---
endpoint: analytics
pattern: Telecoms
status: done
latency_ms: 241502
conversation_id: 87a3d168-0765-431e-b183-1c48bf2a6ef8
citations: 0
created: 2026-05-31 19:23:51Z
---

# How does Singtel’s valuation compare to peers, and what justifies its premium/discount?

# Singtel (Z74 SP) — Valuation vs Peers and Justification for the Premium

**As of latest CLSA coverage (22 May 2025, 4QFY25 result review): rating O-PF, TP S$4.20, c.4.7% forward dividend yield.** Lead source is CLSA's "Singtel — O-PF (All about the capital)" 22-May-2025; secondary corroboration from the 25-Feb-2025 (3QFY25) and 10-Jul-2024 ("Doubling up on data centres") notes. CLSA's coverage is from the parent (Singapore name), not CLST.

---

## 1. Where Singtel trades today

CLSA's own forward-period financials show Singtel at a structurally rich multiple set for a defensive ASEAN telco:

| Metric (Year to 31 Mar) | FY24A | FY25A | FY26CL | FY27CL | FY28CL |
|---|---|---|---|---|---|
| PE (x) | 82.0 | 16.2 | **22.1** | **19.4** | **17.5** |
| Dividend yield (%) | 3.8 | 4.3 | **4.7** | **4.9** | **5.2** |
| ROE (%) | 3.1 | 15.8 | 11.5 | 13.2 | 14.7 |
| Net debt/equity (%) | 29.2 | 34.3 | 27.7 | 20.6 | 13.7 |

Source: CLSA financial summary, FY25 result update [4].

On the longer ratio table (FY22A–FY28CL), CLSA shows **EV/EBITDA at 15.9x FY25A → 14.8x FY26 → 13.4x FY27 → 12.7x FY28**, **PB ~2.5–2.6x**, and **EV/Sales ~4.1–4.3x** [12]. By Asian telco standards this is full — Telkom Indonesia, Globe and PLDT trade at single-digit/low-double-digit PE with mid-to-high single-digit yields (see peer table below).

**Magnitude of the premium**: per CLSA's own Figure 12 (May-25), "Singtel is trading at 2SD above the historical fwd PE relative to the STI" [6], and the supporting series shows Singtel's forward-PE premium to the STI widening to **~85% in 2025**, up from ~50% in 2023 and ~60% in 2024, versus a 2017–18 baseline of ~0% [5]:

| Year | Singtel fwd PE premium / (discount) vs STI |
|---|---|
| 2017 | ~0% |
| 2018 | ~0% |
| 2021 | ~(5%) |
| 2023 | ~50% |
| 2024 | ~60% |
| **2025** | **~85%** |

[5]

---

## 2. Regional telco peer comp

CLSA's regional telco valuation table from the July-2024 deep-dive is the only fully cross-checked peer screen in the in-house archive. Multiples have re-rated since, but the relative-positioning signal is what matters:

| Ticker | Company | Mkt cap (US$bn) | 2024 PE | 2025 PE | 2024 PB | 2024 Div yld | 2024 ROE |
|---|---|---|---|---|---|---|---|
| ST SP | **Singtel** | 34.7 | **19.2** | **16.1** | **1.8** | **4.8%** | **9.4%** |
| STH SP | StarHub | 1.6 | 13.3 | 12.8 | 5.3 | 6.0% | 40.6% |
| TLS AU | Telstra | 29.0 | 22.1 | 19.9 | 2.8 | 4.6% | 12.7% |
| TPG AU | TPG | 5.8 | 130.0 | 92.3 | 0.8 | 3.9% | 0.6% |
| TLKM IJ | Telkom Indonesia | 18.7 | 11.2 | 10.3 | 2.4 | 6.6% | 21.4% |
| ISAT IJ | Indosat | 5.2 | 20.0 | 17.1 | 2.4 | 0.0% | 13.0% |
| EXCL IJ | XL Axiata | 1.8 | 17.1 | 14.8 | 1.1 | 1.9% | 6.5% |
| BHARTI IS | Bharti Airtel | 102.7 | 110.6 | 46.3 | 10.1 | 0.6% | 9.4% |
| T MK | Telekom Malaysia | 5.6 | 15.0 | 14.6 | 2.6 | 4.0% | 18.2% |
| AXIATA MK | Axiata | 4.9 | 27.6 | 22.1 | 1.1 | 2.7% | 3.8% |
| CDB MK | CelcomDigi | 8.8 | 17.2 | 15.0 | 2.5 | 5.2% | 14.7% |
| MAXIS MK | Maxis | 5.7 | 16.8 | 15.3 | 4.4 | 4.7% | 26.9% |
| TEL PM | PLDT | 5.6 | 8.8 | 7.6 | 2.7 | 6.4% | 32.4% |
| GLO PM | Globe Telecom | 5.1 | 12.9 | 11.4 | 1.7 | 4.0% | 15.9% |
| ADVANC TB | AIS | 18.1 | 20.7 | 18.6 | 6.9 | 4.2% | 34.3% |

Source: CLSA, Bloomberg (July-2024 snapshot) [7].

