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:
IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.
The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.
Please see important Research Disclaimer.
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
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.