Singtel’s dividend misses targets, CEO sees ‘bright spots’ in FY2022

The telco saw net profit for FY2021 decline by half, on the back of hefty impairment charges.

  • Singtel (SGX: Z74) share price opens 2.4% lower on Thursday (27 May 2021)
  • The group’s underlying net profit for the second half of FY2021 fell 22% year-on-year
  • This was slightly higher than UOB and CIMB analysts’ earlier estimates
  • Singtel’s final dividend per share for the year also came in below analysts’ expectations and FY2020’s payout
  • Nevertheless, CEO Yuen Kuan Moon sees ‘bright spots’ in NCS and its data centre services business next year
  • Buy and sell Singtel shares with an IG account

Singtel half-year profit falls 93% due to exceptional items

Singapore Telecommunications' (Singtel) underlying net profit for the second half of FY2021 came in slightly lower than analysts had predicted, falling by 22% year-on-year to S$896 million for the period.

UOB and CIMB analysts had expected underlying profit to contract to between S$900 million and S$1 billion.

Due to exceptional items of S$809 million for six months ended 31 March 2021, which the group had announced earlier, net profit fell 93% year-on-year to S$88 million from S$1.2 billion in the second half of FY2020.

Singtel shares opened 2.4% lower following the release of its financial results on Thursday.

The blue-chip counter has risen roughly 6% year to date. Analyst sentiments published by SGX StockFacts show a consensus rating of ‘outperform’ alongside a 12-month target price of S$2.95 on the stock.

The target price represents a 22.4% upside from Singtel’s last traded price of S$2.41.

Singtel FY2021 dividend misses analysts’ expectations

Across the full year, operating revenue for the full year was down 5% to S$15.64 billion.

EBITDA for the full year was S$3.83 billion, down 16%, while underlying net profit decreased 30% year-on-year to S$1.73 billion from S$2.46 billion.

Factoring in net exceptional charges of S$1.18 billion for the full year, net profit declined 49% to S$554 million. This included non-cash impairment charges for investments in Amobee and Trustwave, which the group also shared on 14 May.

The board has recommended a final ordinary dividend per share (DPS) of S$0.024. This brings the total ordinary DPS for the year to S$0.075, which is 39% lower than FY2020’s total DPS of S$0.1225.

Dividend yield at 3.1% (based on the latest stock price), also falls below analysts’ expectations of a dividend yield of 5% on a forecasted total DPS of S$0.115 for FY2021.

Nevertheless, FY2021’s total dividend payout amounts to approximately S$1.23 billion. This represents a payout ratio of 71% of underlying net profit.

What’s Singtel’s outlook for FY2022?

Mr Yuen Kuan Moon, Singtel Group CEO, said FY2021’s results are ‘disappointing’.

The resurgence of Covid-19 and tightened movement restrictions continue to weigh on regional economies, he added. Against this backdrop, the operating environment remains challenging for the telecoms sector, as companies confront structural changes and elevated capital investment cycles.

‘That said, NCS and our data centre services proved to be bright spots, showing strong growth as enterprises rushed to digitalise and transform their businesses. We will be capitalising on this mass digitalisation with plans for a strategic reset to drive recovery and growth,’ Mr. Yuen stated.

Singtel will also continue to maintain a strong balance sheet through a more active capital management programme.

The group expects dividends from the regional associates to be approximately S$1.3 billion and the group’s capital expenditure including 5G networks, to be around S$2.4 billion, comprising A$1.5 billion for Optus and S$800 million for the rest of the group.

Trade Singtel and other Singapore stocks with IG

Create an IG account or log in to your existing account to get started now.

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

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

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

liveprices.javascriptrequired

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

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.