Singtel Q1 FY2024 Results: What Singapore Dividend Investors Should Know

August 23, 2023

Singtel stock dividend

Over the past 18 months or so, the Singapore stock market has performed relatively well versus other global stock markets.

One reason is the presence of dividend-paying stocks listed on the SGX. As more mature, profitable businesses, they haven’t been as hard hit by the rising interest rate environment.

For Singapore dividend investors, one recognisable company is Singapore Telecommunications Ltd (SGX: Z74), better known as just “Singtel”.

Singtel, which operates the largest broadband and 5G network in the city state, also owns Optus in Australia, along with sizeable stakes in leading telecoms operators elsewhere in ASEAN as well as in India.

The company recently released its Q1 FY2024 earnings (for the three months ended 30 June 2023). Here’s what Singtel shareholders and dividend investors alike should know about its latest numbers.

Singtel’s underlying net profit rises 15%

During Q1 FY2024, Singtel saw its revenue fall slightly by 3% year-on-year to S$3.5 billion. The company’s net profit fell 23% year-on-year to S$483 million, missing expectations.

However, Singtel’s underlying net profit actually rose 15% year-on-year to S$571 million on the back of net finance expense due that was S$62 million lower and a revaluation loss from a derivative in Q1 FY2023.

The exceptional loss of S$88 million – which contributed to the fall in overall net profit – was driven by a net exceptional loss from Singtel’s Indian associate Bharti Airtel.

The Indian carrier recorded a big hit from foreign exchange losses due to a steep devaluation of the Nigerian naira against the US dollar. Bharti Airtel operates a leading mobile network service in Nigeria.

Strong Singapore dollar impacts Singtel’s regional businesses

For Singtel, the strong Singapore dollar had an adverse impact on its regional associates’ businesses.

The rebound in performance was obvious from a constant-currency basis but in Singapore dollar terms, the higher growth rates were cut down substantially by the strong Singapore dollar (see below).

Singtel Q1 FY2024 regional associates

Source: Singtel Q1 FY2024 earnings presentation

Meanwhile, the core Optus business in Australia is continuing to see improvements on the back of industry price hikes, with Optus raising its prices in May 2023.

While there are targeted efficiency gains and cost rationalisation efforts by management, a weaker Australian dollar could weigh on the unit’s near-term earnings.

Bright spots included Singtel’s NCS business, which is where many new business initiatives sit. The segment saw a 14% year-on-year rise in revenue to S$681 million in Q1 FY2024.

Looking at growth engines for Singtel

Overall, it was a quarter that came in slightly below expectations – mainly due to the stronger Singapore dollar which put a dampener on profits from both its regional associates and Optus.

Singtel management did say that Optus is addressing key operational challenges and seeing improvements.

Meanwhile, the business looks to maintain the growth momentum of some of its newer initiatives, including Digital InfraCo and NCS.

The former secured contracts for new data centre builds and is exploring opportunities in Malaysia.

In the months ahead, Singtel investors should be on the lookout for progress in the Optus business as well as any meaningful news from its growth engines.

Disclaimer: ProsperUs Head of Content & Investment Lead Tim Phillips doesn’t own shares of any companies mentioned.

Tim Phillips

Tim, based in Singapore but from Hong Kong, caught the investing bug as a teenager and is a passionate advocate of responsible long-term investing as a great way to build wealth.

He has worked in various content roles at Schroders and the Motley Fool, with a focus on Asian stocks, but believes in buying great businesses – wherever they may be. He is also a certified SGX Academy Trainer.

In his spare time, Tim enjoys running after his two young sons, playing football and practicing yoga.

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