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Closed $3.86 yesterday! A hefty PE ratio of 20X, it better deliver fantastic Q2 profits. here are some questions raised by Investor Central, 25 July 2012......
CEO Neil Montefiore likes to say: " An Apple a day keeps the profits away"
25/7/2012 – DBS Vickers Research has maintained its HOLD call on StarHub and raised its target price to S$3.50, as it now expects dividend of 21 cents versus 20 cents earlier.
It expects StarHub to report Q2 earnings of S$95 mln, 12% more than consensus expectations.
This is due to the increasing popularity of Android phones, which StarHub subsidises less than iPhones.
Investor Central. We ask the questions that need to be asked
1. Will the launch of iPhone 5 hit margins again?M1 Ltd, in its earnings announcement, revealed that 70% of its new post-paid customers in Q2 had opted for Android phones.
Telcos provide lower handset subsidies on Android phones versus iPhones due to the cheaper retail price of Androids.
This may benefit SingTel and StarHub, too.
But, will the upcoming launch of iPhone 5 bite again?
And by the way, Neil Montefiore really did say " an Apple a day keeps the profits away" . Watch the interview here.
2. Is the customer acquisition costs set to rise?The burden on telcom companies would come from handset subsidies, which could mount as a slew of new handsets enter the market.
Neil Montefiore, CEO of StarHub, intimated in the earnings call in May that the outlook was the same as the last quarter – unless subscribers rush to upgrade their phones.
So, can we expect the customer acquisition costs to rise?
3. How much did it benefit from the absence of exclusivity costs for EPL rights?The English Premier League (EPL) rights are getting super-expensive in many markets.
British Telecom and BSkyB have paid a 71% higher price of S$6 bln for the rights to telecast EPL matches in Britain for the 2013-14 seasons.
Coming to Singapore, neither of the telco players has an incentive to bid more for exclusive rights, as consumers can access the content through cross-carriage arrangements anyway.
But either both players join to make a common bid for the rights, or each player bids on a non-exclusive basis.
In either case, each player has to incur some cost of owning the content-rights.
4. How much did it earn from UEFA?When we last spoke to Mr Montefiore, he was hoping the Euro Cup (which Spain won with a 4-0 thumping of Italy) was going to earn StarHub lots of money.
So, did it?
5. Will StarHub possibly raise regular dividends slightly?Management has ruled out special dividends given the EPL bidding ahead and spectrum sale next year?
With net debt to EBITDA of 0.5 times, the lowest amongst the three telcos, will StarHub possibly raise regular dividends slightly?
We are sending these questions to the company to invite them for an on-camera interview, and/or seek their written response.
Did management answer our questions?
Find out at
.Maybank downgrades StarHub to sell
Tags: M1 Limited | Maybank Kim Eng | Singapore Telecommunications | Starhub
| Written by Reuters | |||||
| Wednesday, 11 July 2012 14:11 | |||||
By 2:00 p.m., StarHub shares were 0.6% lower at $3.57, and have risen 23% this year, compared to the Straits Times Index's 12.4% rise. “The stock has raced to an all-time high amidst the current risk-off environment and its dividend yield has compressed to the lowest level since listing,” Maybank said in a report. It added that StarHub shares are overvalued if dividends stay put at $0.20 a share. At current levels, StarHub has a dividend yield of 5.6%, and the spread between the yield and the 10-year Singapore government bond yield has also narrowed to its smallest level of 400 basis points, the brokerage said. StarHub’s capital expenditure may also rise in 2013 if it has to compete for 4G spectrum against Singapore Telecommunications and M1, Maybank said. |
