StarHub - Assured 4.5% Yield Amid A Sharp Cut In Street Earnings

StarHub - DBS Research 2023-02-08: Assured 4.5% Yield Amid A Sharp Cut In Street Earnings

SGinvestors.io

Published: 2023-03-15 01:27 PM

STARHUB LTD (SGX:CC3)

StarHub (SGX:CC3)'s FY22 normalised earnings of S$114.2m (-23% y-o-y) was 14% below our estimates. StarHub reported FY22 earnings of S$62.2m (-58% y-o-y). However, normalized earnings was S$114.2m (-23% y-o-y) excluding S$30.8m provisions related to DARE+ transformation coupled with impairment losses of S$21.6m in Strateq and S$38.5m in legacy network assets, and fair value gains of S$31.4m. This was 14% below our normalized earnings estimates of S$132.1m for FY22 (excluding transformation opex of S$30m which was factored in our forecasts).
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Normalised operating expenses excluding the S$30.8m DARE+ provisions increased by 18% y-o-y to S$2,150m. Normalised service EBITDA margin stood at 21.7% in FY22, which exceeded management guidance of 20%, but was below our forecasted margin of 23.4%.
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StarHub (SGX:CC3)'s FY22 normalised earnings of S$114.2m (-23% y-o-y) was 14% below our estimates. StarHub reported FY22 earnings of S$62.2m (-58% y-o-y). However, normalized earnings was S$114.2m (-23% y-o-y) excluding S$30.8m provisions related to DARE+ transformation coupled with impairment losses of S$21.6m in Strateq and S$38.5m in legacy network assets, and fair value gains of S$31.4m. This was 14% below our normalized earnings estimates of S$132.1m for FY22 (excluding transformation opex of S$30m which was factored in our forecasts).
FY22 service EBITDA of S$410m (-15% y-o-y) was 6% below our forecast of S$438.3m. This was mainly due to a rise in cost of services due to EPL content costs and other operating expenses arising from the consolidation of JOS SG and JOS MY.
Normalised operating expenses excluding the S$30.8m DARE+ provisions increased by 18% y-o-y to S$2,150m. Normalised service EBITDA margin stood at 21.7% in FY22, which exceeded management guidance of 20%, but was below our forecasted margin of 23.4%.
StarHub's FY22 service revenue of S$1,889m (+17% y-o-y) were in line with our estimates. Service revenue which excludes equipment/ handset sales reported S$1,889m (+17% y-o-y) for FY22 which was in line with our expectations but above the management guidance of 12%-15% y-o-y growth given in Nov 2022.
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Above is an excerpt from a report by DBS Group Research.
Clients of DBS may access the full PDF report @ https://www.dbs.com/insightsdirect/.

Sachin MITTAL DBS Group Research | https://www.dbs.com/insightsdirect/ 2023-02-08

Read also DBS's most recent report:
2025-02-24 StarHub - Earnings Growth Postponed To 2026.

Price targets by 4 other brokers at StarHub Target Prices.

Listing of research reports at StarHub Analyst Reports.