Starhub

Ha! Ha!
Welcome to learning without end. Sometimes, i have to re-learn what i have learned because of not putting into practice consistently. (Lazy lah?) So in a way, i am teaching myself too.

(08-08-2014, 10:07 PM)corydorus Wrote:

(08-08-2014, 09:40 PM)greengiraffe Wrote: Was wondering why so much time being spent analysis a fixed income type of business?

If Starhub is trading half the price, may be worth spending time but now that it is trading at near all-time highs, I think better quality of time should be spent looking at other counters...

Vested
Long Term Investment
GG

(08-08-2014, 08:57 PM)CityFarmer Wrote: Kim Eng analyst report on the company, rating HOLD and TP $4.44

--------
Mobile star dimming
 2Q14 results below, revenue guidance cut. Downgrade our least preferred telco to HOLD from BUY. TP cut to SGD4.44 (DCF, WACC 7.8%).
 Sharp slowdown in mobile revenue growth as fall in voice/SMS offset data growth.
 Broadband’s revenue free fall unlikely to end soon.
http://remisiers.org/cms_images/research...tarhub.pdf

I am kind of puzzle with your statement. Seems like your view is "since i buy low, i can continue be vested". Shouldn't it be based on today price to justify hold or not else you are in the opinion that losing the capital gained does not matter ?

i tend to agree with you. i think in terms of CPF 2.5% + capital gain. The benefit is OA can be treated as CASH OPTION without strike price and period. To be used when an opportunity for investment appears.
My wife's CPFIS only has 1 lot of SGX.

Quote:I am kind of puzzle with your statement. Seems like your view is "since i buy low, i can continue be vested". Shouldn't it be based on today price to justify hold or not else you are in the opinion that losing the capital gained does not matter ?

Having bought shares at a lower price, and not selling at a higher price is an investment for the longer term.

A belief that the company is able to generate sustainable dividends and grow its value.

The practice of buy low and sell high is for traders, not a value investor.
Then again how high is high?
That is where some homework needs to be done.

Semcorp Marine is now priced at $3.98 ( or thereabouts). If it was acquired at the price of $2.00 say, 20 years ago, should it be sold, to lock in capital gains?
The opportunity cost of not being invested has to be weighed, no? ( assuming zero holdings after the sale).

In fact, if the belief holds that the company is still sound and the industry is still viable, it may be better to buy even more!

(09-08-2014, 12:28 PM)Porkbelly Wrote:

Quote:I am kind of puzzle with your statement. Seems like your view is "since i buy low, i can continue be vested". Shouldn't it be based on today price to justify hold or not else you are in the opinion that losing the capital gained does not matter ?

Having bought shares at a lower price, and not selling at a higher price is an investment for the longer term.

A belief that the company is able to generate sustainable dividends and grow its value.

The practice of buy low and sell high is for traders, not a value investor.
Then again how high is high?
That is where some homework needs to be done.

Semcorp Marine is now priced at $3.98 ( or thereabouts). If it was acquired at the price of $2.00 say, 20 years ago, should it be sold, to lock in capital gains?
The opportunity cost of not being invested has to be weighed, no? ( assuming zero holdings after the sale).

In fact, if the belief holds that the company is still sound and the industry is still viable, it may be better to buy even more!

Exactly. Which i am of the view that if current price of starhub makes sense we should continue to invest or more. If the price is out of whack, regardless of entry price, we should sell.

(09-08-2014, 12:36 PM)corydorus Wrote:

(09-08-2014, 12:28 PM)Porkbelly Wrote:

Quote:I am kind of puzzle with your statement. Seems like your view is "since i buy low, i can continue be vested". Shouldn't it be based on today price to justify hold or not else you are in the opinion that losing the capital gained does not matter ?

Having bought shares at a lower price, and not selling at a higher price is an investment for the longer term.

A belief that the company is able to generate sustainable dividends and grow its value.

The practice of buy low and sell high is for traders, not a value investor.
Then again how high is high?
That is where some homework needs to be done.

Semcorp Marine is now priced at $3.98 ( or thereabouts). If it was acquired at the price of $2.00 say, 20 years ago, should it be sold, to lock in capital gains?
The opportunity cost of not being invested has to be weighed, no? ( assuming zero holdings after the sale).

In fact, if the belief holds that the company is still sound and the industry is still viable, it may be better to buy even more!

