SINGAPORE - Shares of the local telcos are trading at such highs these days that some analysts are suggesting it might be best to hold off buying any more stock or even getting out altogether.
The shares have been scaling dizzy heights, rising by between 18 per cent and 26 per cent this year.
SingTel traded at a 52-week high of $4.05 last Wednesday while M1 hit a record $3.49. StarHub shares hit a record high of $4.73 on Wednesday in the previous week.
Mr Ramakrishna Maruvada, head of South-east Asia and India telecoms research at the Daiwa Institute of Research, believes that could be as good as it gets.
"We have a hold rating on all the three telco stocks as they are all fairly valued on a six-month view," he notes.
The research firm has a target price of $4.05 for SingTel - around its level now - but only $4.06 for StarHub and $3 for M1.
Some analysts advised investors to get out of SingTel after the telco announced its fourth-quarter results last Wednesday.
Earnings fell 33 per cent to $868 million due to exceptional losses, with huge outlays in the pipeline, including continuing investments in fourth-generation (4G) and 3G mobile networks, as well as an enlarged dividend range.
It declared total dividends of 16.8 cents for the year - a payout ratio of 74 per cent, up from 60 per cent a year ago.
Maybank Kim Eng analyst Gregory Yap is not hopeful about short-term returns in view of the firm's capital expenditure rise of 25 per cent to $2.5 billion in the next year.
SingTel and its regional associates are among 12 applicants able to submit bids by June 3 for two telecoms licences in Myanmar. The winners will be announced by June 27.
South-east Asia's largest telco is also allocating $2 billion over the next three years to expand its mio TV pay-TV business overseas and acquire digital content start-ups.
Meanwhile, StarHub has been rated "hold" or "sell" as analysts urge investors to make the switch to what they regard as the only bright spark - M1.
OCBC Investment Research has downgraded StarHub from "hold" to "sell" at a target price of $4, with analyst Carey Wong noting after the telco's results came out last week: "While part of the run-up could be driven by investors searching for yield, current valuation looks pricey."
StarHub reported 3 per cent growth in net profit to $91 million for the first quarter but revenue declined 2 per cent to $580 million.
Revenue growth for the year was revised downwards to "low single-digit" from "single-digit".
M1 is the top pick of Maybank Kim Eng and CIMB Research, which believe it can lift its average revenue per user much faster than SingTel and StarHub.
Last September, it was the first to achieve islandwide 4G network coverage. It is also the only telco to raise mobile data prices - by $3 - in the last eight months.
The relative underperformance of M1's stock this year against its rivals gives investors a better chance "to get in early on potential earnings upside from the adoption of 4G", said Mr Yap.
Last month, M1 posted a 1.8 per cent rise in first-quarter net profit to $41 million but revenue fell 7 per cent to $243 million.
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