Author: tfwee
StarHub – BT
StarHub rolls out treats to retain mobile customers
STARHUB yesterday started a broad based campaign to retain and expand market share in its mobile pre-paid customer base. For the rest of this year, Starhub will roll out ‘Happy Treats’ every Sunday for its pre-paid customers. For its first treat, Starhub decided to reach out to its customers by giving away a familiar favourite, Old Chang Kee curry puffs.
Chief operating officer Tan Tong Hai joined StarHub’s management team to distribute the curry puffs at Ngee Ann City yesterday afternoon.
Chan Kin Hung, StarHub’s head of personal solutions and advanced multimedia services said, ‘We want to show our appreciation to our mobile pre-paid customers for their support all these years. Every Sunday for the rest of the year we will be giving away wonderful happy treats , turning each Sunday into a happy Sunday.
‘By showing their StarHub mobile pre-paid SIM card at selected Old Chang Kee outlets, our customers will receive a delicious curry puff for free. As many of them are from overseas, we are happy to introduce a local delight – the curry puff – to them.’
StarHub intends to give away 100,000 curry puffs at 25 selected Old Chang Kee outlets islandwide, this month. It has planned other Happy Treats in the upcoming months.
And its initial treat appears to have caught on, with a long queue of StarHub pre-paid customers waiting for their turn despite the gloomy weather to claim a free curry puff at the Chang Kee outlet at Ngee Ann City yesterday afternoon.
StarHub had 874,000 mobile pre-paid customers as of end 2008.
SPH – BT
SPH Q2 net profit down 12.6% to $87 mln
Singapore Press Holdings’s second-quarter net profit fell 12.6 per cent to $87 million from a year back, as the economic downturn led to shrinking profits for its print media business.
Recurring profit for the three months ended Feb 28, 2009 fell 16 per cent to $93.8 million, the group said today.
Revenue for its core newspaper and magazine segment fell 13.5 per cent to $204.6 million, while overall group revenue fell a narrower 3.7 per cent to $287.2 million.
SPH saw a 32.9 per cent rise in revenue from the property segment to $72.2 million, with Sky@eleven and Paragon contributing $16.3 million and $1.3 million respectively to the increase.
SPH has announced an interim dividend of 7 cents per share, payable on May 20.
SingTel – CIMB
The planets are aligning
• Falling risks and improving growth prospects. We believe SingTel’s outlook and risk profile continue to improve across the board.
• Lower risks at Optus. The Australian government’s decision to build the country’s broadband network has lifted concerns about Optus possibly being awarded the project, which would stretch the group’s finances. Also, the proposed merger between Vodafone and Hutchison Australia should rein in competition.
• Improving prospects in Indonesia. Telkomsel had added users at a faster clip in the first two months of 1Q09 despite seasonal weakness. Also, industry tariffs are creeping up, supporting our view that competition continues to pull back.
• Easing competition in India. We do not believe competition in India, which heated up in January, is sustainable. In fact, there are signs of easing price competition.
• Strengthening regional currencies. The market is expecting the Singapore government to allow the S$ to depreciate to support the ailing economy. This should benefit SingTel as it derives 72% of its PBT from overseas. The A$ and Indian rupee have appreciated 8% and 6% against the S$ in the last two months.
• Maintain OUTPERFORM, though we have lowered our FY09-11 core net profit estimates by 0.1-2.5% and sum-of-the-parts target price by 5cts to S$3.05, mainly after lowering our numbers for Bharti. Key re-rating catalysts could include qoq improvements in core net profits at its key units, strengthening regional currencies and further signs of an easing price war in India.
SPH – DBS
What’s news on 13 Apr
A peek into 2Q09 results. We expect SPH’s 2Q09 operating profits on 13 Apr to fall c.12% y-o-y to just about S$103m. This is based on a 17% drop in advertising revenue and high newsprint charge out rate, offset by higher property contributions. We reiterate our belief that the share price has factored this in. Despite rebounding by 13% since our upgrade on 13 Mar, share price is still down by 20% YTD. We think an 8 cents interim dividend, similar to 1H08, can be expected. Maintain Buy, TP remains at S$2.93.
