StarHub - CGS-CIMB Research 2024-02-08: Entering The Tail-End Of DARE+

• StarHub (SGX:CC3)’s 2H23 core net profit of S$73m (-5% h-o-h, +139% y-o-y) was in line with consensus but above our expectations, with FY23 core net profit at 12% above our full-year forecast.

EBITDA margins in line with guidance.

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• FY23 service EBITDA margin came in at 21.7% (FY22: 20.1%), in line with StarHub’s guidance of ~22%.

FY23 Dividend at S$0.067

• StarHub proposed a final dividend of 4.2 cents, bringing FY23 dividend per share to 6.7 cents (vs 5.0 cents in FY22), indicating an FY23 yield of 6.3%. See StarHub's dividend dates.

Tapering transformation costs in FY24F

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• We expect FY24F to be an important year of integration for StarHub, as the group focuses on:
  1. streamlining of IT and network functions, and
  2. transitioning away from legacy systems.
• We think margin expansion would be more apparent in FY25-26F as capex/opex levels normalise following DARE+ completion and cost savings kick in.
• We forecast FY24F service EBITDA margin of 21.9% (+0.2% pt y-o-y), before rising to 22.7%/23.0% in FY25F/26F.

More growth for Ensign ahead, while mobile remains competitive

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Kenneth TAN CGS-CIMB Research | LIM Siew Khee CGS-CIMB Research | https://www.cgs-cimb.com 2024-02-08 SGinvestors.io

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