- In line with expectations, StarHub (SGX:CC3) reported stable 1H24 revenue (+1.0% y-o-y) and PATMI (+8.6% y-o-y), forming 45% and 49% of our full-year forecasts respectively. The stable performance was driven by the enterprise segment but offset by StarHub’s consumer businesses.
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Expanding margins.
- 2Q24 service EBITDA was also higher (+4.9% y-o-y) as service EBITDA margin expanded by 0.5ppt y-o-y, likely due to seasonally lower DARE+ investments in 2Q24 coupled with realisation of ongoing cost efficiency efforts. 2Q24 PATMI margins rose by 0.5ppt y-o-y, driven by realisation of DARE+ benefits (capex to opex model).
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Outperformance.
- For 2Q24, StarHub beat its 2024 service EBITDA margin and capex guidance given seasonally lower DARE+ investments in 1H24.
- Moving into 3Q24, we maintain our expectations of some downside to service revenue growth given stiff competition in the group’s consumer segments, likely meeting the lower end of its guidance. Also, service EBITDA margin is expected to compress as capex commitment would likely increase in 2H24.
- Lastly, StarHub declared an 1H24 interim dividend of 3.0 cents. Given that the guidance applies to full-year 2024, we maintain our 2024 dividend of around 7.9 cents/share, implying an 80% PATMI payout and 6.1% dividend yield.
StarHub Mobile: Strong headwind intensifies.
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