StarHub

StarHub: Announced 1Q11 results which were within expectations. Rev at $531m, +0.2% YoY and -0.1% QoQ, while Net Profit at $69.1m, +62% YoY and -18% QoQ, translating to 23% of street’s FY11 earnings estimates. Mobile revenue momentum was relatively soft at just +3% YoY & -2% QoQ, while Pay TV momentum improved, on back of rising subscribers and ARPUs, which improved 2% QoQ……

Margins expanded 7.6ppts YoY with the elimination of EPL-related expenses, although Mgt did guide that the majority of its exclusive content agreements face expiry over the next 2-3 yrs, which can result in a more competitive pay TV environment as Singtel will likely make a bigger push on content to take pay TV and related broadband mkt share…..

Going forward, mgt expects capex to sales ratio at around 13% for FY11 vs just 7% in 1Q, implying an acceleration in network spending and could see potential for rising network and depreciation costs. We note that at current price, grp trades at 15x FY11E P/E and 8x FY11E EV/EBITDA, the most expensive among the 3 SG Telco’s, however yield remains attractive at 7%.....

For house ratings, Deutsche maintains Buy with $3.00 TP, Nomura upgrade to Neutral from Sell with 2.60 TP, Morgan Stanley remain E/W with $2.70 TP, Citi maintains Sell with $2.50 TP, CS maintains U/P with $2.31 TP, UBS maintains Neutral with $2.60 TP and CIMB maintains U/P with $2.41 TP.