Results at a glance
Source: Company, PSR #Note – Only selected financials are provided in the 1Q22 update.
The Positives
+ Broadband revenue at 5-year high. Broadband revenue has been progressively growing through higher prices, lower discounted contracts and upsizing to higher speed 2Gbps plans. Broadband has become an essential service amid the Covid-19 pandemic.
The Negatives
– Costs piling up. Service EBITDA margin was down almost 7% points to 24.2%. It remains above FY22e guidance by at least 20%. We expect higher costs in the coming three quarters. EBITDA margin recovery is only expected in FY23e. Higher cost was incurred on staff, electricity and IT.
Outlook
Roaming will provide an upside surprise in revenue. However, earnings will be bogged by higher cybersecurity staff costs and upfront investments in technology. The purchase of EPL exclusively for six years (pricing details not available) will be an added fixed cost burden. Nevertheless, StarHub said it has strategic initiatives for EPL together with other OTT content. EPL could be the beachhead to enhance its OTT offerings in gaming, entertainment and sports, all bundled into a “super app”.
Upgrade to ACCUMULATE from NEUTRAL with an unchanged TP of S$1.35
Our valuation is based on regional peers’ 8x FY22e EV/EBITDA.
Source: Phillip Capital Research - 4 May 2022
Chart | Stock Name | Last | Change | Volume |
---|
Created by traderhub8 | Jun 12, 2024
Created by traderhub8 | Jun 03, 2024