StarHub rated buy

Thursday, 19 March 2009 13:54
Goldman Sachs in a Mar 16 research report says: "StarHub’s recent 4Q results were better than expected and management guided for 'low single digit' revenue growth for 2009 despite the sharp slowdown in Singapore’s economy. We have raised our 2009/2010/2011 earnings forecasts by 4%/4%/2% on the back of higher revenue expectations and increase our 12-month SOTP (sum-of-the-part) based target price to $2.51 (from $2.45). "Although we think that there is risk to StarHub’s revenue growth guidance given macro uncertainties, we are more confident that it will be able to maintain its free cash flow (FCF) to support its 18 cents (9% current yield) minimum dividend guidance, due to its low capex and stable margins. StarHub trades at 2009E FCF/equity and FCF/EV yields of 11.7% and 9.6%, respectively, which we view as attractive relative to its regional peers’ yields of 8.7% and 8.5%. BUY."Back to Top