Sign up & unlock articles! In my previous article “Singtel share price in nuclear meltdown”, I predicted that Singtel share price will collapse upon the announcement of a dividend cut. Indeed, Singtel share price plummeted upon the release of full-year financial result for FY2020 which saw full-year dividend being reduced to 12.25 cents. This is the lowest dividend since FY2005.
Many analysts may argue that it is the poor financial performance that wrecked Singtel share price. To this end, I do not disagree. Group revenue declined 5% while net profit crashed 65% year-on-year. However, most of the shareholders of Singtel are long-term investors and I honestly doubt that they are spooked by the financial result. It should be the massive cut in dividend that scared the living daylight out of investors.
Year-to-date, Singtel share price had tanked 27%. In fact, Singtel share price has crossed my previous target entry price of $2.60. At this moment, it is too early to tell if it is going to be light at end of tunnel for Singtel share price anytime soon. Nevertheless, at current trading momentum, this counter could test the low of $2.28 seen on 23 March 2020. That was the fateful day in which most, if not all, SGX crashed due to maximum fear induced by COVID-19 pandemic.
If Singtel share price does breach the support level of $2.28, expect all hell to break loose for this leading light of SGX. Under such circumstances, it may not be a bad thing for long-term investors seeking to accumulate this blue chip on the cheap. In this article, I will attempt to analyse the outlook for Singtel in FY2021.
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 on nightmare run
I have been following Singtel share price for a number of years. The last time that Singtel share price sunk to $2.00 level was during the Great Financial Crisis in 2008. The current pandemic crisis has the potential to push Singtel share price to such level but it appears that the worst is over since 23 March 2020. That was when the overall market bottomed. It seems that the current challenge confronting Singtel share price should be the sticky issue of Bharti Airtel and the cut in dividend.
But before we go into details about Bharti Airtel, let’s examine the devastating effects of the COVID-19 pandemic on Singtel share price. The virus has led to global travel restrictions, leading to significant reductions in roaming and prepaid revenues. On the other hand, numerous businesses also reduce their spending in light of the crisis. All these combined to cause all the business segments of Singtel to record lower revenues.
To be fair to the management, it is not a sea of red as Singtel still reported net profit of $1.075 billion. Nonetheless, this is the lowest annual net profit for the telco in more than two decades. Therefore, this explains the crisis of confidence on Singtel share price. Make no mistake, no winter lasts forever and COVID-19 pandemic will blow over in no time.
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