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8 more days to 8 Feb FY23 result....
StarHub on the cusp of reaping season
Telco will be decommissioning costly legacy systems, starting in the middle of this year, and is also working on wrapping up its cloud transformation
BEFORE the end of his first year at the helm of StarHub, Nikhil Eapen did the unthinkable.
Eapen became the chief executive of StarHub on Jan 1, 2021. And Singapore&rsquo s second-biggest telco looked on track to wrap the year with decent revenue growth, good earnings before interest, taxes, depreciation and amortisation (Ebitda) expansion, and strong free cash flow.
But, in November 2021, he went to the market to announce an audacious multi-year plan that was going to cost S$270 million and diminish its service Ebitda margin from 30 per cent to around 20 per cent in the coming years.
Much of the jargon used then &ndash such as cloud, infinity play, and transformation enablement &ndash flew right over the heads of many observers. And frankly, they still do.
But executives now see some light at the end of the tunnel, and Eapen says that he is proud of the baby with a plucky name: Dare+.
Despite its toll on capital expenditure and operating expenses (opex) over the past two years, Dare+ has brought StarHub out of a situation where it runs its network in a &ldquo very monolithic&rdquo way.
Eapen explained that monolithism, which many of StarHub&rsquo s competitors are still subjected to, comes when a telco is required to &ldquo use a lot of energy &ndash probably more than is needed, because not everyone needs all that bandwidth all the time across your entire network&rdquo .
With Dare+, StarHub is close to shifting its network from legacy platforms towards one that operates off a combination of hybrid and public multi-cloud systems, he said.
When this process completes &ndash targeted for mid-2024 for its consumer business and end-2024 for its enterprise businesses &ndash StarHub will become the first &ldquo brownfield&rdquo telco in the world to cloudify an existing network, he noted.
Brownfield challenges
Running it off the cloud means that &ldquo you can pinpoint the delivery of that bandwidth to where it&rsquo s needed, how much it&rsquo s needed, to the specific requirements of the customer at that point in time&rdquo , Eapen said.
This includes when enterprises need the network to support more data-intensive operations requiring multi-access edge computing. It is about managing transmission in a dynamic way, for it to go where it is needed, rather than providing it uniformly at maximum capacity with a buffer across the entire network, he added.
Telco operators playing in this arena are Japan&rsquo s Rakuten Mobile, United States&rsquo Dish Network, and India&rsquo s Reliance Jio. These are &ldquo greenfield telcos&rdquo , however. For brownfield telcos like StarHub, a company founded more than 25 years ago, the added challenge is in reskilling engineers who have not worked with the cloud from day one, Eapen noted.
The transition is also opex-heavy, with StarHub having to keep both the old and the new systems running. Opex are up almost 18 per cent, with S$1.57 billion spent in the first nine months of 2023, versus S$1.33 billion over the same period in 2021.
Net profit initially suffered, falling 18.4 per cent from S$108.2 million for the nine months in 2021 to S$88.3 million in 2022. Earnings have since rebounded 29.1 per cent to S$114 million in the first nine months of 2023 though &ndash a result that Eapen attributes to the beginnings of Dare+ taking effect.
The market, however, has not taken to StarHub&rsquo s new direction. Its share price has shed a fifth of its value since late-2021 when Dare+ was announced. The counter last closed at S$1.09 on Jan 5.
Profit goals
StarHub will soon scrap its legacy platforms though, heralding a season of reaping. Being infrastructure-heavy, these platforms come with substantial running costs that will soon be a thing of the past.
Eapen said that the decommissioning will start in the middle of 2024 and stretch into 2025, sparking three things: sustained revenue growth, a tailing-off of transformation spend, and harnessing of efficiencies.
The efficiencies, through automation and cost reduction, are expected to kick in from the second half of 2024 onwards. &ldquo With all three things in combination, our goal is strong profitability growth,&rdquo he said.
Will StarHub subscribers feel a change? This is where Eapen perks up. &ldquo Imagine a world where you&rsquo re not stuck within these rigid legacy telco bundles, and you can self-serve and build your own package.&rdquo
He continued: &ldquo Imagine that world where a platform has embedded within it data and artificial intelligence capabilities, so we can suggest products that are suitable for you based on our very deep understanding of you.
