UOBKayhian on 8 May 2014
FY14F PE (x): 21.3
FY15F PE (x): 18.0
StarHub reported net profit of S$84.2m for 1Q14, which is below our expectations.
Slowdown in mobile. The bulk of its net addition of 18,000 post-paid subscribers
was secondary lines through its Smartsurf SharePlus plan. Each post-paid subscriber
can add up to two SharePlus lines for family members to share voice minutes and
bundled data at only S$12.84 per line. StarHub also experienced a seasonal decline in
outbound roaming. Post-paid ARPU declined by S$3 or 4.4% to S$66 while mobile
revenue grew by a tepid pace of 1.3% yoy.
Downgrade to HOLD as StarHub faces near-term headwinds. We have lowered our
target price to S$4.48, based on DCF (required rate of return: 6.7%, terminal growth:
1%). Our suggested entry price is S$4.05.
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