UOBKayhian on 8 Nov 2013
(STH SP/BUY/S$4.36/Target: S$4.65)
FY13F PE (x): 22.6
FY14F PE (x): 20.2
StarHub reported net profit of S$95.3m for 3Q13 (-1.0% yoy), slightly lower than our forecast. Targeting enterprises to generate growth. The mobile business added 24,000 post-paid subscribers to expand its post-paid subscriber base by 6% yoy. The boost came from new corporate accounts.
Postpaid ARPU increased 1.4% yoy but declined 2.8% qoq to S$70. The sequential decline in ARPU was due to lower outbound roaming. The proportion of post-paid subscriber base on tiered data plans increased
from 32% to 38%. Data usage increased 19% ytd. Maintain BUY. Our target price is S$4.65, based on DCF (required rate of return: 6.7%, terminal growth: 1%). We have factored in positive impact from the
improvement in working capital management into our cash flow projections.
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