Starhub ($4.13) - Temporary rebound in force

A temporary rebound is underway for which resistance appears at the confluence of the moving averages at $4.16. That leaves limited upside in the short term. The decline is likely to resume soon, with support established at the thrice-tested $4.02 level.

Volume remains lacklustre, an indication that buying pressure is absent. There are sporadic bouts of selling, when volume expands on black-candle days. ADX is very low, at 11, an indication that prices are unlikely to decline sharply, which at this stage is a saving grace.

StarHub 2Q net profit falls 6.3% to $94.3 mil

StarHub said it posted a 6.3% decrease in net profit to $94.3 million for the second quarter ended June 30.

Total revenue for the quarter was at $576 million, 2% lower compared to a year ago. On a half-year period, revenue was at $1.1 billion.

Mobile services revenue decreased 1% for the quarter to $310.3 million and was stable for the half-year at $616.2 million. Pay TV revenue increased 3% for the quarter to $98.4 million and 1% to $192.2 million for the half-year basis. Broadband revenue decreased 17% for the quarter $51.0 million and 15% for the half-year to $104.9 million. Fixed Network revenue increased 2% both for the quarter and half-year periods to $92 million and $182.2 million respectively.

The group’s EBITDA decreased 2% for the quarter and also for the first half to $187 million and $365 million, respectively. EBITDA margin as a percentage of service revenue was 34.0% for the quarter and on a half-year basis, it was at 33.3%.

Free cash flow was $62 million for the quarter and cash capital expenditure (capex) was 6% higher at $95 million compared to a year ago. On a half-year basis, free cash flow was $166 million while cash capex was $162 million.

May 8: StarHub, Ezion, UOL

Singapore shares closed lower on Wednesday, following Wall Street losses and in line with a regional sell-off. The benchmark ST Index drops 9.13 points, or 0.28%, at 3,236.43 on turnover of $1.01 billion. Here are some stocks that could move the market this Thursday morning:

StarHub reported a 7.7% fall in earnings for the first quarter ended Marc to $84.2 million, down from $91.2 million a year ago.

Ezion Holdings said its earnings for the first quarter ended March 31 fell 2% to US$45.21 million, despite a 72.3% rise in revenue.

UOL Group posted a 69% rise in group earnings to $120.8 milllion for the first quarter ended March from a year ago. This was due mainly to the sale of land at Jalan Conlay, Kuala Lumpur.

StarHub posts 7.7% fall in 1Q earnings to $84.2 mil

StarHub reported a 7.7% fall in earnings for the first quarter ended March to $84.2 million from $91.2 million a year ago.

Total revenue fell 2% to $571 million as service revenue fell by 1% at $544 million. Mobile revenue increased 1% to $306 million, contributed by Post-paid mobile services which recorded higher subscription revenue, driven from a larger subscriber base and an increased mix of subscribers on tiered data subscription plans.

Pay TV revenue decreased 1% to $94 million. The lower revenue was a result of lower subscription revenue. Customer base was stable at 533,000 households and the churn rate held steady at 0.9%.

Broadband revenue decreased 14% to $54 million, compared to a year ago, mainly due to lower subscription revenue despite a higher subscriber base.

The group’s EBITDA decreased 3% to $177 million from $182 million previously. EBITDA margin for the quarter was at 32.6%.

Free cash flow at $105 million was 14% higher compared to last year’s $92 million. Cash capital expenditure was 45% higher at $67 million compared to the same period last year.

Starhub ($4.07) - Breaks below support

Quarterly momentum is testing a support at its equilibrium line for the fourth time and the indicator appears poised for a breakdown. If this materialises, the rate of decline could pick up.

Prices fell below a minor uptrend and support at $4.20 as the moving averages were forming a negative cross. Immediate support is at $4, and a break below this level indicates a target of $3.60. Since medium-term indicators are in declining mode, a break below $4 looks increasingly probable.

Singapore's STI +0.9%; Playing catch-up: OCBC

Singapore's STI is up 0.9% at 3,301.12, remaining buoyant, with just four stocks in negative territory, even as European stocks open a tad lower.

"Markets here are playing a little bit of catch-up because we've been away from an extended Chinese New Year holiday," says Selena Ling, head of treasury research at OCBC.

Volume is 7.59 billion shares valued at $1.53 billion, skewed heavily toward penny stocks. In the broader market, gainers top losers nearly three to one. StarHub (CC3.SG) is up 2.8% at $4.04 after falling 2.0% Friday after reporting fourth-quarter net profit fell 5% on year to $87.9 million.

Among China-exposed plays, CapitaMalls Asia (JS8.SG) is up 1.9% at $2.14, while HK Land (H78.SG) is up 3.2% at US$8.04.


