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Latest Forum Topics / SingTel    Last:3.27    -0.01  Post Reply
Singtel Bullish???
Glooper83
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15-Sep-2024 00:35     
 
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 Alert Admin 		Funny, I couldn't find info supporting your statement that the other global telcos are trading at pe of 9x.

Quick search shows that it is trading at between 12 to 17...

But i see you put a caveat of a forward looking pe... honestly if that's the case then we can just pluck numbers out from the sky cos no one really knows the future and you didn't really explain how you derived those forward looking pe...


2egg4kosong      ( Date: 11-Sep-2024 15:41) Posted:

Prata Research Review of Singtel (SGX: Z74)
Current Price: SGD $3.30
TP: SGD $2.50

Summary: Competitive Mobile/Broadband Landscape, Data Center Business ROI Challenges, Share Price Overvaluation, and other Financial Pressures
 
1) Mobile/Broadband Remains as Key Revenue Source
 
Revenue Dependency:
·                 Singtel' s mobile and broadband segments contribute significantly to its overall revenue. However, these segments are facing increasing  competition  from regional players and local competitors like StarHub and M1, which could pressure profit margins.
·                 Declining  Average Revenue Per User (ARPU)  in both Singapore and regional markets, due to cheaper plans and market saturation, could pose a long-term threat to profitability.
 
Singapore Market:
·                 Mobile Penetration  in Singapore is already extremely high, meaning limited room for growth. Singtel has to rely on maintaining its market share, but the entry of new MVNOs (Mobile Virtual Network Operators) has intensified competition.
·                 The  broadband market  is also becoming more competitive, with fibre broadband becoming commoditized, leading to price wars and reduced profitability.
 
Regional Challenges:
·                 In  Australia, Singtel' s subsidiary Optus has been losing market share to Telstra and TPG Telecom, exacerbated by network issues, high customer churn, and the  Optus data breach, which hurt brand trust and may lead to further regulatory scrutiny and legal actions.
·                 Emerging markets  like India (through Bharti Airtel) and Indonesia (Telkomsel) present growth opportunities but come with significant risks due to  regulatory pressures,  currency fluctuations, and economic instability.
 
5G Investment Risks:
·                 Singtel is investing heavily in  5G infrastructure, but the returns on these investments may be delayed. With high capital expenditures and slow consumer adoption, this could drag on profitability in the near term.
 
Margin Pressure:
·                 As mobile and broadband become more commoditized, Singtel' s ability to differentiate itself and maintain premium pricing is under threat, leading to  shrinking margins  across key markets.
 
