Company Name: STARHUB LTD
| Research House: CIMB | Price Call: BUY | Target Price: 3.31 |
CIMB Research expects earnings margins of telecommunication firms StarHub and M1 to improve in the first quarter due to lower advertising and marketing expenses and lower smartphone subsidies.
Data revenues of telecoms will also continue replacing voice revenues due to higher smartphone penetration rates, the broker said in a report.
CIMB estimates Starhub’s earnings to grow 5-9% in the first quarter over the previous three months, and expects pay-TV revenue to increase year-on-year as the company raised its pricing by 4% in August.
“The company has given us reasons to believe that it could raise dividends in the coming quarters as its under-leveraged balance sheet is ripe for optimisation,” CIMB said.
The broker has a neutral rating on the telecom sector, but an outperform rating on StarHub with a target price of $3.31.
StarHub’s shares were down 0.6% at $3.13, and have gained 7.6% so far this year, underperforming the broader market. M1 shares are little changed this year.
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