UOB KayHian upgraded StarHub to Hold, saying the stock is trading well below its five-year average enterprise value to earnings before interest, tax, depreciation and amortization (EBITDA) ratio.
StarHub reported Tuesday its third quarter net profit rose 2 percent on-year to S$58 million despite lower revenue from mobile, pay TV and broadband, as operating expenses fell.
UOB KayHian said nine-month core net profit of S$142 million, down 22 percent on-year, accounted for 77 percent of its full-year forecast, in line with its expectations.
“Whilst near-term competition persists, Starhub’s cost efficiency and potential 5G leap will set the group on a stronger footing to capture
revenue growth in the medium term (beyond 2021),” the brokerage said in a note Monday.
“Starhub is keen on a partnership with other mobile network operators (MNOs) to jointly bid for a nationwide 5G network provider. The
company is in the midst of discussions with the MNOs, and believes that network consolidation would result in massive capex and opex savings, as well as the creation of a more reliable network,” the note said.
The brokerage kept its target price at S$1.45, with an entry price of S$1.25.
Shares of StarHub were up 9.85 percent at S$1.45 at 2:13 P.M. SGT.