Starhub

Starhub: BoAML reiterated Underperform on StarHub with TP adjusted down from $3.35 to $3.25 as operational trends in 2H14 are likely to stay modest while positive catalysts could remain elusive. While the CEO was more optimistic on 2015 prospects, the house is more cautious as the structural pains in broadband and pay TV could remain a drag. Topline growth should be intact for its Mobiles business, which makes up 56% of service revenues, as subscribers migrate from 3G to 4G plans, barring regulators introducing a new entrant (either Mobile Network Operator or Mobile Virtual Network Operator). Revenue from broadband, however, should stabilize in 4Q14 as increasing subs are more than offset by pricing adjustments. Competition from M1 and MyRepublic is stiff due to pricing pressure. The house adjusted down revenue and EBITDA estimates by 2-4% and NPAT by 8-9% for FY14-16E due to slower growth in broadband and higher D&A. Dividends are unlikely to rise, but stable yields are likely to become less attractive in a rising interest rate environment.