StarHub (SGX:CC3)'s 3Q22 EBITDA eased 17.5% y-o-y (-9.2% q-o-q) as lower margin more than offset higher revenue. This led to core EPS falling 31.5% y-o-y (-10.8% q-o-q). However, 9M22 EBITDA/ core EPS tracked ahead at 78%/89% of our FY22F forecasts as the booking of Dare+ transformation cost has been slightly deferred.
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StarHub's 3Q22 Fixed Enterprise revenue climbed 16.3% y-o-y (+6.9% q-o-q), led by higher network solutions (+6.7% y-o-y) and regional ICT services (+1.2x y-o-y; owing to consolidation of HKBN JOS Singapore & Malaysia) revenues.
Meanwhile, entertainment revenue climbed 17.6% y-o-y (+12.6% q-o-q) due to higher Premier League (EPL) subs and advertising revenue.
Similarly, broadband revenue jumped 28.2% y-o-y (-1.2% q-o-q) on consolidation of MyRepublic Broadband and 2Gbps adoption.
3Q22 service EBITDA margin narrowed sharply by 9.4% points y-o-y to 20.6% on higher costs for staff, marketing (one-off, EPL-related), network and IT transformation initiatives and utilities. StarHub kept its FY22 guidance of margin at > 20% as it projects a pick-up in costs for EPL, World Cup content/marketing and IT transformation in 4Q22.
As part of Dare+, StarHub will also review its regional ICT business and write off certain legacy network assets in 4Q22.
StarHub said the write-off will not affect its dividend-paying capacity (one-off in nature, will not adversely impact its retained earnings too substantially).
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Above is the excerpt from research report by CGS-CIMB. Clients of CGS-CIMB may access the full report in PDF @ https://www.itradecimb.com.sg/.
