Company Name: STARHUB LTD
| Research House: Maybank Kim Eng | Price Call: BUY | Target Price: 3.99 |
Maybank Kim Eng raised its rating on StarHub to ‘buy’ from ‘sell,’ impressed by the company’s 27% rise in quarterly profit and said fourth-quarter results could also beat expectations as the negative impact of iPhones on margins could be fading.
The broker said that with third-quarter margins at 33.9% versus full-year outlook of 30%, Singapore’s second-biggest telecom firm has “a good chance of doing better than expected.” Maybank raised its target price to $3.99 from $3.06.
StarHub’s shares were up 0.6% at $3.67 in a weak market and have risen 26% so far this year, outpacing a 14% rise in the index. The stock has eased after hitting a record high of $3.88 in early August.
HSBC also raised its rating on StarHub to ‘neutral’ from ‘underweight,’ partly helped by the company’s better operating margins.
Maybank said StarHub’s gearing fell to a record low of 0.46 times in the third quarter following its recent raising of $220 million in medium-term notes, and this raises confidence in sustained dividend.
Ahead of the results, 13 brokers had a ‘hold’ rating on StarHub, with nine rating it a ‘sell’ or ‘strong sell,’ one had a ‘buy’ rating and one had a ‘strong buy’ recommendation.
StarHub earns all its revenue from Singapore. Quarterly net profit at smaller rival M1 fell 19.5%.
Singapore Telecommunications reports results this month.
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