**Read-throughs**:
- On **2024 PE (~19x)**, Singtel trades **richer than every ASEAN incumbent** in the screen — Telkom (11x), PLDT (9x), Globe (13x), Telekom Malaysia (15x), Maxis (17x), CelcomDigi (17x). It is broadly in line with Telstra (22x) and AIS (21x).
- **Dividend yield ~4.8%** is mid-pack, well below StarHub (6.0%), Telkom (6.6%) and PLDT (6.4%) but above Maxis (4.7%) and ahead of Bharti, Indosat, Axiata, TPG (sub-3%).
- **ROE 9.4% is at the LOW end** of the ASEAN-incumbent set — Telkom 21%, AIS 34%, PLDT 32%, Maxis 27%, StarHub 41%, Globe 16%. This is the central anomaly: Singtel earns less on capital than its regional peers yet trades at a higher multiple.
- **PB 1.8x is mid-pack**, materially lower than StarHub (5.3x), AIS (6.9x), Maxis (4.4x), Bharti (10x) — confirming the "rich" signal is concentrated in PE and EV/Ebitda, not book.

---

## 3. CLSA's SOTP — where the value actually sits

The premium is mechanical once you decompose. CLSA values Singtel sum-of-parts, valuation year 31-Mar-27 [1]:

| Component | Stake | Tgt value S$bn | TP/share S$ | % of NAV | Valuation basis |
|---|---|---|---|---|---|
| Singtel Singapore | 100% | 14.6 | 0.89 | – | DCF (WACC 6.6%, TGR 1%) |
| Optus | 100% | 11.9 | 0.73 | – | DCF (WACC 7.8%, TGR 1%) |
| NCS and DIC | 100% | 4.5 | 0.28 | – | 1.2x EV/Sales |
| Less: Net Debt | | (5.1) | (0.31) | – | |
| **Total consol. operations** | | **25.9** | **1.59** | **28%** | |
| Telkomsel | 30.1% | 9.9 | 0.61 | 11% | 11x PE |
| **Bharti Airtel** | 23.0% | **41.2** | **2.52** | **45%** | 13x EV/Ebitda; TP INR 2,035 |
| AIS | 32.0% | 11.2 | 0.68 | 12% | Market price; TP THB 296 |
| Globe | 46.7% | 4.3 | 0.26 | 5% | NAV: 5x EV/Ebitda; 20x PE Mynt; 19x EV/Ebitda DC |
| **Total associate valuation** | | **66.6** | **4.08** | **72%** | |
| Total SOTP (S$/share) | | 92.5 | **5.66** | 100% | |
| Less: holding-co discount | (25%) | (23.6) | (1.44) | – | |
| **Net SOTP (TP)** | | **68.9** | **S$4.20** | | |

[1]

**Critical observation**: Associates contribute **72% of gross NAV**, of which **Bharti Airtel alone is 45%**. The "Singtel valuation" call is functionally a Bharti Airtel + ASEAN-associate basket call with a Singapore/Australia stub attached. CLSA capitalises Telkomsel at only 11x PE (cut from 13x in Feb-25 and 15x in Jan-25) [2][8], so the *implied* multiple on the Singapore-listed entity has been pushed even further up by the associate revaluations — Bharti has done most of the lifting from S$3.60 TP (Feb-25) [5-prior table] to S$4.20 (May-25).

**Stub value**: CLSA itself notes the Singapore + Australia operations excluding listed-associate market value are trading at "**c.6x EBITDA**" in May-25 [8] — up from "sub-5x" in earlier vintages [reverting to historical baseline]. The stub multiple alone is not particularly demanding — the premium versus pure-domestic ASEAN telcos largely reflects the embedded Bharti exposure, not over-payment for the SG/AU consumer franchises.

---

## 4. What justifies the premium

Five drivers, in order of weight:

1. **Bharti Airtel passthrough.** 45% of CLSA's NAV is Bharti at 13x EV/Ebitda, valued at TP INR 2,035 [1]. India's wireless ARPU upcycle (5G monetisation, tariff hikes, Vi share loss) is the single largest reason Singtel's SOTP has expanded since 2023. CLSA flags Bharti as "the most promising for growth prospects in the portfolio" [8].

2. **Data-centre / Nxera optionality.** Singtel's DC arm (Nxera) is targeted at ~22% 3Y EBITDA CAGR to FY27CL with ~160MW under construction; CLSA values Globe's DC at an implied 19x EV/EBITDA inside the Globe NAV — the market is paying full DC multiples on regional infra plays, which spills into Singtel's stub [3][methodology]. May-25 FY25 reconciliation: NCS + Digital Infraco FY25 EBIT grew, SG/TH DC pre-leased 50/80% [9].

3. **Capital-return signal.** CLSA highlights three layers stacked: **70–90% core dividend payout, 3–6 S¢ "Value Realisation Dividend" (VRD)** in the medium term, **plus a newly announced S$2bn share buyback** [8][9]. Combined forward yield 4.7% with explicit capital-return augmentation is materially above STI yield and supports the multiple. DPS was upgraded mid-year from 16.5 to 17 S¢ for FY25 (+13% YoY) [9].