 

 

CIMB tips upside to Asean-Four markets in 2013

CIMB tips up to 18% upside for Asean-four markets in 2013, calling the Fed’s latest asset-purchase plan a positive. “Its timing is good with global macros on the mend, diminished risks of a hard landing in China and risk indicators trekking down significantly.”

It expects cyclical sectors to benefit most, including offshore & marine, property and commodities, while it likes construction-linked stocks in Indonesia and Thailand for structural improvements and remains selectively positive on consumer and financials.

CIMB stays Overweight on Singapore and Indonesia, Neutral on Thailand and Underweight on Malaysia.

Its top picks for Singapore are DBS (D05.SG), CapitaLand (C31.SG), ST Engineering (S63.SG), Thai Beverage (Y92.SG), Ezion (5ME.SG), Cache Logistics Trust (K2LU.SG) and Tat Hong (T03.SG). CIMB also screens for high-dividend-yield stocks with above-market average forward and historical yields among its Outperform-rated coverage, turning up Venture (V03.SG), SPH (T39.SG), Ascendas REIT (A17U.SG), ST Engineering (S63.SG), SIA Engineering (S59.SG), StarHub (CC3.SG), Frasers Centrepoint Trust (J69U.SG), DBS, Keppel (BN4.SG) and Sembcorp Industries (U96.SG).

Its Singapore-listed contrarian Underperform calls include CapitaMall Trust (C38U.SG) and CapitaCommercial Trust (C61U.SG).

CIMB ups StarHub's dividend, earnings forecast

CIMB upgraded its earnings per share (EPS) estimates for StarHub on expectations the city-state’s second largest telco will raise dividend per share (DPS) payout as it had more cash than it needs.

“We now assume StarHub will raise its quarterly DPS from 5 cents to 5.5 cents from the third and fourth quarter of 2012 and 6 cents from first quarter of 2013,” CIMB said in a report.

The broker said StarHub is ripe for a capital reduction or a higher dividend payout due to its under-leveraged balance sheet with a net debt to EBITDA ratio of 0.6 times, substantially below its target of 1.5 times.

StarHub's free cash flow per share is projected to rise from 16.6 cents per share in 2011 financial year to 22 cents in 2012 and 29 cents in 2013, CIMB said.

StarHub, the dominant player in Singapore’s pay-TV and broadband market, reported a 9% rise in its earnings before interest, tax, depreciation, and amortisation (EBITDA) for October-December. That compared with a 7% EBITDA fall for the Singapore operations of Singapore Telecommunications.

StarHub shares had risen by more than 8% so far this year, underperforming the 13% gain in the broader Singapore index.

Starhub rated 'buy' by Maybank Kim Eng

Maybank Kim Eng Research in a Mar 27 research report says: "StarHub has outperformed its two peers, up 5% since early this year. However, it is still a good story for 2012, with potential catalysts from lower subscriber acquisition costs as Android devices appear to be gaining ground.

"In addition, we expect the new Vodafone roaming alliance to boost ARPUs. For the 2011 mandate year, StarHub repurchased 2.1 million shares, above 2010’s 2 million shares, although average cost was 10% higher at $2.87 (up to $2.91). Since the share buyback is another way to enhance shareholder value, other than paying good dividends, the higher average cost is a firm endorsement of the stock’s value despite the outperformance.

"Target price raised to $3.33, based on target yield of 6% (pegged to the average yield of the top 15 dividend stocks with market cap over $1 billion under our coverage). MAINTAIN BUY."

Starhub rated 'neutral' by Phillip Securities

Phillip Securities Research in a Feb 3 research report says: "Starhub's FY2011 results were significantly above our estimates of $301 million. Sales were higher on very strong postpaid ARPU of $76 for the 4th quarter, which was 4% higher as compared to the same period last year.

"However, margins were flattered by several one off items that were booked in the quarter. Excluding these one off items, EBITDA margin on service revenue would have been lower than the headline 33.1%, but still above recent trend levels at 31.3%.

"Management guided for their intention to maintain the dividend levels of 20 cents for FY2012E. We revised our estimates up by 6-8% for the next two years and lifted our target price to $2.90. Starhub's current market price would translate to a strong yield of 7%. MAINTAIN NEUTRAL."

Starhub rated 'buy' by Kim Eng

Kim Eng Research in a Jan 16 research report says: "StarHub is slated to release its full-year FY2011 results on Feb 2. We would not be surprised to see a lower-than-forecast net profit, given the stronger-than-expected demand for iPhone 4S.

"Our full-year revenue forecast of $302.7 million suggests a 4Q11 net profit of $79.8 million and EBITDA margin on service revenue of 31%. While this is in line with management's full-year guidance of "about 30%" (9M11 margin was 30.4%), we would not be surprised by a lower-than-forecast EBITDA margin in 4Q11 due to the robust demand for iPhone 4S.