Exactly. Which i am of the view that if current price of starhub makes sense we should continue to invest or more. If the price is out of whack, regardless of entry price, we should sell.

Whatever! Don't we have to take the tendency of share price mean reversion into consideration?

(09-08-2014, 01:13 PM)Temperament Wrote:

(09-08-2014, 12:36 PM)corydorus Wrote:

(09-08-2014, 12:28 PM)Porkbelly Wrote:

Quote:I am kind of puzzle with your statement. Seems like your view is "since i buy low, i can continue be vested". Shouldn't it be based on today price to justify hold or not else you are in the opinion that losing the capital gained does not matter ?

Having bought shares at a lower price, and not selling at a higher price is an investment for the longer term.

A belief that the company is able to generate sustainable dividends and grow its value.

The practice of buy low and sell high is for traders, not a value investor.
Then again how high is high?
That is where some homework needs to be done.

Semcorp Marine is now priced at $3.98 ( or thereabouts). If it was acquired at the price of $2.00 say, 20 years ago, should it be sold, to lock in capital gains?
The opportunity cost of not being invested has to be weighed, no? ( assuming zero holdings after the sale).

In fact, if the belief holds that the company is still sound and the industry is still viable, it may be better to buy even more!

Exactly. Which i am of the view that if current price of starhub makes sense we should continue to invest or more. If the price is out of whack, regardless of entry price, we should sell.

Whatever! Don't we have to take the tendency of share price mean reversion into consideration?

Yeah, both are well-loved stocks and Bolinger band is also important.

With the newly announced 1Q (end-June) SingTel result, the fiber broadband market share of SingTel, M1, Starhub and MyRepublic has been estimated (Jun month IDA statistic not released yet, and Starhub number not disclosed)

SingTel : approx 59%, from 58% previous quarter
M1: approx 16%, from 16% previous quarter
MyRepublic: approx 4%, from estimated 1-2% previous quarter
Starhub : less than 20%, from estimate 23-24% previous quarter

It seems the main culprit for the downtrend of Starhub broadband business in previous quarter was the 1Gbps package promotion of MyRepublic.

(not vested in Starhub)

(05-08-2014, 09:18 PM)CityFarmer Wrote: The Edge online report on the Starhub 1H result.

Up to now, base on both results from M1 and Starhub, the worst casualty of the MyRepublic 1Gbps deal, is the Starhub broadband business. M1 still gained positively albeit slower growth. SingTel's 1Q (till end-June) report is yet to announce.

(vested in M1, not in SingTel and Starhub)

StarHub 2Q net profit falls 6.3% to $94.3 mil

StarHub said it posted a 6.3% decrease in net profit to $94.3 million for the second quarter ended June 30.

Total revenue for the quarter was at $576 million, 2% lower compared to a year ago. On a half-year period, revenue was at $1.1 billion.

Mobile services revenue decreased 1% for the quarter to $310.3 million and was stable for the half-year at $616.2 million. Pay TV revenue increased 3% for the quarter to $98.4 million and 1% to $192.2 million for the half-year basis. Broadband revenue decreased 17% for the quarter $51.0 million and 15% for the half-year to $104.9 million. Fixed Network revenue increased 2% both for the quarter and half-year periods to $92 million and $182.2 million respectively.

The group’s EBITDA decreased 2% for the quarter and also for the first half to $187 million and $365 million, respectively. EBITDA margin as a percentage of service revenue was 34.0% for the quarter and on a half-year basis, it was at 33.3%.

Free cash flow was $62 million for the quarter and cash capital expenditure (capex) was 6% higher at $95 million compared to a year ago. On a half-year basis, free cash flow was $166 million while cash capex was $162 million.
http://www.theedgesingapore.com/the-dail...3-mil.html

(08-08-2014, 11:03 PM)Stecano Wrote: I was then even more surprised to learn from the folks here that even worse, they don't even have sufficient FCF to cover the dividends. And we are not talking about 1 or 2 years. It's several years in a row. I did hear there are companies running in this mode for a long time but personally, I would ask myself, why don't look elsewhere? To be specific, I wasn't targeting starhub and it just turns out that starhub's RE stood out like a sore thumb amongst the 3 telcos. Although this factor alone may not form an investment decision but at least it would lead me to try and understand more (for my learning purposes). Anyway, once again, thanks for sharing the article.