&ldquo Also imagine this world where we make all of these things available to you at a price point and a value, which frankly pales in comparison to the delight and lifestyle enrichment and the safeguards that you get.&rdquo
Consumers will start experiencing such changes by the middle of the year, he added.
Eapen offered a piece of trivia: &ldquo For cloud gaming, do you know that more than half of our customers are not StarHub&rsquo s connectivity customers? A lot of them don&rsquo t even sit in Singapore. They are in Asean.&rdquo They sign on as their countries only have &ldquo legacy&rdquo telco providers that cannot provide the same level of services, he shared.
The benefits also permeate StarHub&rsquo s enterprise business, which Eapen views as a 50-50 contributor to revenue. Cloudification allowed it to deploy a secure autonomous cloud network for smart city projects, including JTC&rsquo s Punggol Digital District.
Such a network can overcome existing pain points, such as the lack of computing power for analytics, an absence of true multi-cloud options to not be overly reliant on one cloud system, and a dearth of options to avoid overspending on cloud security, he said. &ldquo This is a very different world from this sort of clunky telco, systems-integrator use cases.&rdquo
The dividend picture
The way Eapen sees it, StarHub is poised for strong profitability growth from this year onwards.
While the company can maintain strong dividends due to its strong free cash flow and low debt &ndash its net debt to Ebitda is about 1.4 times versus the regional telco average of 2.5 times &ndash Eapen wants it to be seen as more than a dividend play.
Although telcos are seen as very stable businesses, and investors do buy it for the dividend yield, Eapen said: &ldquo We view ourselves as a total shareholder return company. We&rsquo re not just a dividend company.&rdquo
Eapen even believes that StarHub is under-leveraged, and said that he is contemplating moving its net debt to Ebitda closer to the telco average of 2.5 times over the long term. The current low leverage &ldquo gives us a lot of firepower for acquisitions, which we&rsquo re focused on&rdquo , he added.
On this note, there has been talk that StarHub could buy over one of the telcos for some years now.
The proposition was met with a tight-lipped Eapen, who would only say: &ldquo We have a high degree of credibility and confidence. I think we&rsquo ve executed quite well. Our mobile revenue market share has expanded&hellip We have low leverage and funding firepower.
&ldquo So while I can&rsquo t comment on the specifics of any consolidation, I would say we are well-positioned.&rdquo
Hope 2024 we will see more positive outcomes from Starhub other than dividends given. I have accumulated some last couple of months and hope there's a good run for Starhub after their FY results.
Alignment ( Date: 31-Dec-2023 15:40) Posted:
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There is a catalyst for this company (the most basic type in fact) - cashflows are structually improving in the near term resulting in higher dividends.
StarHub
The telecommunications company purchased a total of 450,000 shares in the last five trading days at the price of S$1.09 per share.
The company&rsquo s share buyback was renewed in April, and it has acquired 15,929,700 shares since then.
In June this year, StarHub : CC3 -1.83% announced it would set aside S$50 million to repurchase up to 3 per cent of its issued share capital, or approximately 51.9 million shares, to enhance long-term total shareholder returns.
The programme will facilitate the return of excess cash to shareholders, the company said, and was proposed after considering factors such as the group&rsquo s short- to mid-term capital requirements and cash flow trends, as well as its future growth plans and funding needs.
StarHub said its business model is shifting, and that it will be substituting more of its capital expenditure needs with operating expenditures instead. The company also generates &ldquo healthy cash flow&rdquo , it said.
Its free cash flow was S$131.1 million for the first nine months of 2023, up 13.7 per cent from S$115.4 million in the year-ago period.
The telco reported a 36.5 per cent growth in net profit in its latest quarter&rsquo s earnings, to S$37.3 million. For the nine-month period, net profit was up 29.1 per cent on the year to S$114 million.
Total revenue for the quarter also expanded 5.3 per cent to S$622.1 million. For the nine-month period, its total revenue was 4.8 per cent higher, at S$1.7 billion.
Last week, StarHub also announced the sale of one of its subsidiaries, cryptographic technology company D&rsquo Crypt, to conglomerate ST Engineering at an initial consideration of S$67.5 million.
The deal also includes a S$5 million earn-out consideration &ndash a form of deferred consideration paid out when certain business goals are met.
The divestment allows StarHub to optimise its resources for other businesses, the company said.
The counter has risen 3.8 per cent this year, to close down 1.8 per cent at S$1.07 on Friday.
