StarHub

StarHub: 3Q14 in line. Net profit rose 2.6% y/y to $97.7m, while revenue rose 2.3% to $592m. Total service revenue fell 0.6%, as broadband weaknessnullified minor gains in other segments. Mobile revenue grew 0.9% to $310.9m, as higher postpaid services revenue offset decline in that of prepaid services. Post-paid ARPU was $69 (2Q14: $68, 3Q13: $70), where growth from data monetization were diluted by higher mix of customers on promotional SharePlus plans. Customer base grew 8.9% y/y. PayTV revenue inched 2% to $97.4m, on the back of a 1.4% increase in customer base on flat ARPU of $51. Broadband revenue (-17.4% to $49m) suffered amid tough competition, with ARPU being slashed to $35 in the quarter (2Q14: $37, 3Q13: $44) Fixed Network Services revenue grew 2.7% to $95.2m, boosted by higher take-up of enterprise solutions of fixed data and internet services. Cost of sales increased 5.2%, mainly due to higher subsidies for the new iPhone 6 launched in late September. Although EBITDA margins were 0.9ppt higher at 34.5%, expect next quarter’s to be weighed on effects of iPhone 6 and Samsung Note 4 (released early Oct) subsidies. Maybank cites no catalyst in sight, except StarHub is supported by a yield of 4.8%. Interim DPS of 5¢ unchanged. StarHub is trading at 19.8x FY14e P/E. Latest broker ratings: Maybank-KE maintains Hold with TP of $4.40