Starhub

Goodwill is meant to be written off in the first place.........

(20-04-2011, 01:29 PM)newborn1000 Wrote: Goodwill is meant to be written off in the first place.........

It used to be that goodwill was written off over 5 years, but now there is a required test for impairment using CGU and other accounting technical details. Geez, too much trouble for me to think about.....

The best write-up I've ever seen on goodwill & its nuances

You can live a full and rewarding life without ever thinking about Goodwill and its amortization. But students of investment and management should understand the nuances of the subject.

http://www.berkshirehathaway.com/letters/1983.html

StarHub Q1 net soars 62% to $69m

By WINSTON CHAI


THE popularity of smartphones has turned from bane to boom for StarHub in one year with the operator's first-quarter net profit soaring 62.1 per cent to $69.1 million, from $42.7 million a year earlier.


Earnings per share for the three months ended March 31 came in at 4.03 cents, up from 2.49 cents last year. Q1 sales stayed flat at $558.5 million.

Last year, the operator's bottom line took a heavy blow in Q1 due to the higher subsidies it had to incur for handsets such as the Apple iPhone.

This time around, the company's operating expenses fell 5.7 per cent year-on-year to $470.8 million.

This is largely due to a 13 per cent reduction in its cost of sales to $216.4 million as smartphone sales have started to wane in light of growing saturation. According to StarHub, 70 per cent of its post-paid mobile customers are already using these newfangled handsets.

With the smartphone drag lifted, the operator's mobile revenue grew 3.3 per cent to $295.6 million. Its cellular subscriber base remained unchanged at 2.15 million.

However, the cellular units of StarHub and its rivals could be adversely impacted from the current quarter onwards as the Singapore and Malaysian authorities have agreed to slash auto-roaming costs 20 per cent from this month and a further 10 per cent next year.

Malaysia is one of the top roaming destinations for local operators.

Some analysts expect local telcos to be hit harder in comparison to their Malaysian counterparts as a larger proportion of their revenue comes from auto-roaming tariffs.

'Our revenue will come down but our costs will also come down accordingly. We're hoping lower prices means they (customers) will be keener to roam. It might have a positive impact overall,' StarHub CEO Neil Montefiore said in a conference call yesterday.

Besides the mobile segment, two of StarHub's three remaining business lines also turned in a better Q1 scorecard.

Its broadband revenue edged up 0.6 per cent to $59.9 million. Sales from fixed network services rose 4.6 per cent year-on-year to $83.6 million, helped by the take-up of the so-called Next-Gen NBN (Nationwide Broadband Network) services on Singapore's new fibre-optic Internet backbone.

Singapore Telecommunications claims it has attracted half of the estimated 16,000 customers who have signed up for Next-Gen NBN packages, while M1 said its market share is around one-third.

StarHub declined to reveal the take-up for fibre-optic services but Mr Montefiore said it has been 'slower than expected'.

StarHub's pay-TV sales dipped 10 per cent in the first quarter to $92 million after it halved its sports group pricing following the loss of its Barclays Premier League broadcast rights to SingTel.

After taking a slight dip initially, StarHub's cable television subscriber base grew by 4,000 users year-on-year to 542,000 in Q1.

'We were focusing on the lower-income groups. That strategy has worked very well,' StarHub's chief operating officer Tan Tong Hai explained.

The operator has proposed an interim dividend of five cents per share for its first-quarter performance, unchanged from last year.

StarHub shares closed four cents lower yesterday at $2.80 before its earnings were released.

StarHub's pay-TV sales dipped 10 per cent in the first quarter to $92 million after it halved its sports group pricing following the loss of its Barclays Premier League broadcast rights to SingTel.

Now, they are raising subscription rate by $2 by August 2011. Existing subscribers are not spared.
This is creating a huge disarray at their facebook page.

but people still prefer their cable tv offerings!

hi guys,

I have noticed that the share price of Starhub has been rising significantly in the recent weeks.

Although I think the company is fundamentally sound, I feel that investors are focusing too much on the yield and ignoring the valuations.

Currently SH trades at a PE ratio of 18.65. Owner Earnings (Reported Earnings + Depreciation, Amortization & Other Non Cash Items - Capital Expenditures), which is similar to Free Cash Flow was 250.3 Million in 2010.

With its market cap of roughly 5 billion, it gives it a Price/Owner Earnings Ratio of about 20.

What I find more disturbing is that Starhub paid out 343.1 Million in dividends in 2010. It earned 4 & 4.54 cents per share in the first and second quarter this year, yet paid out 5 cents per share in dividends.

Although the company is sound, their current commitment to their current payout puts them in a bind - seeing that they are bring far less cash than they can pay. I did a check for the large telecoms both in Singapore and in the US, and Starhub is the only company which I found which is doing so. The only way I see this is possible is that they are borrowing more money than they are bringing in to pay shareholders - something which I find quite puzzling.

My thesis is that Starhub will drop significantly in the event that they reduce their dividend payout for whatever reason. However, I don't see this as something that will happen anytime soon, considering its relatively entrenched position as one of the leading telecoms in Singapore. However, raising its dividend yield anywhere in the near future looks impossible (not to mention irresponsible). At this price, I believe Starhub is trading at a slight premium to its intrinsic value, offering in my opinion, little margin of safety to investors
[Not vested in Starhub]

interesting views. the key is whether they are conservatative in their depreciation policy vs their capex.

i think other than that its ok.

(25-08-2011, 11:14 PM)juno.tay Wrote: At this price, I recommend that investors steer clear of Starhub for now.

[Not vested in Starhub]

You may want to retract this recommendation even if you are duly qualified and licensed.

(25-08-2011, 11:46 PM)Drizzt Wrote: interesting views. the key is whether they are conservatative in their depreciation policy vs their capex.

i think other than that its ok.

Yup. I think as a company there are pretty solid and won't face much difficulties considering the nature of their business. Just that I feel that investors are focusing too much on the yield. Tbh, I only came to this conclusion after prowing around HWZ and reading some of the comments

(25-08-2011, 11:47 PM)edragon Wrote: You may want to retract this recommendation even if you are duly qualified and licensed.

Edited.. Just to be safe!