2) ROI on Data Center Investments
Capital Expenditure and Revenue Growth
Data Center Investments:
  • Investment Overview: Singtel invested SGD $820 million in data centers during FY24. This investment reflects the company&rsquo s strategic focus on expanding its digital infrastructure and capitalizing on the growing demand for cloud and data services.
  • Revenue Contribution: Data center revenue grew by 5% year-on-year, driven by increased demand for cloud services and digital solutions. However, this growth rate is below expectations, raising concerns about the effectiveness of capital deployment.
ROI Analysis:
  • Current ROI: The return on investment (ROI) for data centers stands at 6.5%, which is lower than the industry average of 10-12%. This lower ROI suggests that Singtel is facing challenges in achieving the anticipated returns from its data center investments.
  • Comparative Analysis: Examining ROI benchmarks against industry leaders such as Equinix and Digital Realty reveals that Singtel&rsquo s ROI is lagging behind. These competitors have demonstrated higher returns due to more efficient operations and better market positioning.
Technical Analysis:
  • Capital Efficiency: The lower-than-expected ROI indicates inefficiencies in Singtel&rsquo s data center operations. Factors such as high operational costs, slower-than-expected ramp-up in revenue, and competition from established players contribute to this issue.
  • Revenue Growth vs. ROI: Despite a 5% revenue growth, the ROI challenges highlight the need for improved operational efficiency and strategic adjustments to enhance profitability.
3) Digital Banking Joint Venture: Grab-Singtel Collaboration
Strategic Objectives and Financial Performance
Joint Venture Overview:
  • Partnership Structure: The Grab-Singtel digital bank joint venture involves a 60% ownership by Grab and 40% by Singtel. This partnership aims to leverage Grab&rsquo s extensive customer base and technology platform with Singtel&rsquo s financial expertise and infrastructure.
  • Investment Details: The total investment in the digital bank venture has reached approximately SGD $1 billion, reflecting the scale and ambition of the project.
Initial Performance:
  • Financial Results: The digital bank reported a net loss of SGD $150 million in FY24. This loss is attributed to high setup costs, regulatory compliance expenses, and slower-than-anticipated customer acquisition.
  • Customer Acquisition: The venture has acquired approximately 200,000 customers, falling short of initial projections. The slower customer growth impacts the venture&rsquo s ability to achieve profitability in the near term.
Challenges:
  • Regulatory Compliance: The venture has faced significant regulatory hurdles, including obtaining necessary licenses and adhering to stringent financial regulations. These challenges have led to operational delays and increased costs.
  • Market Competition: The digital banking market is highly competitive, with established banks and other fintech players also expanding their digital offerings. The venture must navigate this competitive landscape to capture market share and achieve sustainable growth.
Technical Analysis:
  • Capital Outlay and ROI: The high initial losses and slower customer acquisition reflect a challenging ROI scenario. The venture&rsquo s long-term success will depend on effective scaling, customer retention, and achieving profitability.
  • Market Positioning: Analyzing the market positioning of similar digital banking ventures, such as those by DBS Bank and Standard Chartered, provides insights into competitive strategies and performance benchmarks.
4) Temasek Holdings&rsquo Ownership Impact
Governance and Financial Implications
Ownership Structure:
  • Temasek&rsquo s Stake: Temasek Holdings holds 52% of Singtel&rsquo s shares, providing significant influence over the company&rsquo s strategic direction and governance.
Implications:
  • Governance: Temasek&rsquo s substantial ownership provides stability but may limit market-driven pressures on management. This influence can affect decision-making processes and strategic responses to market challenges.
  • Dividend Pressures: Singtel&rsquo s high dividend payout ratio of 70-90% reflects the need to satisfy shareholder expectations, potentially impacting the company&rsquo s ability to reinvest in growth initiatives.
Technical Analysis:
  • Governance Risks: Heavy reliance on Temasek may reduce management accountability and responsiveness to market conditions. Effective governance practices are essential to ensure strategic agility and effective decision-making.
  • Dividend Sustainability: The high dividend payout ratio strains financial resources, affecting the company&rsquo s ability to fund growth initiatives and manage economic fluctuations.
5) Valuation Assessment
Valuation Metrics
Valuation Metrics & Peer Benchmarking:
  • Price-to-Earnings (P/E) Ratio: With an optimistic projected annual EPS of S$0.18 and the current share price of S$3.30, Singtel&rsquo s forward  P/E ratio is 18.3x.
    In comparison, major global telecom operators such as AT& T, Verizon and Vodafone trade at significantly lower forward P/E ratios of approximately 9x.
Singtel&rsquo s high valuation relative to its global peers suggests the stock is overpriced, especially considering its limited revenue growth potential and rising risks.
 
6) Other Areas of Concern
 
Ongoing Optus Class Action Lawsuit
Singtel&rsquo s Australian subsidiary, Optus, is currently facing a class action lawsuit following a significant data breach in 2022 that compromised millions of customers&rsquo information. The potential financial damages could exceed A$500 million, directly impacting Singtel&rsquo s bottom line and increasing its legal and operational risks​
 
Capital Recycling as a Short-Term Fix
Singtel has been recycling its capital by selling stakes in its infrastructure and other non-core businesses in the past few years to generate cash for dividends and new investments. Notable transactions include selling of stakes in  Australia Tower Network and divestments of its regional data center business and Comcentre. However, while this has bolstered cash flow temporarily,  asset recycling is not a sustainable long-term strategy. Once key assets have been monetized, the company risks losing stable revenue-generating assets. As a result, this approach undermines the company&rsquo s ability to sustain its high dividend payout over the long term, particularly in the absence of consistent organic growth​ .
 
