StarHub - UOB Kay Hian 2022-12-09: On Firm Footing; Frontloading Capex To Drive Future Earnings

• StarHub is expected to deliver S$500m in cost savings over 2022-26 under its DARE+ initiative. This entails spending S$310m to drive incremental net profit stack of S$80m from 2026 onwards – suggesting a robust 3-year earnings CAGR of 15% over 2023 26.
• - Read this at SGinvestors.io -
• StarHub's share price currently trades at -2 standard deviation below its mean EV/EBITDA of 7x. Market consolidation is a key re-rating catalyst.

Starhub on track to deliver S$500m in cost savings over next three years...with investments peaking in 2023.

• - Read this at SGinvestors.io -
• Total investment over 2022-26 (for network and digitalisation) has increased from an original S$270m to S$310m but StarHub is confident it will have adequate cashflow and gearing headroom in the foreseeable future. With the bulk of investments to be spent in 2023, we expect StarHub to reap revenue growth opportunities from 2024 onwards.
• S$80m incremental profit stack by 2026. By 2026 (3-year earnings horizon), StarHub expects S$80m incremental profit from DARE+ transformation programme. This suggest a robust 3-year earnings CAGR of 15% over 2023-26.

Market consolidation a key re-rating catalyst for StarHub.

• Read more at SGinvestors.io.

Chong Lee Len UOB Kay Hian Research | https://research.uobkayhian.com/ 2022-12-09 SGinvestors.io

---