StarHub    Last:1.01    -0.01

Starhub

Below 4.20 just cum for long haul to Holland. Hahaha. 

 

StarHub (HOLD Target Price: S$4.25)

We estimate revenue CAGR of only 1.9% over 2013-15. Broadband will come under pressure from competitive NBN prices, and we see little growth for pay-TV as SingTel beefs up its content offering. Mobile should get a boost from tiered data plans, but Singapore is a very mature market. The bright spot is fixed network services, leveraging NBN.

We forecast decent EBITDA CAGR of 5.8% over 2013-15 on NBN grants (ex-NBN grants: 4.4%) and lower traffic costs. Supported by FCF, annual DPS looks sustainable at S$0.20-0.22 (yield: 4.7- 5.2%). To achieve a more optimal capital structure, we assume StaHub will declare a special DPS of S$0.25 in 2014, taking net debt/EBITDA to 1.0x by the year-end. Average 2013-15E yield is an attractive 6.8% pa. special dividend may be declared in 1H14, than in 2013.

StarHub?s new CEO and CFO may opt to conduct a thorough review of the business before deciding how much excess cash to pay back to shareholders. Strategy-wise, we expect the CEO to focus on the corporate data services business, given his IT background and the opportunities from greater connectivity to office buildings via NBN.? BNP Paribus    ...last: $4.23...

 

Starhub: 2Q13 results slightly above expectations. Net profit of $100.6m (+16% y/y) was lifted by margin improvement, and further boosted by a doubling of government-subsidised NGNBN adoption grants. Operating revenue was flat at $586.8m, due to fewer handsets sold, but also reflecting weaknesses in pay TV and broadband. Specifically, pay TV revenues declined 8% yoy on sustained subscriber loss (2Q13: 2,000, vs 4,000-5,000 loss in the past few quarters) and a 4% reduction in ARPU (due to one-off impact of UEFA Euro, which boosted 2Q12). Broadband revenues inched down 1% yoy (first decline since 2010) on competition-driven price discounts. On a positive note, mobile service revenues expanded 3% yoy on re-accelerated data revenue growth (+11% yoy). This was attributed to increased take-up of tiered pricing, which caused post-paid mobile ARPU to expand 6% QoQ (+1% YoY) – mirroring a similar trend reported by M1 last month. Noteable was the EBITDA margin (on service revenues) expansion to 34.1% (from 2Q12’s 32%), lifting EBITDA by 7% yoy to $192m, driven by reductions in traffic expenses (lower roaming and settlement rates) and other expenses. Mgt maintained its conservative 31% FY13 margin guidance, citing potential handset launches in 2H13 and sustained competition in home services. The group declared an interim dividend of 5cts, unchg yoy. Mgt also kept its DPU guidance at $0.20, which translates to 4.7% yield. Maybank KE maintains Hold with TP $4.22. Credit Suisse maintains Neutral with TP $4.40. Deutsche maintains Hold with TP $3.83. Nomura upgrades to Neutral from reduce, raises TP to $4.05 from $3.30.

 

the bear argument fr motley:

  First off, let’s examine the moat around the business. I must say the moat has been narrowing due to various reasons as discussed below.

StarHub  (SGX: CC3) had been the sole pay-tv operator in Singapore until July 2007, whenSingTel  (SGX: Z74) entered the fray with its Mio TV service.

Kicking off the new season

In 2009, SingTel pulled off a major coup by winning the rights from StarHub to broadcast the Barclays Premier League (BPL) games in Singapore. As shown from the table below, StarHub has been losing customers and revenue for its pay TV subscription since 2009.

(Source: StarHub Annual Reports)

With the new cross-carriage rule that is likely to kick in for the new BPL season starting August 2013, StarHub may win back some of its previous customers. But we’ll have to wait and see what happens.

The pay-tv segment is also seeing keen competition from illegal downloads and free online streaming of movies and shows. To counter that, StarHub is producing its own proprietary content such as “Lady First  – Singapore” that is less likely to be pirated.

