• Revenue  declined  3%  y-y  from  lower  equipment  sales;  service  revenue remains stable however
• Net profits increased 3% y-y due to higher NGNBN grants  
• Final dividend of 5c per share declared; bringing total FY13 DPS to 20c
• Maintain "Accumulate”, with unchanged TP of S$4.52

StarHub  announced its FY13  results  on 6 Feb 2014. Net  profits increased 3.2% y-y mainly  from  higher  adoption  grants  for  NGNBN  take-up.  EBITDA  on  service revenue increased to 32.9%, up from 32.3% in FY12. This was attributed to lower traffic  expenses  and  equipment  costs.  Growth  in  mobile  and  fixed  network services segments was offset by decline in Pay TV and Broadband revenue. Pay TV revenue  was  lower  due  to  one-off  gain  from  UEFA  EURO  event  in  2012. Broadband  price  competition  remains  intense  as  discounts  were  offered  on competitors'  fibre  broadband  plans.  46%  of  postpaid  subscribers  on  tiered  data plans, up from 38% in 3Q13.  Management guided growth  to continue  in mobile and fixed network services. It intends to maintain annual dividend payout of 20c per share in FY2014.

How we view this

StarHub's results were  inline with expectations. We continue to like StarHub due to  its  attractive  dividend  yield  of  4.7%  at  current  price.  We  remain  positive  on further growth in mobile from data monetising in Singapore.

Investment Action

We revised our estimates for FY14F earnings. We updated our DCF model with 0% terminal  growth  rate  to  reflect  the  growth  nature  of  the  industry  over  the  long term. We maintain "Accumulate" rating with TP of S$4.52, with implied FY14F P/E multiple of 20.3x.

Source: Phillip Securities Research - 7 Feb 2014