Welcome to this week’s edition of top stock market highlights.
Singtel (SGX: Z74)
Rumours are swirling about Singtel being in advanced discussions to fully divest its stake in Optus, its Australian subsidiary.
The buyer is allegedly private equity giant Brookfield (NYSE: BN) and the price tag is A$16 billion, according to the Australian Financial Review.
However, the blue-chip telco has released an announcement refuting this claim.
The group confirmed that there is no impending deal to offload Optus at the said sum and that it remains “an integral and strategic part” of the Singtel group.
Singtel reiterated that its current focus is on improving Optus’ network resilience and searching for a suitable CEO for the division.
The telco announced an update on its strategic reset during last year’s Investor Day where it conducted several capital recycling activities.
An initiative involving Optus would not be out of the question but thus far, these news articles have emerged as rumours rather than fact.
Singtel first purchased its stake in Optus back in 2001 for S$11 billion.
Optus has seen its earnings take a hit in the last few years and has also been in the spotlight recently for a major data hack in 2022 and an outage that occurred last year.
Singtel has plans to unlock more value from its assets which CFO Arthur Lang communicated during the group’s media briefing for its 1H FY2024 results ending 30 September 2023.
A further S$4 billion of assets are expected to be monetised in the next two to three years and Singtel has also implemented a programme to drive a 15% reduction in core costs over the next three years.
Reddit, a social media site where people can share information about their interests, hobbies and passions, is seeking to raise as much as US$748 million in an initial public offering (IPO).
The company is planning to sell 22 million shares at between US$31 to US$34 per share and will have a market value of around US$5.4 billion.
Reddit was founded in 2005 and had an average of 73.1 million daily active users for the fourth quarter of 2023.
The social media company reported a net loss of US$91 million on a revenue base of US$804 million for last year.
In 2022, the business reported a larger loss of US$159 million with revenue coming in at US$667 million.
Co-founder and CEO Steven Huffman believes the company has many opportunities to grow both its platform and the overall business.
Advertising revenue remains Reddit’s key income source but Huffman believes that advertising is still evolving and that the company is in the early phase of growing this income stream.
Reddit also announced a deal with Alphabet’s (NASDAQ: GOOG) Google that allows Google’s artificial intelligence (AI) products to utilise Reddit’s data to improve their technology.
These AI products involve large language models (LLMs) that require massive amounts of human-generated data to improve.
DFI Retail Group (SGX: D01)
DFI Retail Group recently announced its 2023 results which saw a sharp improvement in its underlying performance.
Revenue stayed flat year on year at around US$9.2 billion for 2023 but underlying profit soared more than fivefold year on year to US$155 million.
The pan-Asian retailer declared a total dividend of US$0.08 per share, more than double the US$0.03 that was paid out a year ago.
The better performance was driven by 20% year-on-year sales growth for the group’s Health and Beauty business.
The division also enjoyed nearly 130% year on year profit growth as foot traffic recovered from economic reopening.
Gross margin also improved, boosting the division’s performance.
The profit from the Food division, however, fell because of weaker consumer sentiment caused by inflationary pressures along with intense competition.
DFI Retail recognised US$43 million of profit from its associates, a reversal from a loss recognised in the prior year.
Part of the better performance was contributed by Maxim’s as more people dined out.
The retailer’s share of underlying losses from Yonghui, its Chinese supermarket investment, also reduced to US$36 million.
DFI Retail Group generated a positive free cash flow of US$847.3 million for 2023, 21.7% higher than the US$696.1 million it churned out a year ago.
The economic reopening benefitted the retailer’s business last year but CEO Scott Price warned that high interest rates, inflation, and macroeconomic uncertainty will weigh on consumer sentiment this year.
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Disclosure: Royston Yang owns shares of Alphabet.
