Singtel opens 9% higher after Grab partnership wins digital bank licence

The telco’s stock spiked up as much as 10.7% to start the week, following last Friday’s digital full bank licence win.

  • Singtel shares opened nearly 9% higher on Monday (07 December)
  • The stock then rose to an intraday peak of S$2.58 five minutes into trading
  • This follows the telco’s digital banking licence win last Friday, as part of its partnership with lifestyle app Grab

Singtel share price: What’s the update?

Singapore Telecommunications Ltd (Singtel) shares opened 8.6% higher on Monday (07 December 2020), after its consortium with Grab was awarded a digital full bank licence.

The telco’s shares opened at a five-month high of S$2.53, rising to a peak of S$2.58 five minutes into trading (representing a 10.7% increase from the previous close), before settling at S$2.48 a share by mid-day.

Singtel-Grab received one of two digital full bank licences announced by the Monetary Authority of Singapore on Friday (04 December). The other was awarded to tech giant and New York Stock Exchange-listed Sea Limited.

Hiring already underway at Singtel-Grab consortium

The Singtel-Grab consortium says it will focus on serving consumers and small businesses, beginning with young professionals, managers, executives and technicians (PMETs), gig workers with flexible incomes, and micro-SMEs who face limited access to financing.

Grab and Singtel will aim to enable these ‘underserved groups to easily access transparent financial services that are embedded in their everyday activities’.

Grab and Singtel’s priority is to ‘create the most seamless and secure digital banking experience in Singapore’. Operations will reportedly begin in 2022.

To achieve this, the consortium says it has already started assembling a team of experts with backgrounds in banking, fintech and technology. Key roles overseeing product, data, cybersecurity and technology - around 10% to 15% of the 200 open positions - have already been filled.

What are brokers’ latest predictions for Singtel?

The stock was rated a ‘buy’ by 15 analysts and a ‘hold’ by another four, with an average target price of about S$2.83 as at 02 December.

Maybank Kim Eng analysts reinitiated coverage on Singtel on Sunday (06 December) with ‘buy’ and a S$2.88 price target, citing that they prefer Singtel for its ‘proxy to digital banking expansion’ and ‘improving volumes and margins from rising ARPUs and 5G’.

The brokerage also noted previously that at the stock’s current cheap valuations, the market is ascribing almost zero value to the company’s core businesses.

Meanwhile, CIMB was more optimistic with its target price of S$3.10, stating that the licence win ‘represents an expansion into a potentially profitable business over the medium to long term’.

However, the analysts do not see the Grab partnership having a ‘major impact’ on Singtel’s net profit in the next three financial years.

Older ratings included Morningstar Inc, which recommended ‘hold’ with a S$2.20 target on Wednesday (02 December). More aggressive targets came from Credit Suisse at S$3.35 and Macquarie at S$3.21, with both giving an ‘outperform’ call.

How to trade Singtel with IG

Are you feeling bullish or bearish on Singtel?

Either way you can buy (long) or sell (short) the asset using derivatives like CFDs offered on IG's industry-leading trading platform in a few easy steps:

  • Create a live or demo IG Trading Account, or log in to your existing account
  • Enter <Singapore Telecommunications> in the search bar and select the instrument
  • Choose your position size
  • Click on ‘buy’ or ‘sell’ in the deal ticket
  • Confirm the trade

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

Seize a share opportunity today

Go long or short on thousands of international stocks.

  • Increase your market exposure with leverage
  • Get spreads from just 0.1% on major global shares
  • Trade CFDs straight into order books with direct market access

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
liveprices.javascriptrequired
liveprices.javascriptrequired
liveprices.javascriptrequired

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.