Should you buy Singtel at $2.94 on 24 Dec 2018?

Key points from Singtel's 2018 annual report

key questions
what is the definition of underlying net profit?
what is invested capital, and is it different from total assets?

Message from Singtel chairman Simon Israel

• Underlying earnings declined 8%, largely the result of a decline in Airtel’s India earnings and charges from increased network investments and spectrum
• However, Singtel delivered a record profit of S$5.45 billion for the year just ended, with the successful IPO of NetLink Trust
• The Group will continue with the payout ratio of 60 to 75% of underlying net profit
• However, for the next two financial years, a dividend of 17.5 cents is sustainable.

Gain / loss that is capital in nature adds to / subtract from "underlying net profit" and results in higher / lower Net Profit after tax.

As capital gain / loss are not Singtel's core business, they are considered "exceptional". 

Just as "Underlying net profit" is defined as "net profit before exceptional items", we can similarly define "Net Profit after tax" as "net profit after exceptional items". 

The underlying net profit of Singtel group comes from 3 regions - Regional Associates, Australia, and Singapore. In FY2018, they have the following % contributions.

The Group's Free Cash Flow is consistently lower than underlying net profit. That shows the group may have been making investments for expansion consistently.