StarHub Is Trading At 52-Weeks Low, But Here Are Some Positives About The Company

StarHub Ltd (SGX: CC3) is one of the three telecom players in Singapore. The other two are Singapore Telecommunications Limited (SGX: Z72) and M1 Ltd (SGX: B2F).

At $3.02 company is currently trading at its 12 months low.

StarHub’s weak share performance is not unwarranted. Though many reasons could have contributed to its recent weakness, there are two pretty obvious explanations.

Weak third-quarter performance

Share prices are influenced predominantly by the profitability of a company. As such, a weaker profit generally leads to a weaker share price – a situation that StarHub is currently facing as evident by its third-quarter result here.

A few points to illustrate the above are:

  • Quarterly revenue for StarHub was down 3% year-on-year
  • Service revenue was down 2.2% compared to the same quarter a year ago
  • Net profit attributable to shareholders was sliced 27.6% year-on-year

Weaker outlook

Weaker business forecast has also impacted the stock price of the company. Below is the announcement made by the company during its second-quarter results:

“Based on the current outlook, we revised the Group’s 2016 service revenue to be at about 2015’s level and Group EBITDA margin at about 32% of service revenue. We expect our CAPEX payments to be about 13% of our total revenue, excluding the spectrum payment due in 2016. For 2016, we intend to maintain our annual cash dividend of 20 cents per ordinary share.”

StarHub’s previous outlook in the first quarter of 2016 called for service revenue “to grow in the low single digit range and Group EBITDA margin [to be] at about 31% of service revenue.”

Clearly, the negatives above have impacted the company’s stock price. Yet, investors may not want to overlook some positives about the company.


The price decline in the last four weeks of 12% has improved the valuation of StarHub.

For one, StarHub is currently trading at a high dividend yield of 6.7%, as the company intends to maintain its dividend per share at $0.20 in 2016. In a world of low interest rates, this is definitely an appealing alternative.

Year to date performance is not that bad

Despite its relatively weak third-quarter performance, StarHub’s 2016 year-to-date performance is actually not that bad. Let see a quick summary below:


Source – company’s third-quarter results presentation

As we can see, the decline in revenue is offset slightly by the improvement in EBITDA margin. As a result, net profit after tax is down by “only” 1% year to date as compare to 2015.

However, the share price is down by 18% year to date!

Clearly, the company is facing some challenges, as reflected in the weaker results and outlook for 2016.

Yet, investors may also want to have a look at some of the positives to give a more balanced assessment of the company.

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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 contributor Lawrence Nga doesn’t own shares in any companies mentioned.