• Singtel, NetLink NBN Trust and StarHub represent the most traded stocks of Singapore's Telecommunication Sector, and have averaged 2.6% YTD total returns, after averaging 7.0% total returns in 2023. StarHub has led the trio over the past 14 weeks, and last week returned to Sep 2022 levels.

• StarHub has reported that its ROE for FY23 increased to 20.7% compared with 10.2% in FY22, highlighting that it is evolving from a traditional telecommunications provider to a dynamic digital ecosystem player, embracing cloud computing, cybersecurity, artificial intelligence, and IoT.

• Singtel booked the sixth highest net institutional inflow in the local market over the past 14 weeks. Following speculation Singtel was potentially exploring some divestment of Optus, the ratio spread of the Singtel share price to the AUD/SGD currency pair soared to 2 SD above the 6-month mean, returning to the mean at the end of last week.

Singapore's most traded stocks of the Telecommunications Sector, Singtel, NetLink NBN Trust and StarHub, have averaged 2.6% total returns in the 2024 year to 5 April, on S$46 million of combined net institutional inflow. This means over the past 14 weeks, the Sector has seen the second highest net institutional inflow, after the Industrials Sector.

For price performances, StarHub has led the trio over the past 14 weeks, with an 8.1% price gain. The stock is also scheduled to go ex-div on 29 April with a 4.2 cents per share final dividend for FY23. This brings the FY23 total dividend for StarHub to 6.7 cents, above the previous guidance of at least 5.0 cents per share. StarHub released its FY23 Annual Report last week, highlighting that it is evolving from a traditional telecommunications provider to a dynamic digital ecosystem player, embracing cloud computing, cybersecurity, artificial intelligence, and IoT. For its FY23, StarHub achieved its DARE+ milestone of S$150 million in Net Profit Attributable to Shareholders (NPAT), a target set at the end of FY21.

StarHub also reported that its Return-on-Equity (ROE) for FY23 increased to 20.7% compared with 10.2% in FY22. Using standardised metrics, Refinitiv and the SGX Stock Screener calculates the StarHub ROE to be 25.8%. With the comparatively high 25.8% of StarHub, the trio average a 13.9% ROE ratio and an average Price-to-Book (P/B) ratio of 2.1x.

According to Bloomberg data, global communication large, mid and small cap stocks also maintain a comparable median P/B ratio of 2.1x, with a median ROE of 8.1%. The table below details more past performance and net institutional fund flows of the three stocks:

Note: ADT refers to average daily turnover; NIF refers to net institutional flows; TR refers to total returns, RCETP refers to Refinitiv consensus estimates target price which represents the average of individual estimates provided by analysts covering the stock. Estimates typically represent an analyst's opinion of the stock performance over the next 18 months. Source: SGX, Refinitiv (Data as of 5 April 2024)

ROE measures how efficiently a stock has used its shareholder equity to generate profits. A higher ROE indicates the business has been more efficient in converting equity into profit. Note that ROEs are not forward looking and do not take into account profit guidance. The SGX Stock Screener standardised calculation for the StarHub ROE, is based on the FY23 profit after taxation, net of distributions paid on perpetual capital securities, while adding comprehensive income attributable to non-controlling interests. The SGX Stock Screener ROE is also based on an average of the equity attributable to owners and perpetual capital securities holders in 2HFY23 and 2HFY22.

The Singtel share price has been on the move since the end of Feb, gaining from S$2.35 on the 29 Feb close, to S$2.53 at the end of March, and back to S$2.40 on 5 April. Market speculation began in mid-March that Singtel was exploring some divestment or partial divestment of its  Optus Australian unit.

Recent years have seen Singtel conduct strategic asset recycling with partial divestments of its international assets. This has included the divestment of a 3.3% stake in Airtel, the sale of Amobee to Tremor International, and the divestment of its 70% equity stake in Australia Tower Network. On 3 April, Singtel reiterated that there is no impending deal to divest Optus which remains a strategic and integral part of the Singtel Group.

Optus is the number two mobile player in Australia, with the key downside currency risk for Singtel shareholders a decline in the value of the AUD to SGD. In FY23 (ended 31 March), 52% of Singtel's consolidated revenue was reported to Australia. Following speculation Singtel was potentially exploring some divestment of Optus, the ratio spread of the Singtel share price to the AUD/SGD currency pair soared to 2 SD above the 6-month mean, and reverted back to the mean at the end of last week.

Singtel shares have also seen more trading activity this year, with close to S$70 million of shares changing hands each day over the past 14 weeks, compared to S$50 million a day for the full 2023. Singtel completed its FY24 at the end of March, and is expected to report its full year financials around 27/28 May.

Further Resources and Research

Recent Financial Results/Business Updates

• Singtel: Singapore Telecommunications 1HFY24 Financial Results

• StarHub: StarHub FY2023 Financial Results | StarHub FY2023 Annual Report

• NetLink NBN Trust: NetLink NBN Trust 1HFY24 Financial Results

Related Analyst Reports

• Singtel: DBS - Singtel Update : Two reasons to expect a rally finally | DBS - Singtel update : Focus on core operating profit trajectory

• Starhub: DBS - StarHub Update : Pleasant surprise from lower transformation costs

• NetLink NBN Trust: CGS-CIMB - Netlink NBN Trust Update : Finalised ICO pricing removes overhang

Company interviews

• Singtel: 5 in 5 with Singtel - Empowering Every Generation

• StarHub: kopi-C with StarHub's CEO: "There's no other telco like ours"

• NetLink NBN Trust: 10 in 10 with NetLink NBN Trust - Connecting Smart Singapore