StarHub

StarHub: 1Q12 results largely inline with consensus. Revenue grew 6% yoy to $591m, and EBITDA grew 11% to $177m. Net profit was $88m, +28% yoy. The quarter had a one-off write back of about $3m. Quarterly DPS was maintained at 5cts. However, mgt clarified that there will be no special distribution in FY12 while maintaining annual div guidance of $0.20/sh. Revenue growth was supported largely by mobile and eqpt gains, with subscriber acquisitions showing modest growth across key pdt segments (mobile, broadband, pay-TV). EBITDA margin improved 210 bps yoy to 32.2%, driven by i) lower handset sales, ii) lower mktg expenses, and iii) writebacks in repairs and maintenance expenses. Mgt however cautioned of margin pressures going fwd on higher android smartphone take-up, potential new iPhone launches and higher content costs, keeping FY12e margin guidance of “about 30%”. A number of houses believe that at current levels, Starhub’s ~6% div yield is undifferentiated from the other high-yield regional telcos (incl M1 and SingTel), making it a less compelling invmt opportunity than before. Says valuations appear rich with Starhub trading at a premium to both historical valuations and regional telco peers (Starhub at FY12e P/E of 17x vs regional avg of 15-16x). Deutsche downgrades to Hold, but raises TP to $3.20 from $3.03. Nomura keeps at Neutral with TP $2.78. Morgan Stanley also keeps at Equal weight. BOA-ML retains non-consensus Underperform with TP $2.55.