Updated View of StarHub After 1H 2017 2


 

starhub earnings

This is a follow up write-up to my article StarHub 2016 Full Year Results. Please read that article if you have not read it.

I have been waiting for the release of the StarHub Q2 2017 results as I wanted to have a sense of their business momentum and if their earnings are stabilizing. In fact, net profit after tax for the first half year of 2017 has dropped by 21% compared to a year ago.

starhub eps

Of the four lines of business namely mobile, pay TV, broadband and enterprise fixed, three are suffering further revenue erosion. Only the enterprise business shows some growth but growth is that area is tough patching up the revenue declines in the other 3 key revenue generating engines.

As of this writing, StarHub share price has dropped to $2.57, versus $2.79 when I wrote the last article.

starhub share price

The dividend yield at this price assuming dividend of $0.16 is 6.23%. This seems a very attractive yield?

To be fair StarHub is still a hugely profitable organization. Issue is that the market probably sees not much growth potential from the company and for that matter, this applies to M1 as well.

The share price presently is supported by the dividend yield but a word of caution is reiterated: is the dividend payout going to be sustainable? TPG is launching its services in 2H18; MyRepublic has announced becoming a Mobile Virtual Network Operator (MVNO), adding to the fray of Circles.Life with more competition.

For many years, the telcos in Singapore have provided great dividend yields and even capital appreciation to investors. What has changed? Greater competition and technology disruptions in a limited market.

There is no easy advice on the next course of action especially if you currently hold the stock. What I can say is that share price movement in the longer term is a reflection of a company’s earnings.

Please feel free to drop comments below if you have some insights to share.

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2 thoughts on “Updated View of StarHub After 1H 2017

    • admin

      Hi David, SingTel is fundamentally sound, and they are diversified geographically. But please do your own due diligence. Their most recent quarterly results also seem decent.