Singtel share price to swim or sink with coronavirus?

With the onset of the coronavirus, many analysts claim that Singtel share is a defensive play because Singaporeans are likely to stay indoors and use data for communications. To this end, I do not dispute. However, as the saga unfolds, my opinion is that this virus could cause more harm than good for Singtel share price. The latest financial result appears to vindicate my thesis.

The third quarter result is bad. Revenue tanked to $4.3 billion from last year’s $4.6 billion while net profit declined 24% to $627 million. Although the result is disappointing, investors must have heaved a sigh of relief after the horror second quarter in which Singtel recorded its first ever quarterly loss because of the Indian Supreme Court’s hefty fine on its associate (Airtel). Singtel share price had slumped to $3.18 at one point but managed to recover much grounds in recent weeks.

The reason for the recovery of Singtel share price could be attributed to tariff hike by Airtel effective 1 December 2019. That move signalled the end of bitter mobile telco price war in India. Following that announcement, Singtel share price surged to stunning high of $3.46 on 2 December 2019. But since then, Singtel share price turned bearish and could not shake off the persistent blue. Why is this so?

Perhaps the sentiments for Singtel share price had turned cautious. Despite the provision for the hefty penalty, it is too premature to claim that Airtel had won the price war in India. On the other hand, Singtel is also facing another major legal dispute, albeit in Thailand. The latest update is, “AIS received a favourable award from the Arbitral Tribunal in respect of the demands for additional revenue share from disputes on roaming rates from 2013 to 2015.” My opinion is that investors should not pop the champagne yet as one of AIS’ disputes with TOT Public Company concerns additional revenue share of $1.63 billion plus interest based on gross interconnection income from 2007 to 2015.

Apart from the legal disputes, the ongoing virus outbreak will likely throw a spanner in the works for Singtel share price. The question now is: what is the bottom for Singtel share price?

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 remain volatile

With a 5-year beta of 0.74, Singtel share price is moderately volatile but the volatility may continue to soar with the Wuhan virus. It appears to me that an emerging aspect of Singtel’s business is being overlooked by investors and that could weigh on the outlook for Singtel share price in the medium term.

While investors’ focus had always been on the mobile business segment, the [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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