StarHub

StarHub: 2Q14 results missed. Net profit fell 6.3% to $94.3m while revenue decreased 1.8% to $576.4m, on the back of lower service revenue, mainly from broadband business (-17.2% to $51m). Mobile revenue inched slightly lower at $310.3m (-1.4%). Postpaid revenue growth slowed to 0.8% y/y (vs M1’s 5.4% growth) as a 10.3% increase in postpaid customers base was mitigated by 5.8% decrease in APRU to $68. Looking into trends, it seems that sharp decline in voice and SMS revenue is offsetting strong data monetisation. For broadband revenue (-17.2%, $51m), although customer base grew 3.1%, ARPU which fell to $31 (-18.8%) caused the net decrease in top line. Maybank-KE thinks Starhub might have a fighting chance as StarHub intends to build up its subscriber base as part of its home hubbing strategy. Nevertheless, management themselves have downgraded service revenue guidance from “low single digit growth” to “about 2013’s level”, whilst also expecting new iPhone to also mildly depress 2H14 margins. 5¢ interim DPS maintained, on track to meet 20¢ FY14 DPS target. Starhub is trading at 20.3x annualized 1H14 P/E. Latest broker ratings: Maybank-KE cuts to Hold from Buy with decreased TP of $4.44 (from $4.87) Nomura maintains Neutral with TP of $4.10