"StarHub will likely keep its dividend per share at 20 cents in 2012. Net debt/EBITDA hit 0.69x in 3Q11, giving it ample headroom to its target of 1.5x. Assuming a range of 1-1.2x, StarHub could pay 6-15 cents more on top of the regular dividend. Target price of $3.27. MAINTAIN BUY."

Starhub rated 'buy' by DBS

DBS Vickers Securities in a Nov 29 research report says: "StarHub has clinched the exclusive rights for the UEFA Euro 2012 football tournament. This would trigger Singapore's cross-carriage law for the first time since it took effect in August 2011.

"This is not the most popular piece of content and there was absence of bidding. As such we assume that content-cost should not be a big burden for StarHub. SingTel appears to have stayed away as they paid a huge price tag for English Premier League (EPL) rights.

"Consumers can subscribe directly to StarHub (with or without sports package) rather than going through SingTel's mio TV to enjoy savings through bundling discounts. We continue to like StarHub for its 7% yield. Target price of $3.05. MAINTAIN BUY."

Starhub rated 'outperform' by CIMB

CIMB in a Nov 1 research report says: "StarHub should not be too affected by the iPhone launch, thanks to more rational subsidies so far though the degenerating economics of pay TV is a concern. NBN take-up is slow and this should blunt competition in the residential market where StarHub is dominant.

"While 4Q margins could be affected, this should only be a blip. Industry rationality is probably inspired by a rather saturated smartphone market where 65-70% of postpaid users now possess smartphones and any ARPU uplift is unlikely to be material.

"We keep our earnings forecasts but roll over our target price to end-2012, which lifts our DCF-based target price of $3.08 (WACC 8.6%). Catalysts expected from slower competition in NBN, stabilising margins and a stable dividend outlook. MAINTAIN OUTPERFORM."

Starhub rated 'buy' by DBS

DBS Vickers Securities in an Aug 5 research report says: "Net profit stood at $78 million (+34% y-o-y, +13 q-o-q) versus our estimate of $75 million. StarHub reversed the decline in pay TV revenue in 2Q11 and stabilized its ARPU at $49.

"Broadband revenue continued to inch up as StarHub achieved success in acquiring lower-end subscribers while keeping the ARPU stable at $45. StarHub is expected to register a healthy earnings growth of 17% in 2011F due to lower content (EPL) and traffic costs.

"Potential slowdown in smartphone sales and resulting lower subsidies should drive earnings growth in 2012F. Starhub assured annual dividend per share of 20 cents. DCF-based target price of $3.05. MAINTAIN BUY."

May 25: Cautious start seen; property stocks in focus

Singapore shares are likely to make a cautious start on Wednesday as firmer commodity prices are offset by worries over the U.S. economic outlook and euro zone debt concerns.

Singapore’s benchmark Straits Times Index <.FTSTI> edged 0.08% higher on Tuesday to 3,113.09 points.

Here are some stocks and factors to watch:

Property stocks such as City Developments (CTDM.SI) may be in focus on news that foreigners bought more homes in the first quarter of 2011, a development that may prompt further government measures to cool the housing market. Foreigners snapped up 29% of all private homes sold in Singapore in the first quarter compared with 26% in the preceding quarter according to property consultants DTZ, local media reported on Wednesday.

Shopping mall owner CapitaMalls Asia (CMAL.SI), a unit of Singapore property developer CapitaLand (CATL.SI), said it is converting its China development fund to an income fund and increasing the size by 50% to US$900 million.($1.1 billion)

StarHub (STAR.SI), Singapore’s second-biggest telecom firm, is unlikely to follow larger rival Singapore Telecommunications with a special dividend this year, its chief executive said on Tuesday.

Food, beverage and property conglomerate Fraser and Neave (FRNM.SI) said on Tuesday its hospitality arm Frasers Hospitality had opened a residential building in China’s Suzhou Industrial Park.

Singapore-listed United Envirotech (UNIT.SI) said on Tuesday its net profit for the year ended March 31, 2011, rose 7.8% to $16 million from a year ago, helped by contributions from its engineering and water treatment business.   

Beng Kuang Marine (BENK.SI), which provides services to the marine industry, said on Tuesday it had won contracts worth a total of $28.8 million to build four crane barges.

STI down 1.1%; a chance to accumulate - DMG

Singapore’s STI is down 1.1% at 2939.33 midday as concerns over Japan’s nuclear crisis continue to weigh on sentiment. Volume is moderate at 648 million shares worth $751 million, with fallers trumping gainers by over 6 to 1. 

DMG says there needs to be clear evidence that the situation at Japan’s damaged nuclear reactors is under control before stability returns to the market. However, it notes “the STI remains attractive on a 12-month timeframe and (the) recent correction is a chance to accumulate.” 

