StarHub Ltd vs. Bhd: The Better Telecommunications Stock

When looking for investing opportunities, investors tend to compare companies within the same industry and within the same stock exchange.

So, if an investor in Singapore is looking at, say, telecommunications companies, the comparisons are nearly always made between just the trio of Singapore Telecommunications Limited (SGX: Z74), StarHub Ltd (SGX: CC3), and M1 Ltd (SGX: B2F).

But, just across the Straits of Johor, in Malaysia’s stock market, are six other listed telecommunications companies. For investors who are interested in the telecommunications industry, comparisons between the Malaysian and Singapore players could also be made. So, let’s take a closer look at Bhd (KLSE: 6947.KL) and StarHub.

The business

StarHub is Singapore’s second largest telecommunications company. It provides internet, voice, mobile, and pay-TV services to consumers and enterprise customers in Singapore., meanwhile, is one of the largest telecommunications companies in Malaysia. It offers mobile, internet, and other digital services to more than 11 million customers in Malaysia. It is also part of the Telenor Group, a global telecommunications giant.

The operations

Both and StarHub have similar revenues despite the former serving a much wider customer base. In 2015, StarHub and recorded revenue of S$2.44 billion and RM6.93 billion (around S$2.4 billion), respectively. But, is definitely the more profitable of the two. It scored a net profit of RM1.77 billion (around S$600 million) in 2015 while Starhub only managed S$372 million.

Interestingly, both companies use lots of debt in their businesses, resulting in very strong returns on equity. seems to be the winner in this aspect though, with its return on equity of 286% in 2015 triumphing StarHub’s 221%.


Now, despite both companies having high returns on equity, thre is a large difference in their valuations. At its current share price of RM4.91, is valued at 22 times trailing earnings. Meanwhile, StarHub only has a price-to-earnings (PE) ratio of 15.4 at its present share price of S$3.32. Moreover,’s dividend yield of 4.5% pales in comparison to StarHub’s 6.0%

It would seem that StarHub is the stock with the more attractive valuation.

Foolish Summary

To sum up,’s the stock with the better profitability whereas StarHub is the one with the more attractive valuation.

It’s worth noting that what I’ve shared should not be taken as the final word on the investing merits of the two stocks – they are only useful starting points for further research.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Stanley Lim doesn't own shares in any company mentioned.