Singtel just announced its first-half results ended 30 September 2018. I actually think that it is a fairly good results being announced considering the intense competition faced by its overseas associate companies and Optus. Operating revenue surprisingly remained resilient and even grow 3% to S$8.4 billion. Margin eroded by over 21% (after normalisation from one-off gain from disposal of Netlink Trust in the previous year) mainly due to lower contributions from Airtel and Telkomsel as well as foreign currency translation losses from the effects of stronger Sing dollars against other currencies.
The only concern I have is that Singtel still has not stemmed the bleeding from Group Digital Life business. It continued with a widening of losses of
based on the first half results. While I understand the importance of investing in this business segment which management seems to believe that there are perceived synergy to exploit on the Group’s service offerings, the results have been depressing for years. They just can’t seem to breakeven despite growth in revenue.
I have previously disposed all my Singtel stocks at prices of S$3.78 level as I do not like the intense competition with TPG jumping into the Singapore market by year-end. With the sharp decline in the prices of Singtel and which I think have been oversold, I have been accumulating new Singtel shares at prices ranging from S$3.060 to S$3.180 recently. The current business model from telecom business is still relevant and Singtel has proven to be defensive in nature over these past few months with lesser trading volatility relative to other blue chips.
An interim dividend of S$0.068 per share has been declared which represented a 2.19% yield based on the last traded price of S$3.10 per share and in line with expectation. Hence Singtel is still on track for its dividend guidance over the next 2 years of S$0.175 per share. This represents an annual yield of 5.65% which is fairly attractive while waiting for the share price to recover.