4. **Asset-recycling pipeline / ST28 plan.** S$8bn recycled to date funding 5G/initiatives, **S$9bn additional pipeline** announced in May-25 (raised from S$6bn earlier) [9]. CLSA's investment-thesis framing: "executing on growth strategy, funded by S$8bn asset recycled prior and another S$9bn in the pipeline" [3]. This is the underwriting of the "low double-digit ROIC by FY28" target [9].

5. **Margin/cost-out delivery in Optus + NCS.** May-25 Optus EBIT beat CLSAe by 87% on price/cost rationalisation; NCS Ebitda +44% YoY in 4Q; CLSA completed S$250m cost-out in FY25 with another S$200m planned FY26 [9][10]. CLSA raised FY26/27 Optus EBIT forecasts +75%/+88% [vs prior] [10].

---

## 5. What works against the premium / risks

- **Singapore mobile remains intensely competitive.** CLSA cut Singtel SG FY26/27 revenue forecasts by ~6% in May-25 on "worse than expected price competition" [10]. SG prepaid ARPU fell from S$13.5 (Sep-22) to S$9.5 (Mar-25) [SG ARPU table chunk]; only "may ease on market consolidation" [9].
- **ROE 9–13% is below ASEAN peers** (Telkom 21%, AIS 34%, PLDT 32%) — the premium is being paid on a thesis of *future* improvement (ROIC low-teens by FY28), not current returns [7][9].
- **Holding-co discount of 25%** is already baked into TP [1]. Compress/expand of this discount can drive ±S$1.40/share without any operational change.
- **Bharti FX, India regulation, currency translation** (CLSA called out "lower contribution from Telkomsel and Globe" as the 4Q25 miss driver) [Earnings reaction].
- Listed risks: unfavourable FX, decline in enterprise telecom spend, rate increases (negative for yield stocks), irrational price competition from new entrants.

---

## Bottom line

Singtel is **expensive on absolute valuation versus ASEAN incumbent peers** (FY26 PE 22x vs Telkom/Globe 10–13x; ROE 9–13% vs peers 15–35%) and **at a 2-standard-deviation, ~85% forward-PE premium to the STI** — the highest level in the last decade [5][6]. The premium is **largely justifiable but conditional**:
- **~72% of NAV is in listed associates**, dominated by Bharti Airtel at 45% of NAV — so the "Singtel premium" is in large part a derived Bharti/India-telco call [1].
- The **stub (SG + AU consumer) at ~6x EBITDA is not demanding** in absolute terms [8].
- **Forward yield 4.7%–5.2%** + S$2bn buyback + VRD + asset-recycling pipeline create a credible capital-return floor [3][8][9].
- **Earned-ROE remains a structural concern** — the premium relies on the FY28 low-double-digit ROIC target being delivered.

CLSA's S$4.20 TP implies only ~6% upside from the May-22-2025 close [11], rating Outperform (not Buy) — i.e., the house view is that the premium is fairly priced into the current multiple, not under-appreciated. A further re-rating from here requires either (i) Bharti continuing to outrun consensus, (ii) NCS/Nxera materially scaling, or (iii) the holding-co discount compressing.

---

**Sources**
[1] Singtel — O-PF (All about the capital), CLSA, 22 May 2025 — SOTP valuation table (TP S$4.20, FY27 valuation year)
[2] Singtel — O-PF (All about the capital), CLSA, 22 May 2025 — Valuation methodology (DCF/EV-multiple/Telkomsel 11x PE)
[3] Singtel — O-PF (All about the capital), CLSA, 22 May 2025 — Target price and dividend yield (S$4.20, 4.7%)
[4] Singtel — O-PF (All about the capital), CLSA, 22 May 2025 — Financial summary (PE, dividend yield, ROE FY24–FY28)
[5] Singtel — O-PF (All about the capital), CLSA, 22 May 2025 — Premium-to-STI series (2015–2025)
[6] Singtel — O-PF (All about the capital), CLSA, 22 May 2025 — "Singtel trading at 2SD above historical fwd PE relative to STI"
[7] Singtel — O-PF (Doubling up on data centres), CLSA, 10 July 2024 — Regional telco valuation summary table
[8] Singtel — O-PF (All about the capital), CLSA, 22 May 2025 — Investment thesis (stub at c.6x EBITDA, 70–90% payout, S$2bn buyback)
[9] Singtel — O-PF (All about the capital), CLSA, 22 May 2025 — FY25 earnings reconciliation and FY26 guidance
[10] Singtel — O-PF (All about the capital), CLSA, 22 May 2025 — TP raise to S$4.20, forecast changes (SG cut, Optus lift)
[11] Singtel — O-PF (All about the capital), CLSA, 22 May 2025 — Pricing snapshot (22-May-2025 priced data)
[12] Singtel — O-PF (All about the capital), CLSA, 22 May 2025 — Key ratios (EV/EBITDA, EV/Sales, PB, gearing FY22–FY28)

