IntroductionHello everyone, welcome back to my channel where I talk about all things related to personal finance, investing, and retirement planning. Im your host Iggy, and today I have a very exciting topic for you: Why Singtel & ComfortDelGro are Strong Buys now? These are two of the most popular stocks on the Singapore Exchange (SGX), and they have been getting a lot of attention from analysts recently. In fact, both of them have received Strong Buy ratings from multiple sources, which means that they are expected to deliver high returns in the near future. But what makes these stocks so attractive? What are their strengths and opportunities? And how can you invest in them wisely? Singapore Telecommunications Limited (SingTel)The first stock that we are going to look at is Singapore Telecommunications Limited, or Singtel for short. Singtel is a leading telecommunications service provider in Singapore, offering a wide range of services such as fixed, mobile, internet, TV, and more. Singtel has a market capitalization of about S$40 billion as of September 2023, making it one of the largest companies on SGX. It also has a dividend yield of about 4%, which is quite attractive for income investors. But what makes Singtel a Strong Buy right now? Well, there are several reasons for that. Vision and StrategyFirst of all, Singtel recently conducted its Investor Day on August 23rd 2023, where it laid out its vision and strategy for the next three years. The company highlighted some of the key drivers for its revenue growth, such as improved roaming revenues due to the recovery of travel demand post-pandemic, increased adoption of digital services such as e-commerce and cloud computing, and expansion of its 5G network coverage and capabilities. Secondly, Singtel also announced its ambitious goal of improving its return on invested capital (ROIC) from 8% in FY23 to a low double-digit percentage by FY26. To achieve this, Singtel plans to optimize its cost structure by leveraging its scale and synergies across its businesses, reducing its capital expenditure by adopting more efficient technologies, and divesting or monetizing some of its non-core assets such as its stake in Airtel Africa. Buy Ratings from AnalystsThirdly, Singtel has received positive ratings from several analysts who are bullish on its prospects. For example, Kelvin Tan from Maybank confirmed his Buy rating on Singtel’s stock and predicted a 30% growth in its share price. He cited Singtel’s strong cash flow generation, attractive valuation, and potential upside from its regional associates as some of the reasons for his optimism. Other analysts who have rated Singtel as a Buy include HSBC, CGS-CIMB, J.P. Morgan, UOB Kay Hian, and more. According to TipRanks’ consensus forecast, Singtel’s stock has a Strong Buy rating, based on six Buy and one Hold recommendations. The average Singtel share price target is S$2.87, which implies a 20.5% upside from its current trading price of S$2.38. So, as you can see, Singtel is a stock that has a lot of potential and momentum right now. It is well-positioned to benefit from the recovery of the economy and the demand for digital services. It also has a clear and achievable plan to enhance its profitability and shareholder value. And it has the support of many analysts who believe that it is undervalued and has room to grow. SingTel RisksBut what about the risks? Well, no stock is without risk, and Singtel is no exception. Some of the challenges that Singtel faces include:
These are some of the factors that you need to consider before investing in Singtel. You should also do your own research and due diligence, and not rely solely on the opinions of others. ComfortDelGro Corporation LimitedThe second stock that we are going to look at is ComfortDelGro Corporation Limited. ComfortDelGro is a global transportation company with an extensive fleet that includes buses, taxis, and various rental vehicles. The company operates in seven countries, namely Singapore, Australia, China, Malaysia, the UK, Ireland, and Vietnam. ComfortDelGro has a market capitalization of about S$3.5 billion as of September 2023, making it one of the smaller companies on SGX. It also has a dividend yield of about 3%, which is decent for income investors. But what makes ComfortDelGro a Strong Buy right now? Well, there are several reasons for that as well. 10-Month HighFirst of all, ComfortDelGro’s share price reached a 10-month high of S$1.69 on August 30th 2023, driven by a bullish trend that started in June and its Q2 earnings announcement on August 13th 2023. The company reported a strong recovery in its revenue and earnings, thanks to the improvement in its public transport division and its taxi segment. Specifically, ComfortDelGro’s revenue increased by 23% year-on-year to S$1.6 billion in Q2 2023, while its net profit surged by 108% year-on-year to S$61 million. The public transport division contributed 75% of the revenue growth, as ridership increased across all markets due to the easing of lockdown measures. The taxi segment also saw a significant improvement in its operating margin, from -0.4% in Q2 2022 to 14.4% in Q2 2023, as the company reduced its fleet size and increased its rental rates. Zig and partnership with SP GroupSecondly, ComfortDelGro also announced some strategic initiatives that could boost its future growth potential. For example, the company launched a new app called Zig, which is a one-stop platform that allows users to book taxis, buses, trains, bikes, e-scooters, car rentals, and more. The app also offers lifestyle features such as dining deals, events, and attractions. The company hopes that Zig will increase its customer loyalty and engagement, as well as generate new revenue streams. Another initiative that ComfortDelGro announced was its partnership with SP Group, which is a leading energy utility company in Singapore. The two companies will collaborate to install more than 600 electric vehicle (EV) charging points at ComfortDelGro’s premises by 2024. This will support ComfortDelGro’s plan to electrify its fleet and reduce its carbon footprint. Thirdly, ComfortDelGro has received positive ratings from several analysts who are optimistic about its prospects. For example, Shekhar Jaiswal from RHB confirmed his Buy rating on ComfortDelGro’s stock and raised his share price target from S$1.80 to S$1.90. He cited ComfortDelGro’s strong Q2 results, resilient public transport business, and attractive valuation as some of the reasons for his confidence. Other analysts who have rated ComfortDelGro as a Buy include DBS, OCBC, CGS-CIMB, UOB Kay Hian, and more. According to TipRanks’ consensus forecast, ComfortDelGro’s stock has a Strong Buy rating, based on five Buy recommendations. The average ComfortDelGro share price target is S$1.83, which implies a 12% upside from its current trading price of S$1.63. Comfort Del Gro RisksSo, as you can see, ComfortDelGro is a stock that has a lot of potential and momentum right now. It is well-positioned to benefit from the recovery of the transportation sector and the demand for mobility services. It also has a clear and innovative plan to diversify its revenue sources and enhance its sustainability. And it has the support of many analysts who believe that it is undervalued and has room to grow. But what about the risks? Well, just like Singtel, ComfortDelGro is not without risk, and some of the challenges that it faces include:
These are some of the factors that you need to consider before investing in ComfortDelGro. You should also do your own research and due diligence, and not rely solely on the opinions of others. ConclusionSo, there you have it. These are the two stocks that I wanted to share with you today: Singtel and ComfortDelGro. These are two of the most popular and highly rated stocks on SGX right now, and they have a lot of reasons to be optimistic about their future performance.
But remember, investing is not a one-size-fits-all activity. You need to consider your own financial goals, risk appetite, time horizon, and portfolio allocation before making any investment decisions. You should also diversify your investments across different sectors, markets, and asset classes to reduce your overall risk. |
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