Fall in ad revenues but priced in. We expect 2Q’s operating profits to dip by about 12% y-o-y, and 23% q-oq, to about S$103m. We should see ad revenues fall by about 17% y-o-y, worsening from 1Q’s 7% drop. Higher newsprint charge-out rates will also put pressure on newspaper operations. But, we reiterate our belief that these have been priced in.
Property division provide buffer. This is largely on our expectations of an increased revenue contribution from its property development (Sky@Eleven). We expect about $60 – 65m revenue contribution in 2Q. This coupled with recurring rental income (S$30m) should contribute c. S$95m.
Expect 8 cents interim DPS. An 8 cents interim dividend, similar to 1H08, can be expected. This equates to about 55% of operating profits, in line with preceding years. Our 20cents DPS for FY09 is lowest among consensus. Even so, this equates to a yield of c. 7.6%.
Taken in conservative assumptions. We have already assumed a 20% drop in ad revenues, a high newsprint charge-out rate (US$800/mt vs spot rate of US$660/mt) and a 20% drop in asking rents (for Paragon) for FY09F. We have also introduced FY11F forecasts.
Valuations still undemanding, Buy. Despite having appreciated by 13% since our upgrade on 13 Mar, share price is still 20% down YTD. Valuations are still undemanding at 9.4x implied newspaper earnings, 2x P/B and 7.6% yield. Maintain Buy, TP unchanged at $2.93.
StarHub – AmFraser
Revenue streams to be boosted by OpCo
- Infocomm Development Authority (IDA) of Singapore has selected StarHub Limited as the Operating Company (OpCo) for the Next Generation National Broadband Network (NGNBN). Together with the award of the Network Company to OpenNet in September 2008, the core structure of IDA’s iN2015 vision for an ultra high-speed infrastructure is in place to wire up Singapore as an intelligent island by 2015. OpenNet consortium comprises SingTel (30%), Canadian-based Axia NetMedia (30%), Singapore Press Holdings (25%) and SP Telecommunications (15%).
- StarHub will be setting up a new wholly-owned subsidiary to fulfill the operational separation purpose of the OpCo, called Nucleus Connect, within the next 12 months. OpCo, Nucleus Connect will design, build and operate the active infrastructure of the NGNBN, i.e. lighting up the fibre ducts and wholesaling bandwidth to Retail Service Providers (RSPs). Nucleus Connect will work with OpenNet on a coordinated nationwide rollout of the network. With the NetCo’s sped up deployment from the use of existing ducts and other infrastructure assets transferred from SingTel, Nucleus Connect expects to offer commercial services by April 2010.
- Nucleus Connect expects to spend about S$1bil over its 25-year OpCo licence, while it will receive a S$250mil grant from IDA. In the initial two-to-three years, StarHub expects to invest S$100mil in Nucleus Connect, and projects the latter to be self-financing after. With a ready base of corporate customers (albeit small relative to SingTel’s), StarHub stands all ready to be Nucleus Connect’s first customer as an RSP. As part of the terms of the award, Nucleus Connect has targets to garner 330,000 residential subscribers and 80,000 non-residential subscribers by 2015.
- n For the first six years, IDA has capped pricing at S$15 per residential line and S$50 per non-residential line for Nucleus Connect to pay NetCo for the use of the fiber. At the same time, Nucleus Connect will wholesale basic services starting from S$21 per 100Mbps for residential use and S$75 per 100Mbps for non-residential use. For basic 1 Gbps services, these are S$121 for residential and S$860 for non-residential.
- We view the award as positive for StarHub as Nucleus Connect will open up new revenue streams from an enlarged RSP market. In addition, progress of the NBN project also enables StarHub – as an upcoming RSP – to garner more corporate broadband customers because the Open Access nature of NBN levels the playing field. To-date, StarHub’s coverage is up to 800 commercial buildings, mostly within the CBD area. But as corporates move away from CBD to cheaper premises, there will be increasing demand from outlying areas, which it will be able to serve from April 2010.
- Fair value is raised to S$2.28/share. Our previous fair value of S$2.17/share was based on a 5% discount to DCF approach because of StarHub’s vulnerability to rising content costs and weaker buffer to sustain DPS. Given potential for new revenue streams from OpCo, this offsets such negativity and we believe StarHub should trade up to its fair value. As such we upgrade our rating to BUY with upside of 15%.