• 1Q24 results were within expectations and management full-year guidance. FY24 revenue and EBITDA were 23%/22% of our FY24 estimates.
• Service EBITDA was up 0.7% YoY to S$108.4mn excluding D’Crypt which was disposed of in February 2024. Earnings were pulled down by a contraction in mobile and entertainment revenue.
• Mobile competition is more intense than expected. 1Q24 mobile decline is the highest in 11 quarters, or since the pandemic began. We believe competition from MVNOs and MNOs has affected the lucrative roaming segment. Our forecasts are largely unchanged. The target price of S$1.29 is maintained, 6.5x FY24e EV/EBITDA, in line with other mobile peers. And ACCUMULATE recommendation maintained. This year, around 90% of the DARE+ S$270mn investments will be completed. Earnings this year are expected to be sluggish, with DARE+ opportunities in cost and revenue materialising only next year.

The Positives

+ Strong cybersecurity revenue. Cybersecurity expanded 37% YoY to S$73mn. Excluding D’Crypt, Ensign’s revenue would have jumped 54% to S$64.7mn. The surge in revenue was due to project delivery, and 1Q is typically weak on a seasonal basis. Ensign continues to add headcount and fixed costs, which affect its profitability.

The Negative

– Weakness in mobile APRU. Mobile revenue declined 4.5% to S$145mn. The large drag in revenue stems from lower postpaid ARPU and competition. Apart from competition, excess data and voice usage charges have been falling as packages enjoy higher bandwidth.

Source: Phillip Capital Research - 16 May 2024