StarHub

StarHub: 1Q14 results missed. Net profit fell 7.7% to $84.2m on while revenue was shaved 1.5% to $571.4m as total service revenue fell 0.6% to $543m on lower broadband revenue (-13.7% to $53.9m), slightly offset by increase in mobile revenue (+1.3% to $305.9m). PayTV revenue fell 1% to $93.8m on the back of lower subscription and advertising revenue. For mobile, revenue increase was thanks to larger subscriber base and increased adoption of tiered data plans. That said, ARPU fell from $66 (4Q13: $69, 1Q13: $68), which management attributes to promotional pricing. Maybank KE still believes the ARPU rise will come around inevitably, despite the recent block in 4G price hike. For broadband, an increased subscriber base was not enough to offset the decrease in APRU which fell to $39 y/y (4Q13: $42, 1Q13: 1.3%) as a result of stiff NGNBN price competition. Broadly, Maybank KE reiterates that trends like falling handset subsidies, stabilizing roaming revenue and rapid data monetization will strengthen throughout the year. Nonetheless, M1 is preferred. StarHub is currently trading at 21.3x annualized 1Q14 P/E. Latest broker ratings: Maybank KE: Maintains Buy with TP $4.98 Credit Suisse: Maintains Neutral with TP $4.40 Deutsche: Maintains Hold with TP $3.83 Nomura: Maintains Neutral with TP $4.10 Philip Securities: Maintains Accumulate with TP $4.50