SingTel - Fundamental & Intrinsic Value

Base on latest 2009 full year financial report:

• PE = 14.9
• Dividend Yield = 3.87%
• NAV = $1.39
• Net Earning = 23.1% (26.7% in 2008)
• Current Ratio = 0.74 (Similar industry is 0.55) 
• ROA = 10.4% (Base on 2009 Full Year)
• ROE = 16.8% (base on 2009 Full Year)

 

 

Stock Background

• Historical high = about $4.10
• Current Price = $3.23

 

  

 

 

Intrinsic Value Calculation

PE Model

• Fair value PE = 15, intrinsic value= $3.24 (base on EPS $0.21648)
• EPS Growth Rate = 11.3%
• PEG = 1.32 

DCF Model
I use Free Cash Flow instead of Net Operating Cash Flow to calculate the intrinsic value. The reason is SingTel is a telecommunication company which need to continuously invest in the networking infrastructure to generate revenue and profit constantly. The intrinsic value is $2.45.

 

Discounted EPS Model

• EPS Growth Rate = 11.3%
• Discount Rate = 5%
• 2009A EPS = $0.21648
• Intrinsic Value = $3.02

Regardless of which method to calculate the intrinsic value, SingTel seems to at its fair value or over value (base on Free Cash Flow DCF Model). Furthermore, the stock price moves sideway for the past 10+ years. I will not buy SingTel unless the stock price falls below $2.50 and there is an increase in dividend yield in future.