 

The house notes thermal coal prices for April delivery have risen 10% since Friday and is positive in the short-term for stocks like Straits Asia Resources (AJ1.SG), rated Neutral with a $2.49 target, and Noble (N21.SG), rated Buy with a $2.58 target. 

 

The stocks are down 1.6% at $2.45, and down 1.0% at $2.03, respectively. Genting Singapore (G13.SG) and Golden Agri-Resources (E5H.SG) are down 2.1%-2.3% while defensive dividend play StarHub (CC3.SG) is up 0.8% at $2.62. STI support tipped at 2932, then 2915.

 

Relook at Singapore's defensive yield instruments - UOB KayHian

UOB KayHian says while there are still uncertainties on the potential fallout on regional economies from the Japanese disaster, “some defensive yield instruments have fallen to attractive levels. We think investors should relook at these investment assets which are backed by interest or dividend incomes.” 

It notes among corporate bonds traded on the SGX, Jurong Town Corp pays a coupon of 4.826%. It says preference shares provide a specific dividend before any dividends are paid to the common shareholders, and take precedence over common stock in the event of liquidation, with DBS Bank 6% NCPS 10 (D14.SG) currently yielding 5.96%. 

 

Among REITs under its coverage, the house notes Sabana REIT (M1GU.SG) has a forecast FY11 yield of 9.2%, followed by Ascendas REIT (A17U.SG) and Ascott Residence Trust (A68U.SG) both at 7.2%. 

 

Lastly, it notes among stocks that pay dividends, it notes StarHub (CC3.SG) leads with a forecast FY11 dividend yield of 7.7%, then Hong Leong Finance (S41.SG) at 6.9%. 

 

STI down 0.5%; traders, offshore plays lead fall

Singapore’s STI is down 0.5% at 3076.96, as markets across the region trade lower on heightened concerns over the Middle East situation; a late session lift for the STI looks unlikely, with U.S. stock futures pointing to a lower open on Wall Street. 

Volume is low with just 642 million shares traded worth $627 million; there are 2.5 decliners per gainer in the broad market. “Worries over high oil prices adding to inflationary pressure and trimming companies’ earnings remain at the front of investors’ minds, especially with the Chinese inflation data due Friday,” says an analyst at a local brokerage. 

 

Commodity traders Olam (O32.SG) and Noble (N21.SG) are down 1.9% and 2.8%, respectively. While rig builders Keppel (BN4.SG) and SembCorp Marine (S51.SG) are down 0.8% and 1.4% respectively. 

 

Among the few gainers on the STI, UOB (U11.SG) is up 0.5% at $18.80, while StarHub (CC3.SG) is up 0.4% at $2.63. Analysts say the STI is likely to find support at 3040-3050, with resistance at 3100, then 3120. 

 

Singapore can deliver emerging market returns - Morgan Stanley

Morgan Stanley initiates coverage on Singapore with a constructive view: “although we expect Singapore’s market to deliver returns similar to Emerging Market returns expected in 2011, considering its near developed market risk profile, we believe that its risk-reward appears quite favorable.” 

It expects the MSCI Singapore index to deliver 12% and 20% local currency and total returns through 2011, respectively. The house’s base scenario for Singapore is predicated on constructive global growth: “in such an environment, sectors that benefit from Global/Singapore GDP growth and are least affected by currency appreciation should do well. Our preferred sectors to play this theme are Banks and Consumer Staples.” 

Morgan Stanley lists key stock ideas as: Buy DBS (D05.SG) and it prefers OCBC (O39.SG) over UOB (U11.SG). It says Buy Olam (O32.SG) over Wilmar (F34.SG); buy Singtel (Z74.SG) and prefers M1 (B2F.SG) over Starhub (CC3.SG). Its preferred real estate stocks are Keppel Land (K17.SG) and CDL Hospitality (J85.SG) and preferred industrials are Keppel Corp (BN4.SG), SIA (C6L.SG) and NOL (N03.SG).

 

StarHub cut to Equalweight by Morgan Stanley

Morgan Stanley downgrades StarHub (CC3.SG) to Equalweight from Overweight and raises its price target to $2.70 from $2.50 on rollover to 2011 estimates.

The house notes, “with the exception of an attractive yield of 7.6%,” it sees “limited positive stock drivers” and recommends adding to positions in SingTel (Z74.SG), which has lagged both StarHub and M1 (B2F.SG).

The price target has been increased due to 1%-2% upward revisions in revenue estimates for 2011-12.

The house adds, it sees the rollout of the National Broadband Network and the government’s yet-to-be-finalized content cross-carriage decision as potential threats to StarHub’s current market share.

“Moreover, management has ruled out capital management for 2011, given several uncertainties in the business,” Morgan Stanley says.

StarHub down 0.4% to $2.60.