Starhub *Official* (SGX: CC3)

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One user commented on StarHub’s Facebook page that they had been trying for hours but was unable to make the purchase.

Another said the website was "constantly crashing" and not viewable.

Some users on online forum HardwareZone reported that the website hung while they were trying to check out. Others said they had to exit and re-enter the online queue as the website showed an error during the process.

In response to CNA queries, StarHub said: “We are taking longer than expected to serve our customers, due to an overwhelming response, and apologise for the inconvenience caused.”

https://www.channelnewsasia.com/sin...sign-long-wait-promo-early-bird-price-2736671
 
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StarHub first-half profit falls 10.3% to $60.9m despite 8.7% higher revenue​


https://www.straitstimes.com/busine...t-falls-103-to-609m-despite-87-higher-revenue
SINGAPORE (THE BUSINESS TIMES) - StarHub on Thursday (Aug 4) posted a 10.3 per cent drop in net profit to $60.9 million for its half year ended June 30, from $67.9 million a year ago, after higher expenses.

This was despite higher revenue, which rose 8.7 per cent to $1.1 billion from $973.7 million a year ago, the group said in a regulatory filing.

The gain in revenue was mainly due to higher contributions from mobile, broadband, entertainment and enterprise business, offset by lower sales of equipment, it added.

StarHub's total operating expenses in the first half of 2022 was 10.5 per cent higher at $967 million from $875.5 million a year ago. This was mainly due to the consolidation of JOS SG and JOS MY (under regional ICT services) and MyRepublic Broadband, as well as higher cybersecurity services operating expenses, the group said.

Earnings per share fell to 3.3 Singapore cents for the half year, from 3.7 cents a year ago.

At the results briefing, StarHub chief executive Nikhil Eapen said the company was not unique in facing challenges with inflation and it has seen staff wages rise more quickly in the cybersecurity segment. "With cybersecurity, (rising inflation) is obviously particularly acute because you're looking for highly-trained professionals who are conversant in not just cybersecurity but in areas like data science and statistics," he noted.

Johan Buse, chief of StarHub's consumer business group, said the company was "actively contemplating" how it would deal with the challenge of inflation and the company would not rule out any options, including the potential raising of prices.

Still, the company noted that it was still facing "escalating" competition in areas like its mobile segment. In particular, the company gained 26,000 new prepaid subscribers year-on-year in the second quarter of this year, but ARPU fell $2 to $8 in the same period due to increased promotions. On the other hand, Q2 postpaid ARPU grew $1 to $29 from the previous year, while the postpaid subscriber base grew 77,000 subscribers due to an increase in the telco's giga! subscriber base.

Furthermore, revenue from StarHub's entertainment segment grew 5.4 per cent to $49.2 million from the previous year in Q2 2022. The telco attributed this to higher advertising revenue and subscription prices.

Mr Buse pointed out that uptake of the company's English Premier League plan, which it announced on Jun 8, was "very encouraging", although the revenue from the segment will only be booked in the coming quarters.

The results largely beat the forward guidance that StarHub provided for, with service revenue rising 11.7 per cent year-on-year for the half-year, compared to the 10 per cent that it had expected. In addition, service earnings before interest, tax, depreciation and amortisation (Ebitda) stood at 24.6 per cent, beating the company's guidance for at least 20 per cent.

This was likely due to delays in capital expenditure, which stood at 7.5 per cent of revenue, falling short of the company's guidance of 12 to 15 per cent of revenue. The capital expenditure is meant to go largely towards the building of StarHub's 5G network and other IT expenditures as part of its 5-year growth roadmap launched last November, also known as Dare+.

Still, Dennis Chia, StarHub's chief financial officer, said he expects the company to come in at the lower-end of the company's capital expenditure guidance for the rest of the year.

The group has declared an interim dividend of 2.5 cents per share for the half year, unchanged from the previous year. Books close on Aug 16 and the dividend will be paid on Aug 31.

Shares of StarHub closed flat at $1.26 on Thursday, before the results were announced.
 
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StarHub gets an upgrade as it rides on reopening tailwinds​


https://www.theedgesingapore.com/ca...hub-gets-upgrade-it-rides-reopening-tailwinds
Maybank Securities is upgrading its call on local telco StarHub to “buy” from “hold” with an unchanged target price of $1.32, as analyst Kelvin Tan sees tailwinds for the group from the economy reopening.

“Starhub remains on track with its Infinity Play and Super App strategies that will see the creation of new revenue streams. Roaming revenue is improving and it would be in a good position to capture business opportunities from the re-opening of China’s economy,” says Tan, who sees any pullback as an opportunity to “accumulate”.

