Singtel full-year results preview: What to expect

• Singtel (SGX: Z74) share price rises to S$2.45 on Tuesday (25 May 2021)
• The group has launched its 5G Standalone network, making it the first Singapore telco to do so
• It is also scheduled to report its second-half and full-year financial results for FY2021 later this week
• Analysts from UOB and CIMB predict that Singtel’s core net profit will decline by at least 18%
• Buy and sell Singtel stocks with an IG account

Singtel share price: What’s the latest?

Singapore Telecommunications (Singtel) shares are up slightly on Tuesday, ahead of the release of its second-half and full-year earnings for 2021 on 27 May 2021.

The group also launched its 5G Standalone (SA) network this week, becoming the first telecommunications service provider in Singapore to do so.

Compared to 4G, 5G SA delivers twice the responsiveness, 30% faster uploads, and strengthened authentication and encryption capability, according to a press release from the telco.

Since last September, Singtel has been operating its 5G non-SA network under a market trial, offering 5G speeds of up to 1.2 Gbps. Since receiving its 5G licence, Singtel has turned on 5G SA and deployed over a thousand 5G sites across Singapore.

The blue-chip counter has risen 6% year to date. Analyst sentiments published by SGX StockFacts show a consensus rating of ‘outperform’ alongside a 12-month target price of S$2.94 on the stock.

The target price represents a 20% upside from Singtel’s last traded price of S$2.45.

Singtel to continue offering 5% dividend yield in FY2021

UOB analysts rated the stock a ‘buy’ on 24 May 2021, while giving a target price of S$2.84 a share.

They expect the telco to continue offering a 5% annual dividend yield in FY2021 amounting to S$0.115 per share, as the projected S$1.21 billion full-year net exceptional loss announced on 14 May 2021 are non-cash in nature.

Singtel booked non-cash impairment charges of US$438 million and US$250 million against its investments in advertising-technology provider Amobee and cybersecurity firm Trustwave, respectively, for the second half of its financial year ended 31 March 2021.

Meanwhile, its Australian telco subsidiary, Optus, will make non-cash impairments and write-downs of A$197 million.

In terms of financial results, the analysts predict that Singtel’s core net profit for the second half of FY2021 are likely to contract to between S$900 million to S$1 billion ‘in the absence of travel-related revenue and a challenging enterprise business environment’, from S$1.145 billion recorded in the same period a year ago.

UOB’s target price means Singtel will trade at 14 times its FY2022 full-year enterprise value/EBITDA. The analysts believe that the group’s earnings weakness has largely been priced in with current stock valuation.

CIMB’s equity research team maintained their ‘add’ recommendation with a higher target price of S$3.10.

The researchers believe that Singtel’s second-half core net profit will come in at S$930 million to S$940 million, representing an 18% to 19% decline year-on-year.

This will mostly be due to declines from Singtel’s Singapore operations, predicted to drop by between 25% and 27%, Optus (down 67% to 68%), Telkomsel and Globe, they added.

Like UOB, CIMB is also ‘not too concerned’ about the projected net exceptional losses given that they are mainly non-cash charges.

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