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Singtel holders can hide here for awhile.
Anyone attended this morning AGM/EGM? Was Ensign brought up during Q&A?
Reading some of the press articles and comments on Ensign, I don&rsquo t think what is likely to happen is properly understood.
Starhub confirmed on 17 April that it &ldquo is committed to retaining a majority interest in Ensign&rdquo , which makes sense given from a business perspective it is core to its strategy. So when a &ldquo spin off&rdquo is rumoured, what is most likely to happen is not a demerger or a sale of Starhub&rsquo s stake in Ensign, but instead an IPO of Ensign. Such a listing would involve a sale of shares in the market, potentially both secondary shares and primary shares (the former to allow some existing shareholders to exit, and the latter to allow Ensign to raise more capital to fund its growth). Bearing this in mind concurrently with Starhub&rsquo s desire to keep a majority position in Ensign whilst currently only having a slim majority (and in fact this majority is only based on an assignation of rights from some shares owned by Temasek), insofar as there are secondary share sales Starhub is unlikely to be taking part and insofar as there is a primary raise then Starhub needs to subscribe to it in order avoid dilution.
So in conclusion it seems to me that were Ensign to be spun out, insofar as the valuation of Ensign is high then that would potentially highlight that Starhub is valued on a sum of parts basis. However on a pure cash movement basis such a spin out would most likely result in Starhub having to put more cash into Ensign (at potentially a high valuation) rather than a crystallisation of cash by Starhub from its Ensign holding. I could be wrong, just my reading of the tea leaves.
Starhub confirmed on 17 April that it &ldquo is committed to retaining a majority interest in Ensign&rdquo , which makes sense given from a business perspective it is core to its strategy. So when a &ldquo spin off&rdquo is rumoured, what is most likely to happen is not a demerger or a sale of Starhub&rsquo s stake in Ensign, but instead an IPO of Ensign. Such a listing would involve a sale of shares in the market, potentially both secondary shares and primary shares (the former to allow some existing shareholders to exit, and the latter to allow Ensign to raise more capital to fund its growth). Bearing this in mind concurrently with Starhub&rsquo s desire to keep a majority position in Ensign whilst currently only having a slim majority (and in fact this majority is only based on an assignation of rights from some shares owned by Temasek), insofar as there are secondary share sales Starhub is unlikely to be taking part and insofar as there is a primary raise then Starhub needs to subscribe to it in order avoid dilution.
So in conclusion it seems to me that were Ensign to be spun out, insofar as the valuation of Ensign is high then that would potentially highlight that Starhub is valued on a sum of parts basis. However on a pure cash movement basis such a spin out would most likely result in Starhub having to put more cash into Ensign (at potentially a high valuation) rather than a crystallisation of cash by Starhub from its Ensign holding. I could be wrong, just my reading of the tea leaves.
1.25 is good for consolidation level.
Makes it less attractive for bear attack.
Makes it less attractive for bear attack.
stablizing at 125. 13 series coming
Mr Market is in good mood now.
Seems to believe anything good
Seems to believe anything good
The spin off is still a speculation now. We need a confirmation from Starhub or announcement that they are reviewing the option.
Good recovery for this telco
nice 125.
no surprises there.
SmallSmall ( Date: 23-Apr-2024 16:18) Posted:
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This one going to clear $1.25 and move towards $1.30 soon.
Buyer One mouth took $1.24 few minutes ago
Buyer One mouth took $1.24 few minutes ago
DBS raises StarHub target price on potential Ensign spin-off
The cybersecurity business has further potential to grow at a compound annual growth rate of 20%, the research house says
DBS Group Research has raised its price target for StarHub to S$1.54 from S$1.25 with expectations for the company&rsquo s cybersecurity business, Ensign InfoSecurity, to go public before October 2025.
Analyst Sachin Mittal on Monday (Apr 22) highlighted the cybersecurity business as a profitable one, given how it achieved operating profit breakeven in FY2023, excluding StarHub&rsquo s recently-divested subsidiary, D&rsquo Crypt.
In Mittal&rsquo s view, the business breakeven represents a &ldquo stepping stone&rdquo towards Ensign&rsquo s spin off and public listing.
He estimated that the business has further potential to grow at a compound annual growth rate (CAGR) of 20 per cent and has assumed a &ldquo conservative&rdquo two to three times price-to-revenue ratio for Ensign in FY2024.
&ldquo We expect StarHub to re-rate from a 13 times FY2024 price-to-earnings ratio to 17 times, still lower than its last five-year historical average of 18 times,&rdquo said Mittal of the new price target&rsquo s implied valuation.
The analyst has assumed Ensign&rsquo s enterprise value at S$730 million to S$1.1 billion, with StarHub&rsquo s 55.73 per cent stake in the company entitling the group to some S$406 million to S$610 million &ndash or some 20 to 30 per cent of the group&rsquo s S$2.1 billion market capitalisation.
&ldquo Ensign remains pivotal for StarHub and its Dare+ programme, and its platform-based offering is scalable across the region,&rdquo noted Mittal.
The analyst is also positive on the telecommunications company&rsquo s retention of its assigned rights on Ensign for another two years, with the automatic termination date being fixed for Oct 4, 2025.
Launched in 2021, StarHub&rsquo s Dare+ initiative builds on the telco&rsquo s 5G network and other IT expenditures as part of its five-year growth map. Mittal opined that the group&rsquo s expenses regarding this initiative are &ldquo coming to an end&rdquo , given the transformation programme&rsquo s slated completion by FY2024.
He also observed a lower maintenance capital expenditure for the programme over the last three years, which has boosted StarHub&rsquo s earnings growth.
Mittal said he expects StarHub to turn in an 8 per cent earnings CAGR over FY2023 to FY2025 and a yield of more than 6 per cent.
Its cybersecurity business alone could fetch S$0.23 to S$0.35 per share based on FY2024 revenue projections, added the analyst.
13 series comin
AGM/EGM coming up this week, maybe someone can ask the management the follow up question if they are looking to spin off Ensign.
Management generally do not want to break up good companies unless there are better ones to re-invest in.
Their Business Principle is: Keep the winners, cut the losers!
Their Business Principle is: Keep the winners, cut the losers!
There' s a lot of hidden value in the big telcos. Singtel too. Would be worth much (several times) more if they were broken up. Question is are management motivated to do so.
Brokers&rsquo take: DBS raises StarHub target price on potential Ensign spin-off
DBS Group Research has raised its price target for StarHub to S$1.54 from S$1.25 with expectations for the company&rsquo s cybersecurity business, Ensign InfoSecurity, to go public before October 2025.
https://www.theedgesingapore.com/edgeinvest/news/news/cybersecurity/temasek-starhub-jv-ensign-infosecurity-comes-down-mount-olympus-after-four
In a previous article on Edge and also the DBS analyst mentioned Ensign is worth 600m to 900m and growing fast and is more valuable than what is reflected in Starhub share price. Also, with the inclusion of D?Crypt, Ensign is still loss-making. But now that D Crypt is off the books, maybe this scenario may happen.
In a previous article on Edge and also the DBS analyst mentioned Ensign is worth 600m to 900m and growing fast and is more valuable than what is reflected in Starhub share price. Also, with the inclusion of D?Crypt, Ensign is still loss-making. But now that D Crypt is off the books, maybe this scenario may happen.
noslen ( Date: 22-Apr-2024 15:52) Posted:
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I can't see the Edge article but i reckon it's probably what I said before, Starhub may consider listing Ensign.
noslen ( Date: 13-Mar-2024 22:00) Posted:
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5.45%
je00rey ( Date: 22-Apr-2024 15:04) Posted:
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