StarHub – Lim and Tan

• StarHub made its first share buy-back under the mandate to buy up to 171.587 mln shares: it bought 343,000 shares yesterday at $2.83 each.

• Under the previous mandate, StarHub bought a total of 2 mln shares.

• We believe StarHub’s program is simply one way to enhance shareholders value, other than paying good dividends.

• Quarterly dividend rate has been steady for a while at 5 cents a share, translating to 7.1% yield.

• We find this attractive enough, given the rich free cash flow the telco generates ($420 mln in year-to-date vs $308 mln a year ago), already sufficient to cover annual dividend payout of $343 mln.

• Besides, capex is obviously closely monitored, being capped at 12% of operating revenue. It was 8% in the ytd.

• This suggests room for an increase.

• We therefore maintain BUY.