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4 Singapore Stocks Undergoing a Transformation: Can Their Share Prices Do Well?

(RY) Singtel
(RY) Singtel

As the saying goes – change is the only constant.

Hence, it is safe to say that any company that does not evolve or adapt to changing business conditions is doomed to slowly fade away.

The good news is that the management teams of the following four companies are aware of staying with the status quo for too long.

They have initiated strategic reviews and/or transformations to ensure the organisation can successfully evolve to keep up with the times.

Read on to find out if these transformations can act as catalysts for their share prices.

Singtel (SGX: Z74)

Singtel is Singapore’s largest telecommunication company (telco) and offers mobile, broadband, and pay-TV services.

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The blue-chip group also provides cybersecurity and ICT services to corporations.

The telco’s strategic reset was announced nearly three years back in May 2021 when the group recognised the need for impairment charges and to revitalise its core business.

The good news is that Singtel has been updating investors annually on the status of its strategic reset through its annual Investor Day events.

2022’s Investor Day saw the telco driving growth for its Consumer division while trying to build a regional data centre platform.

It was also trying to increase the contributions from its associates while launching its digital bank in partnership with Grab Holdings (NASDAQ: GRAB).

Last year’s Investor Day saw CEO Yuen Kuan Moon identify several tailwinds for the telco to grow while targeting a double-digit return on invested capital.

Back in January this year, there were rumours that Singtel intended to sell off its Optus subsidiary as part of its capital recycling initiative but this was refuted by the telco.

Singtel posted a respectable set of earnings for the first nine months of fiscal 2024 (9M FY2024).

Although underlying operating revenue fell by 2.8% year on year to S$10.5 billion, core net profit improved by 7.4% year on year to S$1.7 billion.

Investors probably need more patience for this year’s Investor Day to assess the status of Singtel’s strategic reset.

StarHub Ltd (SGX: CC3)

StarHub is also a telco that provides mobile, broadband, and pay TV services along with cybersecurity services.

The telco came up with an ambitious five-year transformation plan called “DARE+” back in late 2021 to deliver total cost savings of S$280 million.

DARE+ was announced on the back of the conclusion of StarHub’s DARE 1.0 strategy which helped deliver more than S$270 million in cost savings and a 15% reduction in the telco’s operating expense level.

The group provided regular updates on its DARE+ strategy also through its annual Investor Day events.

2022’s Investor Day saw the telco achieving better-than-expected synergies with product enhancements being rolled out.

2023’s Investor Day saw a continuation of initiatives planned for new enhancements with the creation of an all-in-one app.

The telco has reported a sharp improvement in earnings for its latest 2023 results and also upped its dividend to S$0.067, 34% higher than the S$0.05 that was paid for 2022.

Its share price has also risen by 13.3% in the past year and if the uplift in revenue and earnings carries on, investors should be seeing better share price performance.

Singapore Post (SGX: S08)

Singapore Post is a mail and parcel delivery provider with an extensive logistics and eCommerce network in Singapore and Australia.

The group recently unveiled the findings from its strategic review where SingPost will rely on five key pillars to transform the business.

Aside from the reorganisation of its divisions, SingPost will also engage in capital recycling initiatives to unlock value for shareholders.

It also plans to scale up its presence in Australia and build its technology footprint to expand internationally.

These goals are lofty and investors will need time to see if they can be well-executed.

According to management, several non-core assets have been identified and may be slated for sale soon to kick-start the strategic review process.

Seatrium Limited (SGX: S51)

Seatrium was formed from the merger between the offshore and marine division of Keppel Ltd (SGX: BN4) and the former Sembcorp Marine.

The blue-chip group also recently announced an Investor Day event where it outlined its vision to transform the group into a profitable enterprise.

Seatrium will employ a four-prong strategy to capture opportunities in oil and gas, wind energy, repairs and upgrades, and carbon capture storage.

Each pillar has a large addressable market with solid growth potential.

Seatrium will also leverage its strong partnerships and good repeat customer track record to capture more contracts in these spaces.

It is still early days, but management is targeting a return on equity of more than 8% by 2028.

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Disclosure: Royston Yang does not own shares in any of the companies mentioned.

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