StarHub

StarHub: 2Q11 in line.
Revenue at $573m, flat yoy. Mobile, broadband and fixed line revenues rose by just 2-3%, but was diluted by a 16% decline in pay TV revenues given the cut in sports package pricing after the loss of Barclay’s Premier League rights.

Net profit of $78m, +34% yoy mainly due to margin upside (+380 bp yoy). EBITDA margin jumped 4ppt yoy to 28.8% largely on lower content costs and this drove a 16% yoy increase in EBITDA to $164m.

In terms of outlook, mgt expects 2H11e growth to be driven by mobile and fixed network services (accelerated network access to enterprise buildings). The cable TV tariff increase (+$2/mth) effective Aug is also expected to support.
Still, revenue guidance was cut to low single-digit growth (vs. mid single digit). Capex was also reduced to 12% of revenues from 13% due to delays in undersea cable delivery/payment. EBITDA margin guidance was maintained at ~30%.
5ct dividend declared.

At 14.7x FY11e PE, Starhub is trading close to the 15.4x regional telco average PE. It offers 7% FY11e dividend yield, one of the highest across the region.
CS maintains Underperform, but raises TP to $2.36 from $2.31.
Citi, Credit Suisse, Nomura, Morgan Stanley maintain Hold, TP $2.60 – 2.70.
UBS maintains Neutral, raises to TP $2.80 from $2.60.
DB maintains Buy, TP$3.00