It is noteworthy that StarHub is coming up with new ways to lock in customers but the question begs: How popular are these shows as compared to those overseas content that can be downloaded online for free?

Competitive threat

As for the broadband services segment, more people are going on board the fibre broadband bandwagon, which was launched recently. Since 2011, more companies are springing up offering fibre broadband services to consumers – increasing competition for StarHub. Please refer to the table below.

 

(Source: StarHub Annual Reports and own calculation)

It can be seen that the percentage increase year-on-year has been falling consistently since 2007 and from 2011 to 2012, this number dipped significantly. It only added 4,000 households in 2012. This can be on the back of increasing competition from its fledgling competitors.

Too much debt

Quantitatively, StarHub’s debt-to-equity ratio is extremely high at 40.6 and the Return-on-Equity is extremely inflated at 826% due to leverage.

The dividend payout ratio is 0.958. This shows that StarHub is paying too much of its profits as dividends and is retaining too little to grow its business.

StarHub is valued at 19 times profit. It is also priced at 50 times its book value. That is not exactly cheap by any measure. By comparison, SingTel is valued at 16 times profit while the price-to-book is also lower at 2.4. In my opinion, SingTel should be trading at a premium to StarHub, since it is a much bigger company. 

 

the bull argument from motley:

Kaching!  That is a sound that  StarHub’s (SGX: CC3) shareholders should be familiar with. After all, the telecom operator has made quarterly dividend payments its hallmark since the second quarter of 2005, providing investors with steady, regular income.

At its current share price of $4.05, and with management projecting a total of $0.20 in dividends for this year, the company’s forward dividend yield is 4.9%. That’s an attractive return, given that it’s almost twice the 2.5% yield that investors are getting in the broader market through the  Straits Times Index  (SGX: ^STI) tracker, the  SPDR STI ETF  (SGX: ES3).

Of course, an attractive dividend yield is only appealing if a company is able to keep handing out those cheques using cash that is generated from its businesses.

And on that count, StarHub is a cash-hub.

You need cash for dividends and StarHub makes plenty of dough

It’s been said that a picture is worth a thousand words. So, I’ll save you the trouble of poring through tables of numbers and let you check out the graph below instead.

That’s about as steady a free cash flow stream as you can get and signs are that StarHub’s future cash flow performance could be similar to its past.

A huge portion of StarHub’s revenue comes from subscription-based services – around 89% of 2012’s revenues, to be exact. Subscribers aren’t likely to change telecom providers if service standards do not deteriorate significantly, and that is within StarHub’s control.

So far, the company has not disappointed, as evidenced by the low quarterly customer churn rates of between 0.9% to 1.6% for 2012 and the first quarter of 2013, depending on the quarter and the service.

Low customer churn brings with it higher predictability for revenues and by extension, cash flows. This is advantageous for investors with a focus on steady, reliable income.

Neutralising the debt gremlin

At first glance, StarHub’s balance sheet is bloated with debt, as it is currently carrying S$688m in loans with only S$137m worth of shareholder’s equity.

Investing 101 states that high debt levels can create risks for shareholders. But for StarHub, it helps generate better shareholder returns –  a phenomenal 293% return on equity, to be exact. Shareholders are in a win-win situation here by getting regular income as well as seeing undistributed cash ploughed back into the company to earn impressive returns.

Circling back to debt, out of the S$688m that StarHub owes to other parties, S$220m is not due for repayment for another nine years – September 2022. So that’s a long-time away before there are any worries. Not much is known of the remaining S$468m, so there could indeed be risks there. But, the company’s excellent cash flows should help to neutralise some of that risk.

StarHub’s moving up?

With reliable cash flows and smart use of debt to generate superior returns on shareholders’ equity, it’s possible for StarHub’s dividends to resemble salaried workers’ monthly pay-checks, i.e. very good news for income investors. And that’s the reason why the bull can charge through the bear’s den. 

