UOB Kay Hian raised its target prices on Singapore telecommunication firms - Singapore Telecommunications, StarHub and M1- as they are considered more attractive amid low interest rates.
The broker increased its targets on SingTel by 12.6%, M1 by 11% and StarHub by 10.6%. On Thursday, StarHub shares were up 1.1% at $3.62, SingTel was 0.6% higher at $3.50 and M1 was flat at $2.58.
Interest rates in Singapore, which are highly correlated to those in the United States, are expected to remain exceptionally low for an extended period of time, UOB Kay Hian said.
Singapore telcos offer yields that have become increasingly higher than government bond yields.
“Telcos in Singapore have consistently provided attractive dividend yield, coupled with regular episodes of capital management exercises and are thus correctly perceived as yield plays,” UOB Kay Hian said.
It added that sector catalysts include increased usage of wireless broadband, differentiated services and implementation of lower caps on mobile data.
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