- We downgrade StarHub (SGX:CC3) to HOLD with a lower target price of S$1.00 (from S$1.30) following weaker-than-expected 1Q results, consolidation delays and rising visibility of enterprise, IT & cybersecurity investments over 12–24 months.
Earnings pressure before enterprise payoff
- - Read this at SGinvestors.io -
- Management also indicated openness to fully monetising its remaining 39% Ensign stake (~S$280m implied value), which could lower net debt/EBITDA to 1.5x from >2x currently, although prospects for a special dividend appear limited as StarHub remains open to selective M&A.
Weak 1Q: Hyper competition & enterprise lumpiness
- - Read this at SGinvestors.io -
- The mobile segment showed little sign of stabilisation, with revenues down 11% y-o-y. Led by incumbent players, management continues to see elevated competition across premium, value and digital segments, alongside increasing migration of users toward lower-priced offerings.
- Enterprise revenue also fell 4% y-o-y due to project timing, although management highlighted that >50% y-o-y orderbook growth in managed services and regional enterprise could support stronger growth in coming quarters.
Delayed consolidation prolongs elevated competition
- Read more at SGinvestors.io.
