OUTLOOK - Singapore's StarHub FY net profit 197-205 mln sgd vs loss 52.4 mln
SINGAPORE (XFN-ASIA) - StarHub, Singapore's second biggest phone firm, is expected to report Thursday robust earnings for the past year driven by its strong broadband segment, cable TV operations, and increased subscriptions to its prepaid mobile services.
Three analysts surveyed by XFN-Asia forecast net profit at StarHub -- the only company that offers voice, broadband and pay-TV services in the city-state -- to range between 197 and 205 mln sgd in 2005 versus a loss of 52.4 mln in 2004 which was a result of a one-time non-cash tax debit adjustment.
Singapore's mobile phone penetration rate hit 98 pct in December, up from 96.2 pct in November, thanks to brisk demand for prepaid and 3G services, the government said earlier.
Macquarie Securities analyst Ramakrishna Maruvada gave the most bullish profit estimate of 205 mln sgd.
"Among the three listed telcos, we recommend StarHub as the preferred vehicle for exposure to Singapore telecom sector. SingTel is increasingly seen as a proxy to Asian telecoms and our current neutral rating reflects our concerns regarding aggressive competition in Australian mobiles," Maruvada said.
StarHub shares surged 86.4 pct in 2005, outstripping the Straits Times Index's 14 pct gain and dominant Singapore Telecom's 9.7 pct rise.
Maruvada said StarHub stands to benefit from the buoyant operating environment across all its business segments.
"The benign competitive outlook in the mobile segment allows for margin expansion as all three operators pull back on subsidies in the absence of top line growth.
"The broadband industry is growing robustly and the current duopoly market structure provides enough room to grow without resorting to destructive competition," he said, adding that the company is also benefiting from its move to a digital platform in the cable TV segment.
Analysts said StarHub is likely to return excess capital to shareholders this year through a capital management exercise, since the company has no acquisition plans.
"By the end of 2006, StarHub would have had a few solid quarters of experience in assessing the impact of quarterly dividends on its operational cash flow requirements. As such, we expect management to move towards optimising its capital structure as part its commitment to enhancing shareholder value," Maruvada said.
Citigroup analyst Anand Ramachandran pegs full-year net profit at 197 mln sgd while Credit Suisse First Boston sees 2005 earnings at 204.1 mln.
Going forward, analysts expect StarHub to continue its earnings momentum despite worries that its cable TV revenues might be affected when M2B World, a subsidiary of Nasdaq-listed Amaru, begins its broadband TV services in June.
"We believe that the new competitor, M2B World, serves a niche market in Singapore, especially the Chinese heartlanders, with 60-80s Chinese drama serials and B-rated movies. Moreover, the mode of transmission is through the Internet protocol," DBS Vickers Securities said in a recent client note.
"The threat is limited in the medium-term. M2B World does not have any sports or news channels. We believe M2B World's competitor is a free-to-air TV content provider."
StarHub Info
Three analysts surveyed by XFN-Asia forecast net profit at StarHub -- the only company that offers voice, broadband and pay-TV services in the city-state -- to range between 197 and 205 mln sgd in 2005 versus a loss of 52.4 mln in 2004 which was a result of a one-time non-cash tax debit adjustment.
Singapore's mobile phone penetration rate hit 98 pct in December, up from 96.2 pct in November, thanks to brisk demand for prepaid and 3G services, the government said earlier.
Macquarie Securities analyst Ramakrishna Maruvada gave the most bullish profit estimate of 205 mln sgd.
"Among the three listed telcos, we recommend StarHub as the preferred vehicle for exposure to Singapore telecom sector. SingTel is increasingly seen as a proxy to Asian telecoms and our current neutral rating reflects our concerns regarding aggressive competition in Australian mobiles," Maruvada said.
StarHub shares surged 86.4 pct in 2005, outstripping the Straits Times Index's 14 pct gain and dominant Singapore Telecom's 9.7 pct rise.
Maruvada said StarHub stands to benefit from the buoyant operating environment across all its business segments.
"The benign competitive outlook in the mobile segment allows for margin expansion as all three operators pull back on subsidies in the absence of top line growth.
"The broadband industry is growing robustly and the current duopoly market structure provides enough room to grow without resorting to destructive competition," he said, adding that the company is also benefiting from its move to a digital platform in the cable TV segment.
Analysts said StarHub is likely to return excess capital to shareholders this year through a capital management exercise, since the company has no acquisition plans.
"By the end of 2006, StarHub would have had a few solid quarters of experience in assessing the impact of quarterly dividends on its operational cash flow requirements. As such, we expect management to move towards optimising its capital structure as part its commitment to enhancing shareholder value," Maruvada said.
Citigroup analyst Anand Ramachandran pegs full-year net profit at 197 mln sgd while Credit Suisse First Boston sees 2005 earnings at 204.1 mln.
Going forward, analysts expect StarHub to continue its earnings momentum despite worries that its cable TV revenues might be affected when M2B World, a subsidiary of Nasdaq-listed Amaru, begins its broadband TV services in June.
"We believe that the new competitor, M2B World, serves a niche market in Singapore, especially the Chinese heartlanders, with 60-80s Chinese drama serials and B-rated movies. Moreover, the mode of transmission is through the Internet protocol," DBS Vickers Securities said in a recent client note.
"The threat is limited in the medium-term. M2B World does not have any sports or news channels. We believe M2B World's competitor is a free-to-air TV content provider."
StarHub Info
posted by SmartYInvestor at 10:19 PM
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