Dear readers, Singtel stock reached $2.21 per share on 18 Sep 2020. At this price, Singtel stock price is comparable to the multi-year lows in Oct 2008, during the last global financial crisis. This begs the question: what will Singtel stock price be in the next financial meltdown?
The answer, of course is that Singtel stock price will be low, but will it be lower than $2.21 which it is trading now? My humble thinking is that yes, since Singtel stock price is already at $2.21 now. But will Singtel stock gain some momentum from now and rally next? Well, this really has to do with what investors think of the longer outlook of Singtel.
I believe the overall landscape for the local telecoms is challenging. Just look at the stock of one of the other big three telecom stocks here: Starhub stock. At $1.20 per share, Starhub stock is trading at its lowest at least since year 2005. Yes, Starhub stock is now trading even below the low prices of the 2008 financial crisis.
What is interesting to me is that Singtel stock is trading at 33.6 Price-to-Earnings ratio while Starhub stock is trading at 12.4 Price-to-Earnings ratio (or 0.369 Price-to-Earnings ratio of Singtel). If Singtel stock is to trade at the Price-to-Earnings ratio of Starhub, assuming Starhub Price-to-Earnings is typical of telecom stocks not doing well, we will have Singtel stock reaching $0.82! Is this unthinkable? Can this price happen? Well, before I comment, I would like to highlight the stock and their prices below:
Sembcorp Marine stock: around $3.50 (Oct 2007), now at $0.16
HPH USD Trust: around USD1 (in 2011 during IPO), now at $0.13
SPH stock: around $4.60 (2005), now $1.07
Sembcorp stock: $6.60 (Oct 2007), now $1.33
Golden Agriculture stock: at some $0.80 many years ago to $0.141
Looking at the above, is the possibility of Singtel stock price going down to 82 cents still unthinkable? The reality of stocks is that stock prices are determined by the stock markets and investors who are looking to good and sustained strong performance of companies. Hence if Singtel stock is able to still be perceived as attractive to investor, the price may rebound, else Singtel stock price will head down steadily to 82 cents.
From a close to $4 in Jan 2016 to $2.21 now, Singtel stock is down 45%. If the downward trend continues, I do not rule out a privatisation of Singtel stock, just like that for M1 stock.
Note: this post was first published on SG Stocks Investing on 20 Sep 2020.
BINGE READ ALL POSTS!Visit Home Page for more reads or Connect here!