Why are Singtel shares rising?

• Singapore Telecommunications Ltd (SGX: Z74) share price hit a high of S$2.56 on Thursday (23 June 2022)
• Two of the telco’s subsidiaries recently announced new share purchase agreements
• CIMB analysts maintained an ‘add’ rating on the stock earlier this month
• Keen to trade Singtel shares? Open an account with us to long or short the stock

Singtel stock price: what’s the latest?

Singapore Telecommunications (Singtel) shares have risen by 8% since the start of the week, after two of the telco’s subsidiaries entered into new share offers and acquisition deals.

The blue-chip counter, which is down by 5% in the last one month, fell last week after it announced the transfer of the management of its Optus Enterprise division to Optus.

In terms of outlook, Singtel shares have a consensus rating of ‘outperform’ and an average price target of S$3.15 (equating to a 24% upside from its last traded price of S$2.54), based on the latest SGX StockFacts data.

The latest investment thesis came from CIMB’s equity research team, who reiterated an ‘add’ call and price target of S$3.20 on the stock on 1 June 2022.

Their rating is based on the group’s redevelopment of Comcentre, which will net Singtel proceeds of between S$1.2 billion and S$1.3 billion in 2024.

Singtel subsidiaries enter share purchase agreements

On Monday (20 June 2022), the Board of Directors of Globe Telecom, Inc., which Singtel is a principal shareholder of, announced that it has approved a stock rights offer for Globe’s eligible common shareholders.

The Philippines telco expects to raise up to 32 billion pesos (S$827 million), which will be used for the expansion of the mobile and broadband network as well as debt repayment.

‘The proposed stock rights offer will also enable the company to further expand its digital ecosystem and further differentiate itself in the market, as it capitalises on opportunities in and beyond telco,’ Globe said in a press release.

Last week, Singtel Global Investment also announced that it would raise its stake in Thai telco, Intouch Holdings, from 21.21% to 24.99%, by acquiring approximately 121 million shares from Temasek’s Anderton Investments for S$330 million.

Intouch is the parent company of Advanced Info Services (AIS). By acquiring Intouch, Singtel will also increase its economic interest in AIS. AIS, Thailand’s largest mobile operator with over 45 million mobile customers, has been a regional associate of Singtel since 1999.

‘Intouch has been delivering good returns supported by consistently strong execution from AIS in one of the region’s most attractive markets,’ said Singtel Group CEO Mr Yuen Kuan Moon.

‘Our increased investment deepens our partnership with Intouch’s largest shareholder Gulf Energy, and is part of our strategy of actively recycling capital to invest for growth and shareholder returns.’

The transaction is expected to be completed by end June 2022.

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