Singtel Financial Analysis: Net Profit Decline of 42%

Business Description

Singapore Telecommunications Limited (Singtel) is a major telecommunications company with core business operations in mobile, broadband, and digital solutions. It operates in multiple business segments including Digital InfraCo and NCS, with a geographic footprint spanning Singapore and Australia.

Industry Position

Singtel is a leading player in the telecommunications industry, facing competition from regional companies like Optus, AIS, and Telkomsel. It holds a significant market share in both Singapore and Australia, with a strong presence in digital and enterprise solutions.

Revenue Streams

The company’s revenue streams include mobile services, digital solutions, and enterprise services. Singtel serves a diverse customer base ranging from individual consumers to large enterprises. Its supply chain includes partnerships with technology providers and infrastructure suppliers. Singtel’s competitive advantage lies in its extensive network infrastructure and innovative digital services.

Financial Statement Analysis

Income Statement

Revenue: S\$6.99B, up 9% YoY [[5]].
EBITDA: S\$1.95B, up 27% YoY [[5]].
Net Profit: S\$1.23B, down 42% YoY [[5]].

Balance Sheet

Singtel maintains a strong financial position with a cash balance of S\$2.7B and a net debt of S\$9.7B, largely hedged [[10]].

Cash Flow Statement

Improved free cash flow for both Singapore and Optus, with a total of S\$1.189B [[10]].

Dividend Information

Singtel has declared an interim dividend of 7.0 cents per share, up 35% from the previous period. This includes a core dividend of 5.6 cents and a value realisation dividend (VRD) of 1.4 cents [[11]].

Key Findings

Strengths

• Revenue Growth: Positive revenue trend with a 9% increase [[5]].
• EBITDA Increase: Significant growth in EBITDA, up 27% [[5]].
• Strong Cash Position: Solid cash reserves and improved free cash flow [[10]].

Risks

• Net Profit Decline: A notable 42% decline in net profit due to exceptional gains in the previous period [[5]].
• Currency Headwinds: Adverse impact from stronger SGD affecting regional associates’ PAT [[9]].

Special Activities

Singtel is focusing on cost optimisation and active capital management to improve profitability. The company is also scaling up its digital solutions and infrastructure investments [[3]], [[4]], [[8]].

Investment Recommendations

Current Shareholders

If you are currently holding Singtel stock, it is recommended to hold your position. The company’s strong revenue growth and dividend payouts provide a compelling reason to maintain your investment despite the decline in net profit.

Potential Investors

If you are not currently holding Singtel stock, it is recommended to consider investing. The company’s robust financial position, growth in EBITDA, and attractive dividend yield make it a worthwhile investment opportunity.

Disclaimer

The recommendations provided are based on the financial analysis of Singtel’s half-year results for 2024. Investors should conduct their own research and consider their financial situation before making any investment decisions.

Report Date

The financial report is dated 13 November 2024, covering the half-year results ending 30 September 2024 [[1]].