StarHub – Phillip

Great start to the year! But still too pricey!

Company Overview

Starhub (STH) is the 2nd largest Telecommunications company in Singapore. The company also has a very strong PayTV franchise with subscriber base of more than 500k that is 60% larger than its closest competitor.

Strong start with 28% increase in profits

Stagnant subscriber acquisitions a disappointment

Guidance maintained for DPS of 20.0cents

Maintain Neutral with revised TP of S$2.94

What is the news?

Starhub posted a very strong set of results in the first quarter of the year with profit increase of 28% on the back of 6% growth in sales. The strong set of sales was led by higher Postpaid mobile (+6% y-y) and PayTV (+4% y-y) revenue. Starhub exhibited strong cost control for the quarter with lower marketing and promotion expenses as the key source of variance from our expectations. Starhub maintained its guidance of low single digit revenue growth and DPS of 20.0cents for the year.

How do we view this?

The results were above our expectations. However, subscriber acquisitions were slightly disappointing with relatively stagnant Mobile, PayTV & Broadband subscriber base. We think that the key source of earnings uncertainty for this year’s results would be in 2QFY12, where Starhub would likely book in significantly higher content cost for Euro 2012. Despite its low gearing with Net Debt to EBITDA of c.0.5X, management highlighted that there would be no capital management this year and maintained their guidance of 20.0cents DPS in the year.

Investment Actions?

We maintain our view that Starhub’s stock is fairly pricey at current levels and see little upside from hereon. Maintain Neutral.

StarHub – Phillip

Great start to the year! But still too pricey!

Company Overview

Starhub (STH) is the 2nd largest Telecommunications company in Singapore. The company also has a very strong PayTV franchise with subscriber base of more than 500k that is 60% larger than its closest competitor.

Strong start with 28% increase in profits

Stagnant subscriber acquisitions a disappointment

Guidance maintained for DPS of 20.0cents

Maintain Neutral with revised TP of S$2.94

What is the news?

Starhub posted a very strong set of results in the first quarter of the year with profit increase of 28% on the back of 6% growth in sales. The strong set of sales was led by higher Postpaid mobile (+6% y-y) and PayTV (+4% y-y) revenue. Starhub exhibited strong cost control for the quarter with lower marketing and promotion expenses as the key source of variance from our expectations. Starhub maintained its guidance of low single digit revenue growth and DPS of 20.0cents for the year.

How do we view this?

The results were above our expectations. However, subscriber acquisitions were slightly disappointing with relatively stagnant Mobile, PayTV & Broadband subscriber base. We think that the key source of earnings uncertainty for this year’s results would be in 2QFY12, where Starhub would likely book in significantly higher content cost for Euro 2012. Despite its low gearing with Net Debt to EBITDA of c.0.5X, management highlighted that there would be no capital management this year and maintained their guidance of 20.0cents DPS in the year.

Investment Actions?

We maintain our view that Starhub’s stock is fairly pricey at current levels and see little upside from hereon. Maintain Neutral.

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