Starhub

(11-07-2012, 08:38 PM)Janjansen Wrote:

(02-07-2012, 10:05 PM)KopiKat Wrote: Unrelated to his selling, I have also sold most of mine (left one batch), which I had mostly held since Oct-09 (no, I told all of you I'm not a trader) plus some from Jan-12. My reason for selling is to switch to other stocks. Habits hard to die...

Hello KopiKat, I accumulated at around the same time as you, when it was around 1.90. I can definitely understand your reason for selling, but what other alternative investment are you considering? The entire stock market is rather frothy now and the dividend plays are offering around 5% yield. I do not see too many investment outlets if I divest Starhub. The ideal of holding even more cash is unattractive as inflation will erode real wealth

First of all, I better state that each of us have to make our own decision based on our own sets of criterias.

In my case, I have invested a large part of my cash from selling Starhub into Popular Hldgs after being sufficiently sure that I have done enough homework (with lots of good inputs from other forummers like 'orang') and is willing to take the risk of investing into a small caps stock (will be illiquid most days and may be hard to sell). Using the latest FY12 results, Yield = 6.19% @ $0.21 ; PE = 5.68 (such low PEs seems common for small caps stocks as The Hour Glass has similar PE = 5+). Do note that I started my buying from a much lower price and my average is lower than current prices.

I have also taken a bigger risk than usual to put quite a large amount of my free cash into Neratel. My studies is still a WIP (works in progress) but I'd based my decision on my previous studies (when one of my vested stock, STEng offered to takeover at $0.45) plus many of the good and informative posts (also blog posts) in that thread. Even if they pay a dividend of 3ct (FY10), the yield is 7%++.

Do check out both the above threads and make your own studies and analysis. Do take note that both are small caps stocks and you may have to give some additional discounts to your valuations.

Good Luck!

(11-07-2012, 10:19 PM)swakoo Wrote: How things have changed! Bread and butter used to be necessities in the past but now.....

[Image: HowThingsHaveChanged_A.jpg]

[Image: HowThingsHaveChanged_B.jpg]

[Image: HowThingsHaveChanged_C.jpg]

[Image: HowThingsHaveChanged_D.jpg]

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Ha! Ha! Very funny cartoon. Bread and butter is still very important. Only now it's a different kind.

(11-07-2012, 11:11 PM)KopiKat Wrote:

(11-07-2012, 08:38 PM)Janjansen Wrote:

(02-07-2012, 10:05 PM)KopiKat Wrote: Unrelated to his selling, I have also sold most of mine (left one batch), which I had mostly held since Oct-09 (no, I told all of you I'm not a trader) plus some from Jan-12. My reason for selling is to switch to other stocks. Habits hard to die...

Hello KopiKat, I accumulated at around the same time as you, when it was around 1.90. I can definitely understand your reason for selling, but what other alternative investment are you considering? The entire stock market is rather frothy now and the dividend plays are offering around 5% yield. I do not see too many investment outlets if I divest Starhub. The ideal of holding even more cash is unattractive as inflation will erode real wealth

First of all, I better state that each of us have to make our own decision based on our own sets of criterias.

In my case, I have invested a large part of my cash from selling Starhub into Popular Hldgs after being sufficiently sure that I have done enough homework (with lots of good inputs from other forummers like 'orang') and is willing to take the risk of investing into a small caps stock (will be illiquid most days and may be hard to sell). Using the latest FY12 results, Yield = 6.19% @ $0.21 ; PE = 5.68 (such low PEs seems common for small caps stocks as The Hour Glass has similar PE = 5+). Do note that I started my buying from a much lower price and my average is lower than current prices.

I have also taken a bigger risk than usual to put quite a large amount of my free cash into Neratel. My studies is still a WIP (works in progress) but I'd based my decision on my previous studies (when one of my vested stock, STEng offered to takeover at $0.45) plus many of the good and informative posts (also blog posts) in that thread. Even if they pay a dividend of 3ct (FY10), the yield is 7%++.

Do check out both the above threads and make your own studies and analysis. Do take note that both are small caps stocks and you may have to give some additional discounts to your valuations.

Good Luck!

Thanks, I have a more conservative risk appetite and will likely stick with the blue chips and large caps. That said, investments in small caps can be rewarding and I know of people who are very good at picking up gems. Best of luck!

Despite a -ve report by Kim Eng yesterday, StarHub still closed higher @ $3.62 with an intraday high of $3.75! Extracts,

It’s Been A Stellar Ride

Time to say goodbye. Our long-standing buy call on StarHub has been rewarding. However, it is time to say goodbye and we advise clients to take profit. The stock has raced to an all-time high amidst the current risk-off environment and its dividend yield has compressed to the lowest level since listing. Going by our DDM model, the share price has already discounted a 20% rise in dividends, but our original expectations of higher dividends may be dashed by an upcoming 4G spectrum auction in 2013. Management has also indicated there will be no capital management or reduction initiatives. Assuming dividends stay flat at SGD0.20 a share, our DDM-derived target price is SGD3.04 or 15% below the current level. SELL into the current strength.