 

Starhub climbing back up!!!

 

May rebound from the 200D SMA for Starhub.

http://mystocksinvesting.com/singapore-stocks/starhub/starhub-correction-over/ 

ShareWithMe      ( Date: 18-May-2013 16:51) Posted: 2nd consecutive black candle. Hope this counter will go below $4. I am waiting for you there.

 

Management stated that broadband pricing competition is currently driven by smaller new entrant operators. But STH's strength lies in its ability to complement the broadband offering with content. Management also highlighted that STH's investments in international bandwidth should position the company well versus the competition. Service margins for fibre broadband would be lower versus cable broadband (e.g. the cable network is fully depreciated), but pointed out that a fibre broadband adoption grant from the government would support up to 2015. Management expressed optimism about the mobile business, which is benefitting from relatively rational competition. It expects the positive impact of tiered pricing to materialise in 2H13. DB views that the mobile sector dynamics will continue to improve, with better data monetisation and lower handset subsidies, potentially lifting sector margins over the near term. DB has a SELL rating, TP of $3.83 Starhub trades at forward yield of 4.6%.

 

2nd consecutive black candle. Hope this counter will go below $4. I am waiting for you there.

 

Price correction time

 

Unloaded my Starhub. nice ending today, irregardless of ANALysts comments. intraday high.

Octavia      ( Date: 13-May-2013 10:18) Posted: Starhub revised its outlook FY2013 to low single-digit growth for revenue year-on-year. It intends to maintain their annual cash dividend payout of 20 cents per ordinary share for 2013. Prices may be given downside pressure based on thinning dividend spread (as a result of a non-possibility of upward dividend growth this year), increased competition and revenue slowdown.

 

Starhub revised its outlook FY2013 to low single-digit growth for revenue year-on-year. It intends to maintain their annual cash dividend payout of 20 cents per ordinary share for 2013. Prices may be given downside pressure based on thinning dividend spread (as a result of a non-possibility of upward dividend growth this year), increased competition and revenue slowdown.

 

If have not own any Starhub shares then dun buy 1st. If already have it, dun sell. Why sell when the company gives you good returns? Is like giving away a good plant that bears you flowers.

 

Last year total earning is 359.3million, which is 20.9cts per share, but the dividend payout is 20cts. Which payout is more then the REITS %, if they start to relise they have been overpay their investor and neglect their own balance sheet for too long, then it is still possible to become a fundamental good stock, especially if they can retain their customer base.

 

Starhub have come up with some good reward. Have when in and supprisingly, it can be redeem.

 

Yup, this tread is about starhub, but for FA, noone will buy starhub, unless they claim to be FA, but they are not. Just take a look at their balance sheet. FA look into business, future development and avoid risk.

Their current asset for 2012 is 618million, but their current liability is 879.2million. That means one year period they are unable to pay the debt.

Their total asset is 1808.6 and total liability is 1,765.1million, you might think that you can get back at least 43.5million when it really default, but it is not true, the intangible assets, usually is equal to zero, property most likely you can get certain value but plant and equipment, when you sell can only at certain discount rate. Thus the Group is heavily in debt. The reason for it not defaulting is that they still have the customer base, that the deptor believe that they can still pay up the dept from the customer collection. But all recent policy implement suggest the company actually are trying to squeeze on their customer. I only have their mobile plan, so I am not too sure on the other sector. But from what I observe is that previously renewer of the contract, they give out mobile discount voucher, but now only you subscrip to those highend plans then you can get. The points of the starhub does not get you any place, the redeem items is usually fully redeem. I know a few of my friends actually transfer from starhub to singtel or M1 already, actually I am also considering.

Just for a few cents dividend and bet with 4 over dollars over a -ve corporate, isn't that an act of gambler? This is playing with musical chair, it is when the music stops, who is on the chair will be the one suffer.