With that, he believes that the group is on track to beat its own guidance and continue to offer a 4% sustainable annualised dividend yield.

StarHub has previously mentioned that its DARE+ transformation will position it better to capture growth from new trends in the market. But CEO Nikhil Eapen in a previous interview with The Edge Singapore has also said that FY2021 and FY2022 will be the years that the group will front load its expenses and costs for this transformation.

After which, Eapen expects the group to be on an upward trend as its transformation will allow it to better capture opportunities for growth.

“We acknowledge that FY2022 will be a transition year for StarHub to undertake the necessary investments into new growth areas under the DARE+,” says Tan, who expects opex to rise further in 2HFY2022 ending December from IT outsourcing, EPL content, software licensing and 5G wholesale cost.

“Unless roaming revenue gains further momentum or fresh revenue begins to contribute meaningfully, we think earnings will be sluggish in 2HFY2022. We thus expect ebitda margin to drop from 24.6% in 1HFY2022 to 17.4% in 2HFY2022,” adds Tan.

Meanwhile, StarHub’s environmental, social and governance (ESG) efforts have shown some promising improvement. Tan notes that it has comprehensive sustainability policies in place, and its overall ESG score of 55 is above average on his ESG rating.

The way Tan sees it, StarHub could stand to improve its greenhouse gas (GHG) emission and energy intensity, which has been on the uptrend, as well as its chairman and management salary, which has increased over the past two years and falling number of independent and women directors on the board.

As at 12.30pm, shares in StarHub are trading 1.8% higher at $1.12, giving it a FY2022 P/E of 16.7x with a dividend yield of 4.5%.
 
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Citi upgrades StarHub to 'neutral' due to undemanding valuations on the back of share price correction​


https://www.theedgesingapore.com/ca...l-due-undemanding-valuations-back-share-price
Citi Research analyst Arthur Pineda has upgraded his call on StarHub to “neutral” from “sell” previously after StarHub’s share price declined some 19% year-to-date (ytd).

“Our target price remains unchanged at $1.16, with our upgrade driven by StarHub’s share price correction rather than a fundamental change in outlook,” the analyst writes.

“Valuations are indeed undemanding at over 1 standard deviation (s.d.) below [StarHub’s] 10-year mean on both P/E ratio and EV/ebitda against Citi’s already conservative estimates,” he adds.

The telco’s share price decline comes despite the market’s pivot to defensive names with Singapore Telecommunications (Singtel) delivering a share price return of 15% ytd, the analyst points out in his Oct 3 report.

StarHub’s share price had also underperformed the benchmark Straits Times Index (STI) by -19%. It had also underperformed its telco peers, Singtel and Netlink NBN Trust by -34% and -10% ytd respectively.

To Pineda, StarHub should have been relatively better-positioned owing to its international roaming contributions, 5G average revenue per user (ARPU) accretion, and the contracted nature of its revenues.

However, the rising expenses and investments into the FY2022 ending December owing to StarHub’s planned business transformation program had outweighed the near-term revenue benefits from market re-openings and the migration towards 5G. The rising expenses and investments had also resulted in a weaker earnings outlook into the FY2022, which could be behind the underperformance in the telco’s share price ytd.

“In addition, we believe StarHub is far more exposed to retail investor participation as it is not present in FTSE STI or MSCI Singapore indices. Unlike a large number of institutional investors that may need to rotate investments across sectors and remain invested, retail investors may opt to cash out altogether. This we believe explains the lack of rotation into the name,” says Pineda.

To the analyst, StarHub’s net profit after tax (NPAT) for the 2HFY2022 is “still likely to soften” as its transformation-related expenses pick up.

“We thus see room for the street to still see a markdown in consensus estimates with Citi’s FY2022 estimates 37% below consensus,” he says.

“Uncertainties remain if any transformation-related expenses will be recognised/carry over into FY2023,” he adds. “As such, while we concede that the stock appears inexpensive even relative to our below-street expectations, we see re-rating headwinds with the street still potentially marking down profit estimates.”

That said, any further material share price downside is protected by a 5%-6% yield outlook for FY2022-2023, notes Pineda. This is still superior compared to most Singapore companies, even if it is below mean levels in terms of yield spreads vs the Singapore 10-year bond yield.

“With a further rise in 10-year interest rates from the current 3.5% in view with the US Fed’s tightening stance, we may see the market as potentially wanting higher dividends from StarHub. The company had seen an average 3.0% yield premium to Singapore 10-year bonds. This compares against the current 2.5% spread with the recent increase in bond yields,” he adds.
 
