IPOs: SingTel mulls Optus sale, Maxis sets $3.4b target

Moving from $3.06 down to $3.04, Singtel lost another S$318.536m today adding to a total of S$3,822.432m from before the fall.

Bharti last trade is at Rs 334.65. From its previous of Rs 435.5, the share has lost about 23.2% or Rs 383 billion (S$11.5b). At 30%, Singtel lost S$3.46b.

Comparing S$3.82b losses of Singtel market capitalization to S$3.46b losses in terms of holding Bharti shares mark to market, it can be said that the losses is efficiently reflected into Singtel's share prices at S$3.04. It is possible that Singtel is under valued by S$0.36b or S$0.02.

Bharti short term outlook is as illustrated by the indian market analysts. It is generally expected that the stock stay afloat above Rs 350 and target of Rs 356.Latest is by Mohindar in an interview on CNBC mentioned that despite the shorts are limited, there will be a long bottom before the share picks up strength to move up.

Oct 08, 2009    Bharti Airtel can slip 4-5%: Mohindar
Oct 08, 2009    Hold Bharti Airtel, target of Rs 390: Sharekhan
Oct 08, 2009    Bharti Airtel has support at Rs 330-350: Gujral
Oct 07, 2009    Reduce Bharti Airtel, target of Rs 356: IIFL
Oct 07, 2009    Hold Bharti Airtel: Gujral
Oct 07, 2009    Buy Bharti Airtel at Rs 350-360: Harihar
Oct 06, 2009    Bharti Airtel has support at 320-350: Gujral
Oct 06, 2009    Bharti Airtel has support at Rs 350-370: H Kapadia
Oct 06, 2009    Buy Bharti Airtel at Rs 365-370: Bhamre
Oct 06, 2009    Bharti Airtel has support at Rs 363-365: Anu Jain
Oct 05, 2009    Buy Bharti Airtel, says Dhawan
Oct 05, 2009    Don't buy Bharti Airtel: Baliga
Oct 05, 2009    Bharti Airtel has target of Rs 485: M Thacker
Oct 05, 2009    Buy Bharti Airtel on dips: RR Financial Consultants

Given the immense downside already, I think this price of $3.04 is fairly reasonable. In fact, it might be slightly ahead of the fall. Bharti vs Singtel market capitalisation is S$38,271,828,230.32 vs S$48,417,472,000.00 as of market close. Breaking into parts, Singtel currently have 30% or S$11,481,548,469.10 in Bharti. The remaining of Singtel market cap worth S$36,935,923,530.90, or $2.32 per share, is elsewhere.

Each time Bharti fall(rise) by Rs 1.39, Singtel lose(gain) an amount equivalent to 1 cent per share. 5% downside is Rs 16.73 or 12 cents equivalent. Rs 15.35 minimal upside is 11 cents upside. This will create a trading range between S$2.92 to S$3.15 purely in response to Bharti news. However, Singtel has a large portion of other businesses that is unaffected and still doing well or improving.

Earning season is coming again. Singtel's strong earning growth remains intact and is likely to announce some healthy results despite the net asset valuation expected to fall if the mark to market was done for Bharti. Singtel's recent initiatives and iPhone sales are likely to improve operating income. Moreover, the EPL rights are still "valuable".

Bharti, too, is expected to grow rapidly and report strong results. It should still be noted that the recent market movement were on the basis of speculation of a highly likely government regulation for more competition. This would affect future earnings of telecoms. However, Bharti is diversifying from India already but not as much as desirable to not be affected by this news.

I believe next month's earning will send Singtel back to $3.30 and above. *one other point is that past Bharti surges in stock prices did not affect Singtel by as much or as efficiently. It might be true that Singtel is undervalued.