What a gory correction. After delivering a set of disappointing quarterly results that saw Singtel clocking the seventh consecutive quarter of declining profits, Singtel share price tumbled from a high of $3.55 in July to a low of $3.12 on 27 September. The 12% correction would have caused long-term investors to panic. Question now is: where would Singtel share price go from here?
On 2 July 2019, I highlighted that Singtel share price would be entering a dark chapter but is still considered an excellent investment for the long run due to the telco’s massive regional presence. Thus, investors should stay calm despite Singapore share price volatility. To make money out of this counter, investors should set the appropriate entry price.
Based on the current form, it seems that Singtel share price is likely to continue its bearish streak. Perhaps this could be a sign of things to come. For sure, the coming 1H results would dictate the form of Singtel share price. Unless the management announced significant moves that would provide positive catalyst to Singtel share price, such as the monetization of its loss-making ventures (cybersecurity and digital life businesses), it would take some serious effort to reverse the bearish sentiments for this leading light of SGX.
Singtel share price lost form
Being one of the largest constituents of Straits Times Index (STI), Singtel share price had been pretty resilient despite the unfolding telco war. Current dividend yield is 5.6%. This means that Singtel share price is currently being traded at very attractive level.
Of course, whether the yield is sustainable hinges on the operating cash flow. To this end, 1QFY2019 result revealed that operating cash flow was $1.75 billion. If Singtel maintains its dividend policy of 17.5 cents per share for the financial year ending 31 March 2020, the net cash from the operating cash flow should be sufficient for the dividend payouts.
Based on past years’ data, SingTel share price never fail to correct in the second half of the year, the traditional period after the issuance of SingTel final dividends. In 2018, Singtel share price fell from $3.30 in July to a low of $2.80 by end of the year. On 28 July 2017, SingTel share price collapsed from $4.00 to reach $3.68 in September 2017. Prior to that, SingTel share price fell from a high of $4.30 on 22 July 2016 to a bottom low of $3.65 on 31 December 2016. The year 2015 was another horror ride for shareholders as the correction was even worse – falling from a giddy high of $4.34 on 24 July 2015 to reach a mind-boggling low of $3.56 in October 2015.
Key battles for Singtel
Performance of regional associates continued to weigh on Singtel share price. In the first quarter, [This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only. To read the full content, please sign up as member.]
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