Infraco +10% YoY, NCS +44% YoY) outperformed**, and **ex-associates operating Ebit grew ~20% YoY, in line with guidance** [4].
- In other words, CLSA reads the headline miss as transient (associates / FX), while the strategic transformation lines are accelerating.

**4. Defensive characteristics + capital return tailwind, but with a "consolidation" caveat**
- In the 25-Jun Singapore Strategy note, CLSA's House view: *"Telcos – Singtel consolidates gains. We see continued cost out and data centre growth underpinning the next two years of earnings… The stock has returned 30% in the past 6m, driven principally by its defensive characteristics and Singtel's capital recycling programme… We see the upcoming investor day on 8 Aug as a minor catalyst with information about the DigiCo strategy. Into 2026, we see more upside to the capital return programme."* [5]
- CLSA frames Singtel as one of three "honourable mentions" for Singapore exposure — a **defensive play in an uncertain world** [6].
- Singtel is also flagged as one of the four stocks (with DBS, OCBC, UOB) responsible for **20% Cagr in Singapore index dividends over 2023-25E** [6].
- The 8-Aug investor day on DigiCo strategy is positioned as the next catalyst [5][6].

## The nuance — modestly more cautious near term, structurally more positive

The pattern is best described as **incremental positive on the medium-term thesis (higher TP, bigger buyback, raised recycling target, DC earnings ramp), with a small near-term EPS trim (-3% FY26/27CL) and a tactical "period of consolidation" warning** given the 30% 6-month rally and stretched forward PE premium vs STI (~85% in early 2025) [5][1].

## Catalysts CLSA is watching

- **8 August 2025 Investor Day** — DigiCo strategy details [5][6]
- Continued **asset recycling execution** into 2026, including a potential Airtel stake trim [2][7]
- Special dividends from asset monetisation, and ROIC recovery toward low double-digits (from FY25A 5.4% → FY28CL 7.2%) [8]
- Possible **Singapore mobile sector consolidation** which could ease pricing pressure [5]

## Key risks CLSA flags
Adverse FX moves, weaker enterprise telecom spend, rising rates (negative for yield-centric telcos), and irrational price competition in Singapore.

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**Bottom line**: CLSA's incremental stance on Singtel is **more positive**, with the TP raised ~10% to S$4.20 driven primarily by an **upsized capital-return programme (S$2bn buyback + S$9bn recycling vs prior S$6bn)** and a **new data-centre earnings leg from FY27** with EBITDA doubling by FY28. Daxin Lin acknowledges a soft 4Q (FY26/27 PATMI cut ~3%) and flags near-term consolidation after the 30% 6-month run, but the structural thesis is reinforced.

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**Sources**
[1] Singtel - O-PF (All about the capital) — CLSA, Daxin Lin (22 May 2025) — 607960285LinqAlpha.PDF
[2] Singtel - O-PF (All about the capital) — CLSA, Daxin Lin (22 May 2025) — 607960285LinqAlpha.PDF
[3] Singtel - O-PF (All about the capital) — CLSA, Daxin Lin (22 May 2025) — 607960285LinqAlpha.PDF
[4] Singtel - O-PF (All about the capital) — CLSA, Daxin Lin (22 May 2025) — 607960285LinqAlpha.PDF
[5] Singapore strategy (Strength in defence) — CLSA (25 June 2025) — 607962766LinqAlpha.PDF
[6] Singapore strategy (Strength in defence) — CLSA (25 June 2025) — 607962766LinqAlpha.PDF
[7] Singapore strategy (Strength in defence) — CLSA (25 June 2025) — 607962766LinqAlpha.PDF
[8] Singtel - O-PF (All about the capital) — CLSA, Daxin Lin (22 May 2025) — 607960285LinqAlpha.PDF

