StarHub - UOB Kay Hian 2024-11-14: 3Q24 Results In Line, DARE+ Nearing Its End

• For 9M24, StarHub reported lower overall revenue (-5.0% y-o-y) but higher PATMI (+9.4% y-o-y), forming 69% and 73% of our full-year forecasts respectively.
• The softer-than-expected revenue was dragged by weaker enterprise revenue in 3Q24 due to the timing of project revenue recognition from cybersecurity services. Management noted that the deferred revenue would eventually be recognised in 4Q24.
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Nearing completion.

• Dragged by most of the group’s businesses, 3Q24 service revenue (-4.1% y-o-y) was softer y-o-y but offset by the broadband business. However, both 3Q24 service EBITDA (+6.6% y-o-y) and PATMI (+11.0% y-o-y) grew, driven by the realisation of ongoing cost efficiency efforts and some DARE+ benefits.
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In line with expectations.

• For 3Q24, StarHub missed its service revenue guidance due to the timing of project revenue recognition as previously mentioned. Management noted that with the deferred revenue recognition in 4Q24, the group expects 2024 service revenue to still be within the full-year guidance.
• For 4Q24, we maintain our expectation of some downside to service revenue growth due to stiff competition in StarHub’s consumer segments, which is likely to result in it meeting the lower end of its guidance.
• Also, with StarHub at the tail-end of its DARE+ programme, we expect service EBITDA margin to remain stable/improve slightly while capex commitment would likely not exceed its full-year guidance.
• Lastly, we maintain our 2024 dividend of around 7.9 cents/share, implying an 80% PATMI payout and lush 6.6% dividend yield.

Mobile: Strong performance despite headwinds.

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Chong Lee Len UOB Kay Hian Research | Llelleythan Tan Yi Rong UOB Kay Hian Research | https://research.uobkayhian.com/ 2024-11-14 SGinvestors.io

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