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Is Singtel a good dividend stock?

Since our last update, shares of Singapore Telecommunications (Singtel) (SGX: Z74) have fallen further to a low of S$2.28 each – the lowest since March 2020’s trough. As at 10:45 SGT on Tuesday 25 August 2020, Singtel shares are trading at S$2.30 each on the IG platform.

  • What is the update on Singtel’s share price?
  • What is the stock’s current 12-month price target and rating?
  • What is the expected dividend yield for Singtel?

Singtel stock analysis: what is the update?

Since our last update, shares of Singapore Telecommunications (Singtel) (SGX: Z74) have fallen further to a low of S$2.28 each – the lowest since March 2020’s trough.

As at 10:45 SGT on Tuesday 25 August 2020, Singtel shares are trading at S$2.30 each on the IG platform.

As previously reported, the stock’s current bearishness has come on the back of lower-than-expected Q1 operating revenues.

The telco posted an operating revenue of S$3.54 billion for the first quarter ended 30 June 2020, 14% lower than that of Q1 2019/2020’s S$4.1 billion. The reported figure also missed analyst estimates of S$3.62 billion by 2.3%.

Share price fell as much as 7% subsequently.

IG’s market analysis shows that ‘buys’ form 55% of all trades on the Singtel counter today and 59% of all trades across the week so far.

Additionally, 94% of client accounts also currently hold ‘buy’ (long) positions on the stock, indicating an expectation for Singtel’s share price to rise in the immediate term.

Are you ready to trade Singtel shares?

Start today by opening a live or demo IG trading account.

Singtel’s current price target equates to 33% upside

Despite the present share price weakness, top investment analysts still envision significant upsides for the stock in the next 12 months.

Singtel currently has a 12-month consensus share price target of S$3.06, alongside an average rating of ‘buy’ – based on a Bloomberg poll of 17 brokers.

The price target represents an upside of roughly 33% from the last traded price.

Although RHB analysts on 18 August 2020 downgraded their target price on the stock to S$3.20 per share from S$3.40 citing the company’s worse-than-predicted earnings, they still maintained a ‘buy’ recommendation.

While the analysts also cut their FY2021 to FY2023 full-year core earnings by 12% to 14%, they nevertheless predict that there will be ‘some earnings respite’ in the second quarter of 2021 with ‘mobility restrictions progressively easing’.

JP Morgan’s equity research team reiterated an earlier price target of S$2.65 with a ‘neutral’ rating, stating that they see ‘limited near-term catalysts’.

However, the researchers noted that there are some key upside factors that could lift share price, including a stabilisation in Singapore mobile revenues, an improvement in Australian enterprise sales, as well as a strengthening of the AUD/SGD.

Why one analyst called Singtel a ‘dividend play’

Meanwhile, Morningstar analysts presented the most bearish price target of the lot at S$2.30 per share (down from S$2.55 previously) on a ‘narrow moat’ (hold) rating, citing Singtel’s reduced market share in both Singapore and Australia as a main driver of the downgrade.

‘Moreover, Optus is struggling for profitability after removing the one-off NBN payments. We retain our narrow moat rating for the company but would recommend investors wait for a better price to buy,’ they concluded.

Nevertheless, Morningstar has rated the stock at a price-to-earnings ratio of 18x, which is still slightly above its 10-year average.

The firm also reiterated the stock’s dividend potential – calling it a ‘dividend play’, putting their base case at S$0.09 per share in fiscal 2021.

This figure would give the blue-chip an annual dividend yield of 3.9%. Singtel’s dividend yield for the last financial year ending 31 March 2020 was roughly 7.5%.

How to trade Singtel with IG

Are you feeling bullish or bearish on the Singtel stock? Either way you can buy (long) or sell (short) the asset using derivatives like CFDs offered on IG’s industry-leading trading platform in a few easy steps:

  1. Create a live or demo IG Trading Account, or log in to your existing account
  2. Enter <Singapore Telecommunications Ltd (SGX)> in the search bar and select the instrument
  3. Choose your position size
  4. Click on ‘buy’ or ‘sell’ in the deal ticket
  5. Confirm the trade
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Czech Aug Industrial Production Rebounds Sharply

Czech industrial production surged in August, after falling sharply in the previous month, figures from the Czech Statistical Office showed Friday.

