Even during times of macroeconomic challenges, analysts are looking at the bigger picture. Considering the strong fundamentals and business growth, they are sticking with some stocks with ‘Strong Buy’ ratings.
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We have shortlisted two such stocks, telco giant Singapore Telecommunications (SG:Z74) and beverage company Thai Beverage (SG:Y92) from the Singapore market, that are enjoying analyst confidence.
Let’s see what makes them the analysts’ favorites.
Singapore Telecommunications Ltd.
Singapore Telecommunications Ltd., or Singtel, is the leading telecom provider in Singapore, operating in mobile, fixed line, internet, TV, cloud services, cybersecurity, etc.
In its first-half results for the fiscal year 2023, Singtel posted a 23% increase in its net profit of S$1.17 billion. This was mainly supported by the exceptional income from the sale of a 3.3% stake in Indian telecom giant Airtel. The sale was completed for S$2.25 billion, which the company is planning to use against its debt and 5G expansion initiatives.
Overall, operating revenue decreased by 5% to S$7.26 billion. The earnings before interest and taxes were down by 3% and also missed analyst expectations. The company is facing tough competition in the Singapore market after the government opened up the space for other players. Also, adverse currency movements affected the numbers.
The company did make up for the shortfall in numbers with its dividends. It announced a dividend of S$.046 per share along with a special dividend of S$.05 per share in its results.
Singtel Share Price Forecast
According to TipRanks’ rating consensus, Singtel stock has a Strong Buy rating with a clear majority of eight Buy recommendations.
The average Z74 target price is S$3.15, which has an upside potential of 21.8% from the current price level.
Analyst Choong Chen Foong from CGS-CIMB reduced the EPS forecast for Singtel by 10-12% for the next two years. Foong mentioned dividends as a ‘positive surprise’ and maintained the Buy rating on the stock. He lowered his target price from S$3.2 to S$3.
Thai Beverage Public Co
Thai Beverage is a Thailand-based beverage company with four business segments: beer, spirits, non-alcoholic beverages, and food. The company has a dominant presence in Southeast Asian markets.
The company stock has shown some good growth in the last two months, largely as a result of better-than-expected 2022 annual results. The stock is trading up by 7% in the last three months after falling by 18% in the last three years.
The company’s annual results saw a positive change with the ease of lockdowns and travel restrictions after the pandemic. With more customers coming back to the pubs and bars, beverage sales have again picked up in Thailand and other countries. The group’s revenues increased by 13.2% to ฿272 billion, with the highest contribution from its beer segment. The net profit was reported at ฿34.5 billion, up from ฿27.3 billion in 2021.
The analyst expects the fiscal year 2023 will be a year of growth for the company, with many upcoming events driving up beverage sales. With a slight relief in commodity prices, the margins could also improve.
Is Thai Beverage a Good Buy?
Based on seven Buy recommendations, Thai Beverage stock has a Strong Buy rating on TipRanks. The Y92 target price is S$0.86, representing a 27% change from the current price level.
Conclusion
Both Singtel and Thai Beverage have seen some tough conditions in the last few years, and some challenges continue to persist. However, the long-term outlook remains positive, earning them a thumbs up from analysts.