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StarHub reports 32% y-o-y earnings drop for 3QFY2022, revenue up 14.2%​


https://www.theedgesingapore.com/ca...s-32-y-o-y-earnings-drop-3qfy2022-revenue-142
StarHub has reported revenue of $590.8 million for 3QFY2022 ended Sept 30, up 14.2% y-o-y, as the telco booked higher sales across its major business segments, including sales of equipment.

However, earnings in the same period was down 32% y-o-y to $27.4 million.

The telco attributes the earnings drop to heftier operating costs including wages, repairs and maintenance, as well as capex on its networks. On the other hand, it incurred lower financing costs and tax.

For the 9MFY2022, earnings was down 18.4% y-o-y to $88.3 million, while revenue was up 10.6% y-o-y to $1.65 billion.

For the whole of FY2022, StarHub is guiding for higher revenue growth of 15%, revised from 12%.

On the other hand, because of delays, it expects capex commitment guidance to be at 9% of total revenue, instead of 12% indicated earlier.

All in, StarHub expects a service ebitda margin guidance of "at least 20%" for whole of FY2022.

However, in the coming 4QFY2022, StarHub intends to recognise write-offs in "certain legacy assets".

CEO Nikhail Eapen says the telco is pursuing bigger deals in the enterprise space and is building a strong order book so as to achieve better earnings visibility for the coming FY2023.

However, he warns that with the current challenging macro and market conditions, StarHub is keeping its long-term view and will continue to "optimise" its strategy to "secure" its "growth positioning".

Separately, StarHub announced that chairman Terry Clontz will be retiring on Dec 31. Olivier Lim, currently an independent director, will take over from Jan 1 2023.

Clontz joined StarHub in 1999 as its founding CEO and was appointed chairman on July 2015.

Lim, a former CFO of CapitaLand, is now also chairman of Certis CISCO Security, among his various other board positions.

StarHub shares closed at $1.05, down 0.94% for the day, and down 22.79% year to date.
 
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Analysts remain upbeat on StarHub on transitional 2023; UOB Kay Hian upgrades stock to 'buy'​


https://www.theedgesingapore.com/ca...transitional-2023-uob-kay-hian-upgrades-stock
Analysts are remaining upbeat on StarHub on the back of the telco’s DARE+ transformation programme.

After attending its investor briefing, UOB Kay Hian analyst Chong Lee Len issued an upgrade on StarHub to “buy” from “hold” with an unchanged share price of $1.30.

The upgrade comes on the back of a “hefty correction” in StarHub’s share price year-to-date (ytd), which is around 23.53% lower, at $1.05 as at Chong’s report on Dec 9.

“We believe the risk-reward for the stock is compelling,” she writes. “Firstly, valuation is attractive as the stock trades at -2 standard deviations (s.d.) from its mean EV/ebitda of 7x. Secondly, as Starhub embarks on its DARE+ journey, we expect earnings to gradually recover from a low base in FY2022.”

In the FY2023, the analyst is estimating StarHub’s net profit to grow by 18% y-o-y to $133 million, which is still below StarHub’s pre-Covid-19 profit of $178 million in FY2019.

“We also believe the market is ready for consolidation as the regulator is open to the suggestion. We note that market consolidation is good for incumbents, with significant cost synergies a key reason to consolidate among peers,” she adds.

Under its DARE+ initiative, the analyst notes that StarHub is expected to deliver $500 million in cost savings over the FY2022 to FY2026.

“This entails spending $310 million to drive [an] incremental net profit stack of $80 million from FY2026 onwards – suggesting a robust three-year earnings compound annual growth rate (CAGR) of 15% over FY2023 – FY2026,” says Chong.

“With the bulk of investments to be spent in FY2023, we expect Starhub to reap revenue growth opportunities from FY2024 onwards,” she adds.

Based on Chong’s estimates, StarHub offers a “sustainable dividend yield” of 4% for the FY2022 to FY2023.

In her view, another key re-rating catalyst for the stock – beyond the consolidation of the market -- is the return of tourists to Singapore, which will prop its prepaid SIM card sales up, as well as the faster-than-expected 5G adoption and new business cases in Singapore.

PhillipCapital analyst Paul Chew has kept his “accumulate” recommendation on StarHub with an unchanged target price of $1.15.

Chew’s target price is pegged at 7x of StarHub’s FY2022 EV/ebitda, in line with the rest of its mobile peers.

To Chew, he sees FY2023 as “another transition year” for the telco with “lumpy capital expenditure and operating costs to be incurred”.

“The financial impact can be watered down from a recovery in the high margin roaming revenue as borders re-open. Key roaming destinations for StarHub are Malaysia and China,” he says.

As at 2.36pm, shares in StarHub are trading flat at $1.05.
 
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