Singtel share price hit 4-year high

August 31, 2024 sgwealthbuilder 495 Views 0 Comments

Lifetime Membership High, high into the sky! On 30 August 2024, Singtel share price smashed to a 4-year high to cross the pivotal $3.10 mark. The last time that Singtel share price was trading at this level was in February 2020 – the period right before the stock market plunged into chaos due to the pandemic. Fast forward four years later, even though Singtel share price had crossed the pivotal $3.10 mark, the counter has yet to fully recovered to the pre-pandemic levels.

The shaky confidence in Singtel share price is rightfully understandable. Those who are vested in this counter are mostly long-term investors who view Singtel as a dividend stock. Yet under the helm of the former CEO Chua Sock Koong, the company bizarrely took on a growth model trajectory as the management emphasized more on revenue growth through various acquisitions of loss-making digital companies. After the current CEO Yuen Kuan Moon took over in 2021, he managed to steer the ship back on course and re-fashioned Singtel as a dividend stock again.

It is still early days for investors to claim that Singtel share price has truly bottomed but the latest form of the shares represented a small win for investors. For the past four years, Singtel share price has been in such a wretched form that investors must be wondering if daylight will ever arrive for this major STI component. The key factor for the bearish Singtel share price was largely attributed to the subpar business performances caused by the loss-making digital investments and various legal disputes for its regional disputes. Against this backdrop, the recent bullish form of Singtel share price must be a pleasant surprise and should bring much cheers for many investors.

To make matters worse, the changes made to SGX Securities Borrowing and Lending (SBL) programme lend support to short selling activities. With effect from 2 December 2019, SGX replaced the fixed rates for SBL programme. The borrowing rates for index stocks had been dramatically reduced from 6% per annum to a low of 0.5% per annum! For the records, the borrowing rate is only 0.25% per annum for Singtel shares! At such dirt- cheap rate, the big boys can easily afford to short Singtel share price as and when they like. As at 26 Aug 2024, the lending pool for Singtel shares amounted to 18.3 million.

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The impact of short-selling activities on Singtel share price can be seen in March 2024. On 13th March, short selling volume on Singtel swelled to a 20 million and then nearly 30 million on 14th March. Apparently, short-sellers went in for the kill following the adverse news of Singtel losing its Australia court case on the financing of the acquisition of Optus.

In my opinion, the sudden swing of Singtel share price on 26 July 2024 could be due to Singtel’s response to shareholders’ query before the AGM on steps taken by the management to improve Singtel share price. The management shared that their strategic reset in the past three years have yield positive outcomes – simplifying the operating structure, scaling of growth engines (NCS and Nxera), exiting from loss-making digital investments (Amobee and Trustwave), as well as recycled $8 billion of capital.

Whilst the strategic reset has restored considerable confidence in Singtel share price, the management is not resting on its laurels as they embark on the next phase of growth through Singtel28. The aim is to enhance share value and dividends in the form of “value realisation dividend (VRD)”. Through asset recycling initiatives, the management foresee an estimated pipeline of $6 billion worth of VRD in the medium term.

Indeed, since Yuen Kuan Moon took over the helm, the annual dividends for Singtel has risen consistently from 7.5 cents in FY2021 to 15 cents to FY2024. Whilst the dividends have not restored to the pre-pandemic levels of 17.5 cents to 20.5 cents, the recent initiatives to improve dividends should be encouraging for shareholders. Due to the introduction of VRD, my view on the outlook of Singtel share price has changed and am tempted to take a small position in this counter.

Note that this is an opinion article and not meant to be a financial advice. Please do your due diligence or engage financial advisors before investing in the stock market. Furthermore, I am not vested and have never invested in Singtel before. Whether Singtel share price will surge or collapse has no impact on me. Thus, this article is not meant to induce readers to make any form of investment decisions.

Singtel share price to ride with Singtel28?

Time flies. It has been more than three years since Yuen Kuan Moon took over as Group CEO. In my previous article in 2021, I wrote that investors should be patient and give the CEO at least three years to prove his mettle. In my opinion, Yuen Kuan Moon has been [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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