StarHub

UOBKayhian on 6 Nov2014


FY14F PE (x): 23.0
FY15F PE (x): 20.8

StarHub reported net profit of S$97.7m for 3Q14, which is in line with our expectations.
Slow growth from mobile. StarHub added 11,000 post-paid subscribers and post-paid
ARPU increased 1.5% qoq to S$69/month. Post-paid subscriber base contracted by
120,000 or 11.4% qoq due to the new regulation imposed on the registration of pre-paid
SIM cards from the previous 10 to the current three SIM cards per person. Overall
mobile revenue increased by only 0.8% yoy (M1: 3.4% yoy).
Maintain HOLD as StarHub faces near-term headwinds. We are concerned by the
slowdown in mobile and intense competition for residential broadband. Our target price
of S$4.33, based on DCF (required rate of return: 6.7%, terminal growth: 1%). Our
suggested entry price is S$3.95.