My Personal Analysis of Singtel

Recently, the share price of Singtel has breached its 5 year low, falling as low as S$3.36 as of 12th February 2018. This is after they announced their Q3FY18 net profit fell 8.5% to S$890 million from S$973 million one year ago. Singtel attributed the decline due to lower profits from subsidiaries Airtel, Telkomsel and Globe and also due to lower contribution from NetLink Trust following the divestment of its majority stake in the company.

I doubt the divestment of NetLink Trust will have much impact on Singtel’s FY18 profits as NetLink Trust only contributed S$73 million pre-tax profits in 2017.

Based on the net profit contribution broken down by geography, we can see that 48% of Singtel’s net profit comes from its Regional Associates. Singtel’s Regional Associates consists of Airtel, AIS, Telkomsel and Globe.

Dividends

Singtel has been consistently paying dividends over the past 10 years. I like the way Singtel broke down their dividends into interim, final and special dividend on their website. From the below, you can see that Singtel had only paid three times special dividends over the past 10 years.

If we base on the current share price of $3.37, the current dividend yield for Singtel is 5.19%.

Financial year ended 31 March 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Interim ordinary dividend 4.5 5.6 5.6 6.2 6.8 6.8 6.8 6.8 6.8 6.8 6.8 6.8
Final ordinary dividend 6.5 6.9 6.9 8.0 9.0 9.0 10.0 10.0 10.7 10.7 10.7
Special dividend 9.5 10.0 3.0
Total 20.5 12.5 12.5 14.2 25.8 15.8 16.8 16.8 17.5 17.5 17.5 9.8

Personal Thoughts About Singtel

Entry of Fourth Telco

The news of the entry of the fourth Telco is nothing new. Singtel currently makes up 49% market share for mobile customers and 42% market share for broadband. It will take a few years for the Fourth Telco to gradually build up its customer based and increase its market share. Having said this, 48% of Singtel’s net profit comes from Regional Associates and thus the threat of the Fourth Telco will have some impact but not disastrous impact on Singtel.

Missing Contribution from NetLink Trust

As mentioned above, Singtel has divested NetLink Trust. The impact should be minimal as like I mentioned, NetLink Trust’s contribution is merely a S$73 million in 2017.

Continued Decline in Share Price

I am not an expect in technical analysis but I think the support levels are S$3.20 and the next support level is at S$2.80. As Singtel is a blue chip with good dividend yield at current levels, I may average down if the share price keeps falling. On the other hand, I am speculating the share price will increase when Singtel announce its next dividend payout over the upcoming months.

5.19% Dividend Yield

Singtel has been on my watch list since last year but I didn’t add it to my stock portfolio as the dividend yield was only 4.2%. With the recent plunge in share price to below 5 year low, I personally think it is worth the risk to invest for that above 5% dividend yield.

Summary

Having the above considerations sorted out, I have helped to add Singtel to my spouse’s stock portfolio.

Huat ah!

3 thoughts to “My Personal Analysis of Singtel”

  1. Sold SingTel a few weeks ago as the dividend cannot make up for the loss in capital. Singtel’s profits has been going downhill, can’t remember the last time it increased revenue n profits. Fundamentally, I think it will continue to go downhill and whether it is able to keep dividends at 17.5 cents is a question.

  2. Hi Sir, pl look at the financial statements which recorded that SingTel is facing litigation suits in many of the countries it operate. The concern is that Singtel made no provision in the accounts for possible litigation claims . This will be a surprise charge off if some of the litigation suits succeed in their claims. SingTel price will tank if such scenario play out. Tks

Leave a Reply

Your email address will not be published. Required fields are marked *