Singapore Stock Market News

Starhub - Dragged by handset subsidies

StockFanatic
Publish date: Sun, 17 May 2015, 01:59 PM
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1Q15 core net profit fell by 21.8% qoq (-12.5% yoy) due to higher handset subsidies. Although we expect subsidies to normalise in the coming quarters, 1Q15 was still below expectations at 18%/19% of our/consensus FY15 forecasts. As expected, a quarterly DPS of S$0.05 was declared. We cut FY15/16/17 core net profit forecasts by 4.9%/4.8%/6.8% to factor in higher handset subsidies and slower growth in mobile service revenue. Maintain Hold with a 3.3% lower DCF-based target price (WACC: 7.1%).

We see a decent outlook for its mobile and fixed network businesses, while its broadband business should stabilise this year. However, we do not expect it to raise its annual DPS or pay special dividends in FY15-17 due to high capex and spectrum payments.
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StarHub (CC3)
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