Industrial production expanded 13.1 percent year-over-year in August, reversing a 14.1 percent plunge in July. That was well above the 8.3 percent climb expected by economists.

On a working-day-adjusted basis, industrial production advanced 7.7 percent in August from a year ago.

Manufacturing production grew 16.6 percent, while mining and quarrying output declined by 4.6 percent.

Month-on-month, industrial production increased a seasonally adjusted 12.1 percent in August.

Separately, the statistical office revealed that construction output decreased 5.9 percent yearly in August, following a 16.3 percent slump in the prior month. Compared to July, construction output gained 0.8 percent

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New Zealand’s first Fairtrade Climate Neutral Coffee

Fairtrade have launched New Zealand’s first climate neutral coffee, which not only helps fight climate change, but also supports communities in developing countries. In partnership with Countdown, the Climate Neutral Coffee is exclusively available at Countdown as part of their Macro brand.

Fairtrade Climate Neutral Coffee means that the coffee production, from the farm right through to the supermarket shelf, has no negative impact on the climate. To achieve this, all participants in the supply chain first work to reduce their emissions and then offset the remaining emissions through the purchase of carbon credits from Fairtrade coffee farmers.

The carbon credits are generated by climate projects in Fairtrade farming communities, such as reforestation projects in Peru, the country where the coffee originates. These initiatives help Fairtrade farmers not only to combat the impact of climate change but also to earn additional income from the sale of their carbon credits.

Countdown partnered with Fairtrade Australia & New Zealand to develop the Climate Neutral Coffee exclusively for their Macro Organic range. The innovative product maintains Countdowns commitment to providing great quality products, while also helping to minimise their impacts on the environment.

James Walker, Countdown General Manager of Corporate Affairs says, “We’re pleased to extend our range of Fairtrade certified products, and be the first to launch a Climate Neutral Coffee in New Zealand.

“Demand for certified products continues to increase and this launch showcases our commitment to providing ethical and sustainable choices to our customers. The range is not only quality Arabica coffee, but it is also organic, Fairtrade certified and Climate Neutral.”

“With stores all around New Zealand, doing our bit to reduce our carbon footprint and operate sustainably is something the Countdown team is passionate about. In June this year we won the Ministry for the Environment’s Green Ribbon award in the ‘Resilience to Climate Change’ category for our work in increasing our energy efficiency and reducing our carbon emissions. We are actively working to improve how we do business to reduce the impact we have on the environment.

Molly Harriss Olson, CEO of Fairtrade New Zealand says, “We applaud Countdown for being a market leader in sustainability and are proud to partner with them on this innovative range. By choosing Fairtrade products, consumers are supporting a global system which is empowering and enabling 1.65 million farmers in 74 countries to adapt to climate change,” says Mr Walker.

“What makes Macro Fairtrade Climate Neutral Coffee truly unique is that the carbon compensation also takes place in the Fairtrade coffee supply chain. This means that Fairtrade farmers and their communities are benefitting from a fair price for their coffee as well as additional income from the carbon credits.”

All Fairtrade Carbon Credits are certified by Gold Standard, an organisation specialising in climate security and sustainable development. Gold Standard works to maximise the impact of climate and development interventions by creating robust standards for responsible management of the planet’s resources. Together Fairtrade and Gold Standard are uniquely placed to play a part in the global response to climate change

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Daily Financial News

ECB Minutes show no indication of exit discussion – MUFG

Derek Halpenny, European Head of GMR at MUFG, suggests that the release of the minutes from the September ECB policy meeting were pretty clear with the focus still very much on ensuring continued monetary stimulus.

Key Quotes

“The minutes stated that “there should be no doubt” that the Governing Council is determined to execute asset purchases and also emphasised that it would adopt further measures as required to reach its price stability goal. The minutes also showed that the Governing Council felt it was “crucial” to maintain the high level of monetary accommodation.

Add to that, we had comments yesterday from key ECB Council members to emphasise the maintenance of the current stance. Executive Board member Praet stated that recovery would stall if stimulus was removed prematurely while Constancio was more direct stating that the report on the ECB nearing a taper consensus was simply not correct.

So the stance of the ECB is unlikely to change and we maintain that the ECB will extend QE in December at the current pace with alterations recommended by staff committees allowing for an extension. While that in itself might not drive the euro weaker, it certainly limits the upside as we move toward that key meeting in December.”

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