Dividend Sustainability
Singtel&rsquo s current dividend yield of  more than 6-7%  is attractive but could be at risk. The company&rsquo s practice of capital recycling raises serious doubts about whether it can continue to offer such high payouts without risking financial instability in the future.
 
Conclusion
Based on this not-so-comprehensive research, Prata Research thinks that Singtel&rsquo s current stock price of SGD $3.30 is overvalued. The target price of SGD $2.50 (PE of 13.9x) better reflects the financial and operational risks facing Singtel.
Disclaimer: This report is for informational purposes only and does not constitute financial advice. Investors should perform their own due diligence and consult with financial advisors before making investment decisions.
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Glooper83
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13-Sep-2024 22:58     
 
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 Alert Admin 		Sharing link from SGX Mobile App:
https://www.sgx.com/research-education/market-updates/20240912-sti-return-above-3400-sees-stocks-draw-s760m-net

The 20 stocks that booked the highest net institutional inflow over since Aug 29 are tabled below.
 
Stocks with Highest NIF Since Aug 29 Code Mkt Cap S$M 9 Session Px Chg % 9 Session NIF S$M YTD ADT S$M YTD NIF S$M YTD TR % Sector
Singtel Z74 54,329 8.9 206.3 93.5 853.5 36.8 Telecommunications
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Newcomer19707016
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13-Sep-2024 12:19     
 
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 Alert Admin 		For my i buy at $3.24 as i only bought 3000 shares using tiger broker apps. Brokerage about $10.50 to buy if not wrong
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hokpin
Elite
13-Sep-2024 11:49     
 
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 Alert Admin 		Recover so fast from 324 this morning!
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Newbornborn
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13-Sep-2024 11:14     
 
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 Alert Admin 		I sold at 3.30 , I am just waiting for for golden advice on what is the best price to re enter again . Any advise ?

Newcomer19707016      ( Date: 13-Sep-2024 09:39) Posted:

Newbornborn, what price u want to buy Singtel?

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Newcomer19707016
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13-Sep-2024 09:39     
 
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 Alert Admin 		Newbornborn, what price u want to buy Singtel?
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luke2021
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13-Sep-2024 09:23     
 
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 Alert Admin 		阿 弥 陀 佛

MrBear12      ( Date: 13-Sep-2024 08:15) Posted:

Risk Life savings , definitely. Some lost their life savings. Very painful, you know.

luke2021      ( Date: 13-Sep-2024 08:06) Posted:

Mai siao leh. Stock market not need to risk your life one. 
Tok is just tik Tok haha. 
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MrBear12
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13-Sep-2024 08:15     
 
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 Alert Admin 		Risk Life savings , definitely. Some lost their life savings. Very painful, you know.

luke2021      ( Date: 13-Sep-2024 08:06) Posted:

Mai siao leh. Stock market not need to risk your life one. 
Tok is just tik Tok haha. 

MrBear12      ( Date: 13-Sep-2024 01:21) Posted:

I mean, u bet your life on this, haven't you, Luke
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luke2021
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13-Sep-2024 08:06     
 
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 Alert Admin 		Mai siao leh. Stock market not need to risk your life one. 
Tok is just tik Tok haha. 

MrBear12      ( Date: 13-Sep-2024 01:21) Posted:

I mean, u bet your life on this, haven't you, Luke?

luke2021      ( Date: 12-Sep-2024 18:33) Posted:

What stake you mean Mr Bear.
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MrBear12
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13-Sep-2024 01:21     
 
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 Alert Admin 		I mean, u bet your life on this, haven't you, Luke?

luke2021      ( Date: 12-Sep-2024 18:33) Posted:

What stake you mean Mr Bear.

