Starhub

[ishak]

More Challenges Ahead
23 Sep 2008

Price Target : 12-Month S$ 2.50 (Prev S$ 2.60)
Reason for Report : Company update
Potential Catalyst: potential capital management with FY08 results

Story: In our view, StarHub’s pay TV and broadband business are going to face more headwinds in the medium to long term.

Point: We have three key points to highlight here.
1. Broadband business under pressure from declining ARPU. After comparing with Hong Kong, we think that broadband tariffs can decline by almost 50% in two to three years time. Currently, broadband business accounts for an estimated 23-24% of StarHub’s EBITDA.
2. Pay TV business to experience higher cost of content. Two of the most popular contents – English Premier League (EPL) 2010-2012 and FIFA World cup 2010 are up for renewal in the middle to late 2009. With a more aggressive SingTel, the content cost could even double from an estimated S$150m for EPL in 2006. This could further escalate the losses of the pay TV business for StarHub.
3. Our revised FY08 and FY09 earnings estimates are 3.5% and 7.5% below consensus. We have lowered our FY08 and FY09 earnings estimates by 2.9% and 3.6% respectively. We think the key difference from consensus could be the EBITDA estimates for cable TV and broadband segment. We expect the margins to fall sharply in this segment as indicated in table on the next page. We expect mobile margins to fall gradually over
the time.

Relevance: We peg our target price to 14x average FY08-FY09 EPS at 20% premium to our target PER of 12x for M1, towards the lower end of StarHub’s historical PER range (13.3x-19.4x) when it was considered a growth stock. We maintain FULLY VALUED with revised TP of S$2.50. Additional 6% yield from capital management assuming target of 1.5x net debt to EBITDA depends on the decision to participate in OpCo bidding.

[ishak]

24 September 2008
Target: S$2.30

Cautious tone
Bloomberg has reported StarHub’s CFO Mr Kwek Buck Chye as saying:
• Its users may scale back spending on telecom services because of credit tightening on corporate and small business customers, although he believes that consumers “will still use our services but less”. Despite this, StarHub is maintaining its revenue growth guidance of 7% yoy for the year.
• StarHub does not plan to refinance its S$142.9m loan which will be due within 12 months. “It's not a question of availability for us; it's a question of whether we want to go ahead and take that risk. I think the better time would be to wait six months to a year.”

Comments
StarHub’s cautious tone does not surprise us and is consistent with our negative view on the company. Also, by planning to repay the S$143m loan, we believe the chances of a special dividend or capital repayment are significantly reduced. StarHub had cash of S$102m and debt of S$828m as at 2Q08. When we downgraded our rating on StarHub to Underperform on 5 Sep 08, we highlighted, among other things, that:
1) consumers may downtrade on its services due to higher costs of living; and
2) StarHub may not undertake capital management in FY08 given a fairly high gearing of 1.41x , slightly below its long-term target of 1.5-2.0x.

Mr Kwek’s statements came on the back of SingTel’s recent comment that: “The tea leaves are indicating that things are going to be very uncertain” and it will “start to curtail some of our unnecessary spending and be a bit more cautious.”

Valuation and recommendation
Maintain UNDERPERFORM, with a DCF-based target price of S$2.30 (WACC 7.5%, terminal growth 1.7%). De-rating catalysts could include rising concerns over weaker-than-expected revenue, and the cost of content, in particular that of football. As we head towards year-end, we expect investor attention to turn to events in 2009, and focus on the bidding war for the rights of both the World Cup and BPL in mid-2009. We prefer MobileOne (M1 SP, Neutral, target price S$2.05) for its more visible earnings and attractive dividend yields of 8%.

[ishak]

Starhub - FULLY VALUED - TP $2.50
29 Sep 2008

[kennynah]

amazing how these figures can be so convincing..or should I say, conniving?

[winston]

Not vested.

RESEARCH ALERT-Macquarie upgrades Starhub to outperform

SINGAPORE, Oct 15 (Reuters) - Macquarie has upgraded telecom and cable TV provider Starhub to "outperform" from "netural" but cut the target price to S$2.40 from S$2.64, saying it saw value in the stock after recent weakness.

"StarHub has significant flexibility to curtail capex and marketing activity as it adjusts its business to a slower economic cycle," Macquarie analyst Ramakrishna Maruvada wrote in a report.

"Based on our revised numbers, 2009 free cashflow remains unchanged even though we reduce EBITDA (earnings before interest, tax, depreciation and amortisation) by 9 percent."

[millionairemind]

November 3, 2008, 2.11 pm (Singapore time)

Starhub dips after DBS downgrade

SINGAPORE - Telecoms firm Starhub bucked a rising Singapore market to drop as much as 7.6 per cent on Monday after DBS Group downgraded it on weaker earnings expectations.

DBS in a report downgraded Starhub to 'fully valued' from 'hold', with a target price of $2.34 (US$1.58), and lowered its full year 2008 earnings forecast for the firm by 2 per cent. By 0600 GMT, Starhub shares were 5.04 per cent down at $2.26.

'Fully valued is as good as a sell, because there is no potential upside once it's fully valued,' said a Singapore dealer.

DBS also lowered earnings forecasts for Southeast Asia's top telecoms firm Singapore Telecommunications by 5 per cent for full year 2009 and 2010, but maintained a hold rating with a target price of $2.84. SingTel shares went up as much as 8.2 per cent on Monday.

The report also upgraded MobileOne to 'Buy' with a target price of $1.57. MobileOne shares jumped 17.7 per cent.

At 0608 GMT, the benchmark Straits Times Index was up 4.98 per cent. -- REUTERS

[iam802]

This one I traded based on the Ichimoku chart.

Took a short position a couple of days back and as can be seen there is some mini-rallies last few days.

I stick to my plan and believe that the resistant level as shown by the 'kumo' is enough to make it turn.

Decided to take profit today as it is now trading cum-dividend.

Note: Today close at 2.12 just below the support line. Most of the time, I would have held it further to see how far it goes as it breaks a support line.

[blid2def]

Good job! Grats. Out of curiosity, which day did you initiate your trade?

[iam802]

Nov 3. After the previous day hit a high and reverse.

My notes, states that it is after the results being released.

[blid2def]

Thanks; am I right to suggest that you used Ichimoku to determine the exit point rather than the entry point? Trying to figure out the thinking process and application of the indicators behind this trade; not trying to kachiao you ah. Hahaha.