I don't think that is true historically. However what we are trying to analyse is whether it will be the case in the future.

(09-08-2014, 01:13 PM)Temperament Wrote:

(09-08-2014, 12:36 PM)corydorus Wrote:

(09-08-2014, 12:28 PM)Porkbelly Wrote:

Quote:I am kind of puzzle with your statement. Seems like your view is "since i buy low, i can continue be vested". Shouldn't it be based on today price to justify hold or not else you are in the opinion that losing the capital gained does not matter ?

Having bought shares at a lower price, and not selling at a higher price is an investment for the longer term.

A belief that the company is able to generate sustainable dividends and grow its value.

The practice of buy low and sell high is for traders, not a value investor.
Then again how high is high?
That is where some homework needs to be done.

Semcorp Marine is now priced at $3.98 ( or thereabouts). If it was acquired at the price of $2.00 say, 20 years ago, should it be sold, to lock in capital gains?
The opportunity cost of not being invested has to be weighed, no? ( assuming zero holdings after the sale).

In fact, if the belief holds that the company is still sound and the industry is still viable, it may be better to buy even more!

Exactly. Which i am of the view that if current price of starhub makes sense we should continue to invest or more. If the price is out of whack, regardless of entry price, we should sell.

Whatever! Don't we have to take the tendency of share price mean reversion into consideration?

Entry price is irrelevant except as a reminder of WHY we buy at THAT price. And how it gels with the current argument of holding on. And some will argue: If you don't hold it now, would you buy?

And how will the share price act under the 3 different structure scenario presented below? What does the value investor see?

(07-08-2014, 10:14 PM)Stecano Wrote:

(07-08-2014, 09:47 PM)specuvestor Wrote: Starhub is a very interesting extreme case study on debt structure

Indeed they can repay their debt in 1.5 years if they choose not to pay dividends. In that case their equity will jump and debt goes to zero. ROE plunges while PE slides

Obviously the company is a cashcow that will not collapse. But will the share price collapse?

Asset and business didnt change but the structure change and shareholders are affected nonetheless

Or take the middle path and use ½ the FCF to retire debt instead of dividends to save interest cost. After 3 years go debt free. Will that be better for shareholders?

It's going to be a very difficult decision for starhub to make if they want to take the bold step of cutting or drastically reducing dividends. Their share price may plunge and the CEO would be under tremendous pressure and his (plus others) options may be underwater. As it is, things are not looking good. If I were a long term investor of starhub, I would prefer them to take the middle path. Their dividend strategy of driving the share price higher has turned them into a 'dividend junkie'.

(15-08-2014, 11:50 AM)specuvestor Wrote:

(08-08-2014, 11:03 PM)Stecano Wrote: I was then even more surprised to learn from the folks here that even worse, they don't even have sufficient FCF to cover the dividends. And we are not talking about 1 or 2 years. It's several years in a row. I did hear there are companies running in this mode for a long time but personally, I would ask myself, why don't look elsewhere? To be specific, I wasn't targeting starhub and it just turns out that starhub's RE stood out like a sore thumb amongst the 3 telcos. Although this factor alone may not form an investment decision but at least it would lead me to try and understand more (for my learning purposes). Anyway, once again, thanks for sharing the article.

I don't think that is true historically. However what we are trying to analyse is whether it will be the case in the future.

I actually got the numbers from Poems stock analytics and I'm not sure if they are 'accurate'.

FY 2009 2010 2011 2012 2013
DPS .19 .2 .2 .20 .2
EPS .18 .15 .15 .208 .21

So in years 2009-2011 EPS is below DPS hence FCF is not sufficient to cover dividends.
In 2012-2013, DPS is very close to EPS so if I factor in capital expenditure and perhaps diluted earnings, it is likely that FCF is not sufficient to cover dividends.
That's how I came to conclude historically, FCF is not sufficient to cover dividends.
Sorry, don't know how to format the above table nicely.

You are still confusing EPS with FCF For example in 2010 EPS was 0.15 and DPS was 0.20, but in terms of cashflow it was operating cashflow of $700m and capex $270m so FCF was $430m out of which they paid $343m for dividend

But last year their operating cashflow was only $580m and capex jumped to $300m which was not sufficient to fund their dividend of $343m. That is what we are discussing about.