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3 Numbers About SingTel That Maybe Useful For Value, Growth and Income Investors

There are mainly three types of stock market investors, namely, value, growth and income investors. Given their different investment objectives, these investors could use different metrics to search for investment ideas.

In this article, we will look at 3 different numbers in Singapore Telecommunications Limited (SGX: Z74) that maybe of interest to these three distinct groups of investors.

Growth

Growth investors are interested in companies that have a good historical track record of high growth rate and a potential to continue the growth into the foreseeable future.

Usually, these investors will use historical revenue and profit growth trends as a starting point.

So how has SingTel performed in the last five years in terms of revenue and operating profit growth?

S$ million
2012 2013 2014 2015 2016
Revenue 18,825 18,183 16,848 17,223 16,961
Operating Income 3,223 3,032 3,136 2,944 2,819
Revenue growth 7.11 4.18 -3.41 -7.34 2.22
Operating income growth 0.54 -5.94 3.44 -6.14 -4.25

Here, we see that both revenue and operating profit has declined by 10% and 13% respectively in the past five years.

Dividend

Dividend or income investors look for companies with high dividend yields and high sustainability of future dividend payment.

At S$3.94, SingTel is trading at a trailing dividend yield of 4.4%, which is higher than SPDR Straits Times Index ETF (SGX: ES3) yield of 3.23%.

Next, to assess the sustainability of dividend payment, we will look at two numbers – debt/equity ratio and profit pay-out ratio. Generally, the lower the ratios, the more sustainable could be the dividend payments.

Here, SingTel’s latest debt/equity ratio is about 36% and profit pay-out ratio is 75%.

Value

Value investors look for bargains. They try to pay less than $1 for each dollar of investment.

Though there are many ways that value investors use to judge the attractiveness of an investment, they tend to use some form of valuation metrics in their evaluation process.

Here, therefore, we will compare SingTel to the SPDR Straits Times Index ETF from the perspective of two simple valuation metrics – price-to-book (PB) ratio and price-to-earnings (PE) ratio.

Current price Price to book Price to earnings
SingTel S$3.94 2.47 16.19
STI Index 1.15 11.95

Here, we can see that both ratios are above that of the STI Index.

Conclusion

Overall, we can see that SingTel may not be of too much interest to the growth and value investors However, income investors may find SingTel interesting due to its dividend yield.

What we have seen above may provide some insights into SingTel key numbers. Nevertheless, these numbers should only be used as the starting point for further research before making any real commitment.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies