Amobee done, Trustwave next?
- Amobee’s sale proceeds would be inline with our expectations and benefit group earnings by 3%
- Trustwave is next on cards whose EBIT loss was double of Amobee
- Maintain BUY with unchanged TP of S$3.24
Singtel’s wholly-owned subsidiary, Amobee Group, has entered into a sell and purchase agreement (SPA) to sell all of its equity interest in Amobee Asia, Amobee, Inc. and Amobee ANZ to Tremor International. The divestment will be at an enterprise value of US$239m or about S$331m. The estimated net cash proceeds after deducting transaction costs is expected to be ~US$197m or about S$274m in line with our expectations. The carrying value of Amobee Asia, Amobee, Inc. and Amobee ANZ as of March 31 was US$160m. Amobee incurred S$70m EBIT loss in FY22 which would be absent in FY23F as it was classified as “held for sale” from 31st March 2022 onwards.
More importantly, we expect, cybersecurity arm Trustwave to be classified as “held for sale” subsidiary once talks for its sale are in advanced stage. Trustwave incurred even bigger EBIT loss of S$140m in FY22. Our FY23F forecasts remain unchanged as we expect Trustwave to be classified as “held for sale” by Dec 2022. We continue to like Singtel for its 16% earnings CAGR over FY22-24 and its 4% yield. Singtel’s earnings CAGR is higher than most blue-chip stocks in Singapore and similar to earnings CAGR offered by Singapore banks but less reliant on economy.