StarHub Ltd reported a decent set of 2Q13 results, with revenue down 0.7% YoY (+1.2% QoQ); net profit improved 15.9% YoY and 10.3% to S$100.6m. StarHub declared a quarterly S$0.05/share dividend as guided. For 1H13, revenue slipped 1.2% to S$1166.9m, or about 46.4% of our full-year forecast, while net profit climbed 9.5% to S$191.8m, meeting 53.2% of FY13 estimate. For 2013, StarHub has kept its previous guidance; it also does not expect the BPL cross-carriage to have a material financial impact. Despite the decent 2Q13 showing, we opt to keep our FY13 estimates, as potential margin pressures are likely to emerge in 2H. Maintain SELL on the stock with an unchanged DCF-based fair value of S$3.82.
Decent 2Q13 showing
StarHub Ltd reported a decent set of 2Q13 results, with revenue down 0.7% YoY (+1.2% QoQ) due to lower handset sales, and this resulted in an improvement in service EBITDA margin from 33.3% from 31.2% in 1Q13. Correspondingly, net profit improved 15.9% YoY and 10.3% to S$100.6m. StarHub declared a quarterly S$0.05/share dividend as guided. For 1H13, revenue slipped 1.2% to S$1166.9m, or about 46.4% of our full-year forecast, while net profit climbed 9.5% to S$191.8m, meeting 53.2% of FY13 estimate.
Keeping its 2013 guidance
For 2013, StarHub continues to expect low single-digit revenue growth, unchanged from its previous guidance; this as the overall market remains competitive and challenging. In particular, it expects price competition in the broadband arena to remain intense. In addition, it has kept its service EBITDA margin at 31% (versus 33.7% in 1H13), where the launch of new LTE-enabled phones is likely to drive up customer acquisition and re-contract costs. Capex remains at 13% of operating revenue; the group also intends to maintain its annual cash dividend of S$0.20/share, or $0.05 per quarter.
BPL cross-carriage likely non-event
While StarHub will be able to cross carry the widely-followed BPL (Barclays Premier League) live matches for the upcoming 2013 to 2016 seasons, it does not expect the move to have a material financial impact. Although StarHub has revealed new “Surf & Bundles” with a S$300 rebate for new customers to watch BPL on its cable TV platform, we note that SingTel has responded with its own packages, dangling a S$480 discount for new and existing customers.
Keeping our SELL call
Despite the decent 2Q13 showing, we opt to keep our FY13 estimates, as potential margin pressures are likely to emerge in 2H. Maintain SELL on the stock with an unchanged DCF-based fair value of S$3.82.
StarHub Ltd reported a decent set of 2Q13 results, with revenue down 0.7% YoY (+1.2% QoQ) due to lower handset sales, and this resulted in an improvement in service EBITDA margin from 33.3% from 31.2% in 1Q13. Correspondingly, net profit improved 15.9% YoY and 10.3% to S$100.6m. StarHub declared a quarterly S$0.05/share dividend as guided. For 1H13, revenue slipped 1.2% to S$1166.9m, or about 46.4% of our full-year forecast, while net profit climbed 9.5% to S$191.8m, meeting 53.2% of FY13 estimate.
Keeping its 2013 guidance
For 2013, StarHub continues to expect low single-digit revenue growth, unchanged from its previous guidance; this as the overall market remains competitive and challenging. In particular, it expects price competition in the broadband arena to remain intense. In addition, it has kept its service EBITDA margin at 31% (versus 33.7% in 1H13), where the launch of new LTE-enabled phones is likely to drive up customer acquisition and re-contract costs. Capex remains at 13% of operating revenue; the group also intends to maintain its annual cash dividend of S$0.20/share, or $0.05 per quarter.
BPL cross-carriage likely non-event
While StarHub will be able to cross carry the widely-followed BPL (Barclays Premier League) live matches for the upcoming 2013 to 2016 seasons, it does not expect the move to have a material financial impact. Although StarHub has revealed new “Surf & Bundles” with a S$300 rebate for new customers to watch BPL on its cable TV platform, we note that SingTel has responded with its own packages, dangling a S$480 discount for new and existing customers.
Keeping our SELL call
Despite the decent 2Q13 showing, we opt to keep our FY13 estimates, as potential margin pressures are likely to emerge in 2H. Maintain SELL on the stock with an unchanged DCF-based fair value of S$3.82.
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