That gives it a historical price-to-earnings ratio of 26.8 times, and a dividend yield of 4.63 per cent.
On the other hand, the share buyback is reaching 1% for the year.
TA_Expert ( Date: 17-Dec-2023 01:39) Posted:
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Price of $1 or lower is a good entry point.
There is no catalyst for Starhub.
There is no catalyst for Starhub.
Same old pump and dump trick again....
12 series coming
StarHub?s Investor Day 2023: 4 Key Aspects Investors Need to Know
https://thesmartinvestor.com.sg/starhubs-investor-day-2023-4-key-aspects-investors-need-to-know/
https://thesmartinvestor.com.sg/starhubs-investor-day-2023-4-key-aspects-investors-need-to-know/
Maybank and DBS raise respective target prices for StarHub on higher earnings and lower IT spending
The Edge Singapore
Tue, Nov 14, 2023 ? 05:07 PM GMT+08
https://www.theedgesingapore.com/capital/brokers-calls/maybank-and-dbs-raise-respective-target-prices-starhub-higher-earnings-and
The Edge Singapore
Tue, Nov 14, 2023 ? 05:07 PM GMT+08
https://www.theedgesingapore.com/capital/brokers-calls/maybank-and-dbs-raise-respective-target-prices-starhub-higher-earnings-and
oversold
Good set of results and importantly incrementally better than both predicted at the end of last year and at 1H results - a positive trend.
StarHub Q3 net profit rises 36.5% to S$37.3 million on higher revenue
MAINBOARD-LISTED telco StarHub posted a 36.5 per cent rise in net profit to S$37.3 million for the third quarter ended Sep 30, up from S$27.4 million in the corresponding period a year earlier.
Total revenue grew 5.3 per cent year on year to S$622.1 million, from S$590.8 million a year ago.
Service revenue for the quarter grew 8.9 per cent on the year to S$526 million, as a result of increased contributions across most business segments, as well as the consolidation of MyRepublic Broadband subscribers, said StarHub in a business update on Wednesday (Nov 8).
The telco also recorded higher operating expenses, which increased by 3.9 per cent to S$568.7 million in Q3, up from S$547.1 million in the year-ago period.
For the nine-month period ended Sep 30, 2023, StarHub&rsquo s net profit rose 29.1 per cent on the year to S$114 million its total revenue was 4.8 per cent higher, at S$1.7 billion.
Commenting on the results, Starhub chief executive Nikhil Eapen said that the company has maintained its momentum into Q3 and delivered &ldquo solid growth&rdquo year on year.
He noted that its service revenue growth of 8.2 per cent for the first nine months of 2023 exceeded its earlier guidance range of 3 per cent to 5 per cent.
He added that its service earnings before interest, taxes, depreciation and amortisation (Ebitda) margins of 21.8 per cent for the nine-month period was in line with earlier guidance of about 22 per cent.
Eapen also said that the company will continue to put operating and capital expenditure towards rolling out its Dare+ programme. Dare+ refers to the building of StarHub&rsquo s 5G network and other IT expenditures as part of its five-year growth road map, which was launched in 2021.
&ldquo We reiterate our Dare+ outcomes and our ambition to transcend beyond telco with first-of-its-kind platforms, to enhance long-term total shareholder returns and value for our society and all stakeholders,&rdquo he said.
StarHub also said that it will retain its assigned rights for pure-play cybersecurity provider Ensign InfoSecurity for two additional years until Oct 4, 2025, which will maintain the group&rsquo s effective interest at 55.73 per cent.
Ensign InfoSecurity was formed in 2018 from a joint venture between StarHub and Temasek Holdings.
A mechanism has been put in place for the telco to potentially retain the assigned rights beyond the 2025 deadline, either through a further extension to be negotiated with Temasek, or through a transfer of the assigned rights shares for a consideration to be determined.
Let it be Singtel, more cash and business synergy.
Speediman ( Date: 09-Nov-2023 09:40) Posted:
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try 2.88
AttasBoss ( Date: 09-Nov-2023 12:09) Posted:
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i want to buy over starhhub at 3.88, but can not get the loan financing
at least 1.80 lah
arkan1111 ( Date: 09-Nov-2023 11:03) Posted:
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No so greedy, 1.3 I am happy
im waiting
mrwise ( Date: 09-Nov-2023 10:11) Posted:
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