Starhub

OCBC on 3 May 2012

StarHub Ltd is due to report its 1Q12 results on 4 May after market hours. Based on its historical trend, we expect StarHub’s revenue to come in at around S$600m and net profit of around S$78m. We also expect StarHub to maintain its S$0.05/share dividend for the quarter. Besides its mainstay telco business, we would also be looking for signs of whether its cable broadband business has been affected by the recent entry of more RSPs (Retail Service Providers) in the NGNBN space. On the Pay TV front, we would also like to get more updates on how has the response been for the upcoming Euro 2012 soccer tournament. Last but not least, we would also be keen to find out more about StarHub’s capex plans, especially in light of the upcoming 4G spectrum auction. For now, we hold off adjusting our numbers; maintain HOLD with an unchanged fair value of S$3.10.

1Q12 results due 4 May
StarHub Ltd is due to report its 1Q12 results on 04 May after market hours. Based on its historical trend, we expect StarHub’s revenue to come in around S$600m, which should represent 7.4% YoY increase. Assuming that there is still strong lingering demand for the Apple iPhone 4S, where sales could keep cost up, we expect net profit to come in around S$78m, or an increase of 13.3% YoY. We also expect StarHub to maintain its S$0.05/share dividend for the quarter.

Things to watch out for
Besides its mainstay telco business, we would also be looking for signs of whether its cable broadband business has been affected by the recent entry of more RSPs (Retail Service Providers) in the NGNBN space. We believe that StarHub should still be able to hold its own against these new entrants, aided by its “hubbing” strategy (where subscribers with two or more services enjoy discounts on services). On the Pay TV front, we would also like to get more updates on how has the response been for the upcoming Euro 2012 soccer tournament – this will also be the first exclusive content that is subject to the new cross carriage ruling.

Capex outlook and dividend policy
Last but not least, we would also be keen to find out more about StarHub’s capex plans, especially in light of the upcoming 4G spectrum auction. Note that StarHub had previously guided to spend some 11% of its operating revenue as capex. Also keenly watched would be its dividend policy where it is currently paying out $0.20 for the full year. However, if StarHub doesn’t require additional capex spending, the street believes that it can afford to increase the payout amount, especially since the company also has ample room to take on more debt. For now, we hold off adjusting our numbers; maintain HOLD with an unchanged fair value of S$3.10.