If starhub can reduce the dividend pay, and focus more on building up their customer relationship and reducing their liabilities. Then it will be a better company to look for.

	Group
	2012	2011
Non-current assets
Property, plant and equipment	791.1	761.9
Intangible assets	397.0	423.6
Deferred tax assets	2.5	2.8
	1190.6	1188.3
Current assets
Inventories	28.1	37.2
Trade receivables	142.3	152.0
Other receivables, deposits and prepayments	123.6	149.2
Balances with related parties	12.0	17.2
Cash and cash equivalents	312.0	179.2
	618.0	534.8
Current liabilities
Trade and other payables	-728.1	-702.9
Balances with related parties	-56.5	-41.9
Borrowings	–	-75.0
Provision for taxation	-94.6	-83.5
	-879.2	-903.3
Net current (liabilities)/assets	-261.2	-368.5
Non-current liabilities
Trade and other payables	-37.5	-34.1
Borrowings	-687.5	-587.5
Deferred income	-41.7	-62.8
Deferred tax liabilities	-119.2	-112.8
	-885.9	-797.2
Net assets	43.5	22.6
Shareholders’ equity
Share capital	263.1	262.8
Reserves	-219.6	-240.2
Total equity	43.5	22.6

iluvboost      ( Date: 10-May-2013 21:04) Posted: Lets not cloud this thread with yr comments , this thread is on Starhub, not comparing our FA TA skills. Whats impt is profits in pocket, it doesnt matter whos better.   cheongsl      ( Date: 10-May-2013 20:50) Posted: Are you sure you are an FA?? I doubt so based on the way you comment on starhub

 

Lets not cloud this thread with yr comments , this thread is on Starhub, not comparing our FA TA skills.

Whats impt is profits in pocket, it doesnt matter whos better.

 

cheongsl      ( Date: 10-May-2013 20:50) Posted: Are you sure you are an FA?? I doubt so based on the way you comment on starhub. iluvboost      ( Date: 10-May-2013 20:38) Posted: if i FA on starhub, yes its trading way above its value. but i look into market psychology, price action, volume and TA.  its a dividend safe play , with loyalists, that makes its stock graph so smooth and continously gentle uptrend.

 

Are you sure you are an FA?? I doubt so based on the way you comment on starhub.

iluvboost      ( Date: 10-May-2013 20:38) Posted: if i FA on starhub, yes its trading way above its value. but i look into market psychology, price action, volume and TA.  its a dividend safe play , with loyalists, that makes its stock graph so smooth and continously gentle uptrend.   cheongsl      ( Date: 10-May-2013 20:23) Posted: That means that you are not fundamental trader, if you are fundamental trader you should know why I say starhub is only for gambler

 

if i FA on starhub, yes its trading way above its value. but i look into market psychology, price action, volume and TA. 

its a dividend safe play , with loyalists, that makes its stock graph so smooth and continously gentle uptrend.  

cheongsl      ( Date: 10-May-2013 20:23) Posted: That means that you are not fundamental trader, if you are fundamental trader you should know why I say starhub is only for gambler. iluvboost      ( Date: 10-May-2013 19:48) Posted: funniest cock i heard today. Starhub is a good investment stock. alot of people like to keep this and grow, dividend yield one of the highest with capital gains. only do TA if intend to swing trade this. nothing to gamble for this. want to gamble go play CNA or Lorenzo or mbs casino.

 

That means that you are not fundamental trader, if you are fundamental trader you should know why I say starhub is only for gambler.

iluvboost      ( Date: 10-May-2013 19:48) Posted: funniest cock i heard today. Starhub is a good investment stock. alot of people like to keep this and grow, dividend yield one of the highest with capital gains. only do TA if intend to swing trade this. nothing to gamble for this. want to gamble go play CNA or Lorenzo or mbs casino.  cheongsl      ( Date: 10-May-2013 19:38) Posted: Starhub is not for fundamental trader, mainly for gamblier and technical trader