StarHub - DBS Research 2020-02-21: Beats Consensus; No Cut To Dividends

STARHUB LTD (SGX:CC3) | SGinvestors.io STARHUB LTD (SGX:CC3)

StarHub - Beats Consensus; No Cut To Dividends

  • 4Q19 earnings of S$35m (+76% y-o-y, -40% q-o-q) was above consensus estimate of S$28m.
  • StarHub to maintain 9Scts dividend per share; reduces FY20F capex to 6-7% of revenue versus 7.5% in FY19.
  • Guidance implies 3-6% upside to consensus FY20F earnings; Maintain BUY with Target Price of S$1.72.



What’s New


4Q19 earnings of S$35m (+76% y-o-y, -40% q-o-q) was above consensus estimate of S$28m.

  • StarHub (SGX:CC3)'s 4Q19 earnings was in line with our expectation of S$34m but above consensus expectations of S$28m. The key highlight was sequential stabilisation of Mobile and Pay TV revenue which had been declining sequentially over the last three quarters.
  • StarHub benefited from gross handset profits rising to S$23m from S$17.5m in 3Q19 although it was offset by Cybersecurity losses rising to S$10.5m in 4Q19 from S$3.6m in 3Q19.

StarHub’s guidance implies room for upward revision to FY20F consensus earnings.

  • StarHub has guided for 1-3% rise in service revenue versus 3.9% decline in FY19 on the back of growth in cyber security revenue. Management also guided for FY20F service EBITDA margin of 27-29% versus 31.7% in FY19.
  • While service EBITDA is likely to decline by S$50m-55m based on the guidance, depreciation & amortization expenses should also drop by S$35m-40m as StarHub ceases to lease Singtel’s network after full migration to fiber in FY19.
  • Our FY20F earnings are 3% ahead of consensus as we project 1% service revenue growth and 28% service EBITDA margins in FY20F.

StarHub to maintain 9Scts dividends per share or payout 80% of profit whichever is higher.






Sachin MITTAL DBS Group Research | https://www.dbsvickers.com/ 2020-02-21
SGX Stock Analyst Report BUY MAINTAIN BUY 1.72 UP 1.430



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