Top Stock Market Highlights of the Week: Singapore’s Inflation Rate, Singtel’s Business Update and Nvidia’s Latest Earnings

Welcome to this week’s edition of top stock market highlights.

Singapore’s inflation rate

There is more good news for consumers as Singapore’s inflation rate continues to fall.

The latest numbers show that prices rose at a slower pace for the third consecutive month, with core inflation falling to 3.8% year on year in July, down from 4.2% back in June.

Overall inflation, which includes private transport and accommodation, slid to 4.1% in July down from 4.5% in June.

For those who are worried about high utility costs, electricity and gas inflation experienced the sharpest decline in July, falling 1.6% because of lower tariffs.

Economists are expecting more easing in the months ahead in what must be music to many consumers’ ears.

The Monetary Authority of Singapore and the Ministry for Trade and Industry have maintained their overall inflation forecast at between 4.5% and 5.5% for 2023.

Meanwhile, core inflation is projected to come in at between 3.5% to 4.5% for this year.

Singtel (SGX: Z74)

The telco released its fiscal 2024 first quarter (1Q FY2024) business update recently for the period ending 30 June 2023.

Operating revenue dipped by 2.7% year on year to S$3.5 billion, led by an 8% year on year fall in revenue from Optus to S$1.8 billion.

On a constant currency basis, Optus would have reported a 1% year on year increase in revenue on postpaid mobile growth.

The blue-chip group’s Singapore business saw a 2% year on year fall in revenue, dragged down by its legacy carrier business but mitigated by a one-third improvement in roaming revenue as economies reopened.

Singtel’s enterprise business, NCS, posted an encouraging 14% year on year jump in revenue to S$681 million in line with the division’s successful expansion strategy.

The group’s operating profit fell by 8.5% year on year but underlying net profit improved by 14.5% year on year to S$571 million as net finance expenses were slashed by more than half.

Optus will enjoy higher integration benefits and realise cost savings as Singtel moves into the second half of fiscal 2024 (2H FY2024).

Its prepaid price increases and legacy plan migration should also bear fruit in 2H FY2024.

As for Singapore, Singtel expects the continued recovery in travel and tourism to benefit its roaming division.

The group also plans to accelerate enterprise 5G adoption and increase its digitalisation initiatives while integrating both its consumer and enterprise businesses to achieve cost savings.

Singtel’s regional associates pulled off a respectable performance with a 3.7% year-on-year increase in post-tax contributions to S$426 million.

Of note, India’s Bharti Airtel saw its post-tax contribution surge 61.7% year on year to S$139 million while Thailand’s InTouch’s contribution jumped 26.1% year on year to S$26 million.

Nvidia (NASDAQ: NVDA)

Nvidia released a blowout set of results that blew past analysts’ expectations for its fiscal 2023 second quarter (2Q 2024) ending 31 July.

Revenue for the graphics processing unit (GPU) market leader doubled year on year to US$13.5 billion and was up 88% from the previous quarter.

This level of revenue handily beat the consensus analysts’ expectations of US$11.2 billion.

Gross margin hit 70,1%, up a massive 26.6 percentage points year on year.

Operating profit catapulted 13-fold year on year to US$6.8 billion while net profit shot up from US$656 million in 2Q 2023 to US$6.2 billion in 2Q 2024.

A quarterly dividend of US$0.04 was declared, similar to what was paid out a year ago.

Jensen Huang, CEO of Nvidia, remarked that a “new computing era” has begun.

He said that companies are switching to accelerated computing and generative artificial intelligence (AI) and that Nvidia’s GPUs make up the computing infrastructure for these new technologies.

Major cloud service providers have announced infrastructure upgrades while enterprise IT system and software providers announced partnerships with Nvidia to bring AI to every industry.

Nvidia guided for revenue to be around US$16 billion for its 3Q FY2024, which translates into a 170% year on year surge from just US$5.9 billion in the prior year.

The technology company’s shares have been on a tear this year, more than tripling year-to-date from US$143.15 to the current US$471.63.

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

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