The STI retraced 23.3 points yesterday to close at 3214.3 after gaining 3.8% last week, following an unexpected decision by the Federal Reserve to delay its QE tapering plans. Telecommunication stocks were among the worst performers in the STI, shedding 1.1% on average.
 

Starhub was in the headlines last week after the company announced that hundreds of illegal TV decoders had been seized from a storage facility during a joint operation with the Singapore police force.

Illegal TV decoders

According to a report in the Straits Times, Starhub said they had been tracking a syndicate that has been distributing flyers advertising illegal TV decoders. These set-top boxes are able to unscramble Starhub TV’s content, allowing users to watch channels without paying. 

Starhub’s pay TV business represents approximately 16% of the company’s total revenue each year. Starhub is hopping that customers who had been using the illegal TV decoders will switch to the proper subscription model.

Launch of new Apple smartphones

Starhub’s mobile business represents approximately 50% of its annual total revenue. The ability of the company to capture customers at the launch of new popular smartphones is critical. Each customer is likely to stay with the same service provider for the next two years, representing a stable source of revenue for the company during the contractual period.

Starhub announced its price packages for selling Apple’s latest smartphone, the iPhone 5S and iPhone 5C last Thursday. The iPhone 5C is marketed as a ‘low-cost’ handset for the mass market, with the smartphone handset going for approximately $355 when user signs up for a standard Starhub mobile plan.

Technical indicators for Starhub

Starhub retraced 3.2% over the last two trading days after the telecommunication company closed at $4.37 last Thursday, its highest closing price in more than a month.

Starhub’s RSI was at 68.1 before the retracement, 2% away from 70, an indicative level which suggests that the stock may be oversold. Closing at S$4.23 yesterday, Starhub is currently trading between its 50-day and 100-day moving average price.

Starhub’s 50-day and 100-day moving average lines had been converging since the last week of July. As of yesterday evening, the two moving average lines are less than S$0.01 apart. Should the two moving average lines cross, it may suggest some short term bullish momentum for the stock.

Source: Macquarie Research - 24 Sep 2013