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Telecom Stocks – Battered Down Buys?
Tradeable, Tradeable Ideas | 29 August 2013
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By: Simeon Ang
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By: Andre Lee
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Tradeable Ideas is a new weekly column by Tradeable. This column focuses on locally listed companies or particular sectors that have attracted strong interest from analysts at various research houses. Tradeable Ideas is meant to serve as a springboard for investors’ interest in specific stocks or sectors in Singapore.

Telecom stocks – A Must-Have In The Dividend Investor’s Portfolio?

Telecommunication stocks are defensive and generally have high dividend payouts, making them a prized target for dividend investors.

As network technologies advance and consumers increase their demand for premium services such as high-speed data plans, it provides telecommunication companies (telcos) with opportunities to expand revenue growth.

The 3 Telecoms In Singapore – SingTel, M1 & StarHub

The three telcos recently released their financial results which either beat or came in line with estimates. The overall consensus is that the local mobile business for all three telcos have benefited from increased subscription to tiered-data plans providing a boost to average revenue per user (ARPU).

This is a trend which some analysts believe to be a continuing catalyst particularly for M1 and StarHub.

It is notable that a number of analysts are not too bullish on SingTel and issued a few ‘Hold’ calls. This is after management issued lower earnings guidance owing to poorer performance from its Optus business in Australia, the weaker Aussie dollar, and lower margins in its Enterprise business.

Tapering – What Does It Mean For High-Dividend Stocks?

With the Fed seen to start tapering its Quantitative Easing (QE) policy at its September meeting next month, this could have negative implications on high yield stocks like telecoms.

In an environment with higher interest rates, dividend plays become less attractive to investors.

Indeed, ever since the market has started to grasp the reality of tapering, high-dividend counters such as REITs have taken the biggest hit. Telecom stocks have inevitably been hit as well.

With this in view, dividend investors might want to be on the lookout for attractive entry points into telcos. After all, they will still be valuable long-term dividend generators.

Daily Chart of GLP

Source: Collin Seow’s CSI Trading System, GLP Daily Chart

The above chart for GLP is selected for short(sell).

The first sell arrow is on 28/8/13.

The peak (Resistance) is at $2.72 and the trough (Support) is at $2.66.

To learn more about the CSI Trading system, please click here.

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This is a co-written article of Shares Investment, which lays out the analytical ideas and thoughts of the authors, who are well versed in investments and market concepts.

Singtel  3.200 -0.01 -0.31%   
Business: Asia's leading communications group. [FY19 Turnover] Mobile Comm (31.1%), Data & Internet (19.2%), Infocomm Technology (17.5%), Sale of Eqmt (16.5%), Digital Biz (7.2%), Fixed Voice (5.2%), Pay-TV (2.1%), Leasing (0.8%), others (0.4%).

Insight: May-19, FY19 operating revenue remained flat at $1... Read More
StarHub  1.330 -0.020 -1.48%   
Business: [FY18 Turnover] Mobile (34.9%), sale of equipment (22.4%), enterprise fixed (21.6%), pay TV (13.2%), broadband (7.9%).

Insight: May-19, 1Q19 total revenue rose 6% to $596.8m attr... Read More

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