MrBear12      ( Date: 11-Sep-2024 17:04) Posted:

Follow lukes bets. His stakes are high.
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Entropy72
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12-Sep-2024 22:34     
 
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 Alert Admin 		So pls hold tightly to your Singtel shares 😄 Don?t Kan Cheong take tiny profit and miss the big payout. Let buyers chase up to fair valuation.

Entropy72      ( Date: 12-Sep-2024 21:57) Posted:

There are 16B Singtel shares.

If Bharti Airtel is divested fully, it is worth SGD3 per Singtel share. Spread the payment out as special dividend over 10 years means we can get SGD0.30 each year. That represent a base realization dividend yield of close to 9% (base on $3.30 SingTel price) excluding regular dividends.

Glooper83      ( Date: 12-Sep-2024 21:49) Posted:

Yes, Singtel' s stake in Airtel should be worth about Sgd 45b already, while Singtel' s own market cap is about Sgd 54b... 
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Entropy72
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12-Sep-2024 21:57     
 
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 Alert Admin 		There are 16B Singtel shares.

If Bharti Airtel is divested fully, it is worth SGD3 per Singtel share. Spread the payment out as special dividend over 10 years means we can get SGD0.30 each year. That represent a base realization dividend yield of close to 9% (base on $3.30 SingTel price) excluding regular dividends.

Glooper83      ( Date: 12-Sep-2024 21:49) Posted:

Yes, Singtel' s stake in Airtel should be worth about Sgd 45b already, while Singtel' s own market cap is about Sgd 54b... 

go_long      ( Date: 12-Sep-2024 17:43) Posted:

Wow. Bharti Airtel up 4.5% today. Another new all time high.
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Glooper83
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12-Sep-2024 21:49     
 
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Yells: "Always focus on Fundamentals!"
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 Alert Admin 		Yes, Singtel' s stake in Airtel should be worth about Sgd 45b already, while Singtel' s own market cap is about Sgd 54b... 

go_long      ( Date: 12-Sep-2024 17:43) Posted:

Wow. Bharti Airtel up 4.5% today. Another new all time high.
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luke2021
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12-Sep-2024 18:33     
 
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 Alert Admin 		What stake you mean Mr Bear.

MrBear12      ( Date: 11-Sep-2024 17:04) Posted:

Follow lukes bets. His stakes are high.
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go_long
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12-Sep-2024 17:43     
 
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 Alert Admin 		Wow. Bharti Airtel up 4.5% today. Another new all time high.
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MrBear12
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12-Sep-2024 16:44     
 
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 Alert Admin 		If I win, I'll buy all of you a beer.

Potato      ( Date: 12-Sep-2024 14:32) Posted:

Gd afternoon Bear Bear ~~ noo you see correctly. But Potato is always very wrong. Potato hopes he is very very worng too. haahaa... 

Potato      ( Date: 11-Sep-2024 13:26) Posted:

haa.. haaa
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Newcomer19707016
Senior
12-Sep-2024 16:39     
 
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 Alert Admin 		Seem like a lots of buying and selling @$3.27
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Newcomer19707016
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12-Sep-2024 15:05     
 
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 Alert Admin 		Yes definitely. I have Phillips Secuities too. But seldom used as it charges more for brokerage. It ate into my profit
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Potato
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12-Sep-2024 14:58     
 
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 Alert Admin 		Hello Newcomer197016... ahh than it make sense casue the normal CDP brokerage fee might be way too high if you keep buying and selling.. at the end those knn people make all your hard earn $$

Newcomer19707016      ( Date: 12-Sep-2024 14:37) Posted:

Potato, I am using Tiger broker Apps to trade. So for 3000 shares the brokerage will cost me around $10.50 if not wrong
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Newcomer19707016
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12-Sep-2024 14:37     
 
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 Alert Admin 		Potato, I am using Tiger broker Apps to trade. So for 3000 shares the brokerage will cost me around $10.50 if not wrong
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