Skip to main content

Singtel - More trouble ahead?

Singtel continues to show weakness with yet another set of disappointing results.




For the three-month period ending Dec 2018, EPS declined from 5.88 cents to 5.04 cents. In other words, the EPS for the full year may decline to 20.12 cents.

If so, the expected dividend payout after the 2020 may decline to 12 cents to 15 cents a share. At current share price ($3), this translates to a yield of 4% to 5%. To be fair, this is by no means terrible for a blue chip stock, but it is a far cry from its current 17.5 cents a share dividend.

A critical factor for the continued weakness was attributed to fierce competition in India (Bharti Airtel), which posted losses. It further did not help that Singtel's ID and TH associates also posted lower profits due to "handset subsidies and advertising".

I believe Singtel continues to be a long term value play, primarily because Singtel's size and experience would ultimately allow it to gain an edge over the competition in its Asian businesses.  Singtel retains a healthy balance sheet, with FCF of 2.53 Bn. This will continue to afford Singtel ammunition to wear down its competition and take a larger slice of pie when the markets revert to sustainable profit structures.




If you have not yet invested into Singtel, or are waiting for an opportunity to accumulate/average down, you might want to wait to see how much further EPS would decline before deciding on an appropriately safe entry price. 

For income investors with long investment horizons, this transient weakness should not be overly disconcerting. Indeed, these may be opportunities to take meaningful positions in a sleeping Asian behemoth. 

Onward to FI!

Comments

  1. MMF SolutionsFebruary 15, 2019 at 8:56 PM

    Well, didn't expect this from singtel. I was thinking to consider it for my next investment. Anyways, thanks for the details.

    ReplyDelete
  2. Edwin DaiFebruary 18, 2019 at 10:46 AM

    No problem. I am holding onto quite a fair bit of Singtel. Hopefully, the turnaround happens sooner rather than later. Thanks for reading!

    ReplyDelete
  3. INTJFebruary 21, 2019 at 1:18 PM

    Hi edwin

    For Singtel growth areas like cybersecurity and IOT
    Will you have any insight to the nature of their business and capex requirements?

    ReplyDelete
    Replies
    1. Edwin DaiFebruary 22, 2019 at 12:02 PM

      Hello INTJ

      Thanks for dropping by.

      Unfortunately I do not have further information beyond those disclosed by Singtel in their reports. Cybersecurity falls under their Group Enterprise arm, and as far as I can tell, the YoY growth in that sector is pretty decent in Singapore at +13.4%, but flat in AU (-1.3%).

      https://www.singtel.com/content/dam/singtel/investorRelations/financialResults/2019/Q3FY19-MDA.pdf

      Delete

Post a Comment

Popular posts from this blog

As a Dividend Investor - I am having fun staying poor

Recently, there was a self-styled "master" who went around dissing dividend investing, saying things like REITS will chibaboom (his words not mine). Ironically, the master also invested into "growth stocks" like BABA and notably SE before its recent implosion.  Masterstrokes indeed. Dividend/income investors have borne the brunt of "have fun staying poor" taunts since the dawn of time.  Previously from the crypto bros and then from the growth investors. This is nothing new.  Every growth investor likes to talk about Tesla. But where are the ARK ETF investors? Where are the NIO bulls? Where are the BABA fanatics? Even a broken clock is right twice a day.   Good luck to those who retired on a portfolio of "growth stocks", hoping to spend 4% annually on an expected annualized portfolio growth rate of 10%.  Without dividends, one would have no choice but to liquidate part of the portfolio for meeting expenditures.  The damage done might never be reco...
13 comments
Read more

The FI Checklist

You are on the verge.  So close your ears are tingling with anticipation.  Your fingertips rattle across the keyboard. Your lips purse into a wry smile. You can barely contain the pent-up ecstasy as the words appear on your computer screen: "... I would like to resign my position with effect from.... " WAIT A MINUTE.  I know you have literally waited a decade to type this letter.  But hold your horses first.  Have you done the FI checklist? The FI Checklist 1.  Have you set aside a cash buffer for income tax payments, which will persist for at least one more year in your unemployed life?   Since you would no longer have an active income, it is pertinent that you have set aside sufficient cash reserves to meet your tax obligations. If your passive income level is high enough to cover your expenses plus taxes, good on you. If not, prudence dictates that you ring fence some money for Singapore's most powerful debt collector. ...
4 comments
Read more

Is it finally the end of the tunnel for REITs

General Mood Market is expecting interest rates to hold after US CPI data came out on 14 November and pointed to softening prices across the board. Oil has also retreated nearly 20% since its recent peak in Sep 2023.  Are we finally reaching the end of the tunnel for battered REIT assets?  My gut tells me that we are at early stages of recovery although we may possibly still see a couple more rate hikes in 2024.  Nonetheless, barring further escalation of global military conflicts and an unmitigated collapse of the Chinese housing market, both of which seem unlikely but can never be completely ruled out, we may start to see a gradual recovery in DPU for REITs (as rental reversions go up but interest expenses stay constant or go down).    What I did in 2023 (Not to be construed as recommendations or investment advice.) Throughout 2023, I have continued to load up on REITs which (i feel) have:      i. Good sponsors (Capland, Frasers, Maple family) ...
2 comments
Read more