Stock is overvalued if dividend stays put. StarHub has almost reached our DDM-derived TP of SGD3.64, which had assumed a 20% rise in annual dividends to SGD0.24 a share. However, the 4G spectrum auction in 2013 may lead to a rise in cash commitment next year, which could reduce the company’s willingness to increase dividend payout. If dividends stay put at the current SGD0.20 a share, the stock is now overvalued, with a DDM-derived TP of SGD3.04.

Spectrum cost to push up 2013 cash needs. Using past auctions to provide a pricing benchmark, StarHub may need to pay SGD110-131m for refarmed 4G spectrum. An auction is likely to be held in 1H 2013. This could bump up 2013 cash requirements by 43-51% and push 2013 net debt/EBITDA from 0.63x to 0.78-0.81x. While this should not endanger its current SGD0.20 DPS, it may undermine our original thesis that StarHub can afford to increase its dividends.

Absolute valuations also difficult to justify. At the current level, StarHub is yielding just 5.6% on its ordinary dividend, the lowest since it was listed in 2004 and started paying dividends in 2005. The spread between dividend yield and the 10-year Singapore government bond yield has also narrowed to its tightest level yet, a mere 400bp, since the bond itself was issued in 2007. Dividend yield is also barely hedging against domestic inflation of 5% (as at May 2012).

<Not Vested>

Buying is the easy part, selling is the difficult part.

The market seems to be pricing that in the near
future (most likely next year),
Starhub will increase its dividends by another 4 cts to 24 cts.

Then its price should be $4. (similar to SPH).

In the meantime, I will hold tight to it to collect its dividends.

(12-07-2012, 10:13 AM)ken Wrote: Starhub will increase its dividends by another 4 cts to 24 cts.

Kim Eng is using a DDM model to arrive at their valuation. How accurate is their forecast of 24c dividend for next year? What is Starhub's capital commitments for 4G and LTE? It's better to crystallize these facts before investors get too optimistic.

The way I invest is that I model in the worst case scenario of a dividend cut to see if I can still preserve my capital, rather than opting for a more optimistic view to assess my upside.

My 2-cents.

(Not Vested)

(12-07-2012, 10:29 AM)Musicwhiz Wrote:

(12-07-2012, 10:13 AM)ken Wrote: Starhub will increase its dividends by another 4 cts to 24 cts.

Kim Eng is using a DDM model to arrive at their valuation. How accurate is their forecast of 24c dividend for next year? What is Starhub's capital commitments for 4G and LTE? It's better to crystallize these facts before investors get too optimistic.

The Kim Eng report is actually recommending a SELL as they'd revised from their previous analysis. Previously, they'd projected a high possibility of an increase in dividend from 20ct to 24ct. But, now, they're saying the coming 4G spectrum auction in 1H13, will eat up all the extra cash flow, so, they now think it's highly unlikely Div will be increased.

Hi KopiKat,

Thanks noted that KE changed to SELL. I think what I meant to say was that we should project a potential cut in dividends, while KE is saying dividends will not be raised (hence: flat at 20c). My idea is to simulate a worse-case scenario to protect the conservative investor from losses.

Not vested but with the extreme movements in opposite directions yesterday and today, wonder what's going on...

But am an MaxOnline subscriber. For past few weeks, was living with an intermittent connection - every few hours lose connection for a few minutes. Called Starhub helpdesk a number of times. Due to intermittence, they said everything looks ok on their end. Starhub investors will be pleased to know they will not waste profits by sending people to go take a look until the connection is definitely dead. But very frustrating for subscribers.

To be fair to them, they are mostly very polite and one of them did ask me to bypass router. But the signal already missing before that, so it's not it. Also bypass splitter but due to intermittence, I couldn't fully verify as I needed to use both TV and PC.

Then last night, it went dead. This time I was able to revive by taking out the splitter. Went to Starhub and bought a new splitter, came back and after putting it in, problem still there! Had the idea to change the short cable connecting splitter to data point. Voila! Connection back and for good.

So much for trouble shooting capability of Starhub helpline. Short cable should be in the checklist too... (take note if you're using splitter)

The fixed broadband market changes from asset-base to service-base, Starhub broadband biz will be cannibalized by RSPs including itself. The broadband biz size is approx 250-300 Mils S$, and other biz may be impacted as well.

The Starhub's cable network asset will be written-off in due course, depending on commissioning of fiber network by OpenNet.

Base on IDA statistic, cable users are reducing at the rate of approx 5k/month in April 2012, while Starhub continue to promote it now.

Starhub is not actively promoting the replacing of cable network with fiber network. At the moment, only M1 and Singtel are working closely with OpenNet to speed-up the installation and migrating to fiber network.