• Results were below our expectations. EBITDA and net profit disappointed 13% and 20% respectively.
• Switching from fixed to variable dividend policy and to at least pay 80% of net profit each year. Cuts dividend to 9 cents per share from current 16 cents.
• We revised our FY19e EBITDA and net profit downwards by 12% and 16% respectively due to the results. Downgrade to NEUTRAL with a lower target price of S$1.58 (prev. S$1.88).

The Positives
+ Solid growth from enterprise. The segment enjoyed a revenue growth of S$70.3mn (16%
YoY). The growth is attributed by higher contribution from managed services where there is
higher demand for cyber security, cloud, cryptographic and digital solutions. The cyber security
business contributes 7% of enterprise revenue and turned EBITDA positive in FY18. The S$30mn
cost savings as part of the restructuring exercise is likely to flow back into Ensign as cyber
security is labour intensive. We expect enterprise to continue its growth momentum in FY19 as
more resources are channelled into the segment.

The Negatives
– Triple whammy. Revenue from mobile, pay-tv and sales of equipment declined. Mobile
revenues decreased 14% YoY in 4Q18. We observe a 10% decline in mobile post-paid ARPU from
a year ago as consumers continued the shift from traditional bundled plans to sim-only plans.
StarHub added 34,000 post-paid customers a dismal amount compared to its competitors M1
(91,000) and Singtel (112,000). Pay-tv revenue saw its biggest YoY decline in 4Q18, revenue
shrunk $16.8mn (19%) the decline is contributed by a decrease in subscriber base (49,000) and
lower ARPU YoY. Sales of equipment revenue declined S$33.9mn (17.3%) this is due to lower
handset sales.

Source: Phillip Capital Research - 18 Feb 2019