Singapore Telecommunications Limited (SGX:Z74) Stock: Strong Performance, Weak Fundamentals

Ladies and gentlemen, let me tell you something: Singapore Telecommunications Limited (SGX:Z74) is on a roll! The stock has been climbing like a rocket, with a 35.18% increase over the past year. But hold onto your hats, because the fundamentals tell a different story. Let's dive in and see what's really going on with this telecom giant.

First, let's talk about the good news. The stock has been on a tear, with a 4.27% increase in the past month alone. The 52-week high of S$3.45 shows that investors are bullish on this company. But before you jump in, let's take a closer look at the numbers.



The recent financial results show a mixed bag. Revenue for the third quarter of 2025 was S$3.63 billion, up 1.0% from the same period last year. But the net income of S$1.32 billion is a whopping 184% increase, thanks to a one-off gain from the sale of assets. This boosted the profit margin to 36%, up from 13% last year. Impressive, right? But don't get too excited just yet.

The earnings are forecast to grow by 24.81% per year, which is higher than the industry average of 4.0%. That sounds great, but there are some red flags you need to know about. The dividend of 4.94% is not well covered by earnings or free cash flows. This means the company might be paying out more than it can afford, which could lead to a dividend cut in the future. And let's not forget about the large one-off items impacting the financial results. The profit margins have dropped from 21.9% to 5.3%, which is a big concern.

Now, let's talk about the dividend policy. The company has increased its dividend payout in recent years, which is great for income-focused investors. But with the dividend not well covered by earnings or free cash flows, there's a risk that this trend might not continue. The company has identified about S$12b-13b in monetisable assets that could be returned to shareholders, which could lead to higher value-realisation dividends in the future. But until that happens, investors need to be cautious.

So, what does all this mean for the stock? The strong performance is great, but the weak fundamentals are a cause for concern. The company's earnings growth and potential for value unlocking are positive signs, but the dividend policy and financial health are red flags that investors need to consider. If you're thinking about buying this stock, do your homework and make sure you understand the risks involved.

In conclusion, Singapore Telecommunications Limited (SGX:Z74) is a stock with a lot of potential, but it's not without its risks. The strong performance is impressive, but the weak fundamentals are a cause for concern. If you're an investor looking for growth, this stock might be worth a closer look. But if you're focused on dividends, you might want to steer clear until the company's financial health improves.