Singtel Falls 13% After Profit Drop, DBS Upgrades to Buy on May 28

Singapore Telecommunications fell to S$4.35 on May 28, down 13.3% since announcing results on May 21. The telco reported a 21% profit decline and signaled caution for the 2027 financial year. However, DBS Research upgraded the stock to buy, raising its 12-month target to S$5.46, suggesting the sell-off may be overdone. For investors holding special discounted shares, the timing of this weakness matters.

Why the Stock Crashed

Singtel shares fell more than 6% on May 21 alone, dropping from S$5.02 to S$4.70, the largest single-day move since the Covid-19 pandemic. Weaker investor sentiment followed the telco’s cautious outlook for the 2026-2027 financial year. The company reported earnings before interest and taxes growth expectations that disappointed the market, triggering the broader 13.3% decline through May 28.

DBS Sees Value in Bharti Airtel Stake

DBS upgraded Singtel to buy, raising its price target 1.9% to S$5.46 from S$5.36. The upgrade reflects a higher valuation of Bharti Airtel, in which Singtel holds a 27.5% stake. Bharti Airtel accounts for 49% of Singtel’s total valuation. DBS analyst Sachin Mittal expects Reliance Jio’s initial public offering this year to trigger industry-wide tariff hikes in India, benefiting Bharti Airtel and Singtel.

Growth Drivers Remain Intact

DBS projects Singtel’s operating company earnings before interest and taxes to grow 5% in 2027, accelerating to 10% in 2028. Optus, the Australian subsidiary, is expected to stage a strong recovery and drive mid-single-digit group earnings growth in 2027. The data centre business and NCS, Singtel’s growth engine, will support expansion. However, weakness in Singapore’s consumer business and industry consolidation uncertainty may weigh on 2027 results.

What Special Discounted Share Holders Should Know

Singtel special discounted shares will transfer to Central Depository accounts by November 21. A median holder with 1,360 shares would have received S$6,800 at S$5.00 in April, but now faces S$5,872.50 at the current S$4.35 price, a loss of S$927.50. Analysts said the current weakness is likely temporary, suggesting holders may not need to rush selling.

Final Thoughts

Singtel trades at S$4.35, down 13.3% since May 21, but DBS’s buy upgrade and S$5.46 target suggest 25% upside. Meyka rates the stock B with a yearly forecast of S$5.87, indicating the sell-off created a buying opportunity for patient investors.

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