DBS Expects Starhub to disappoint
DBS Vickers lifts Starhub (CC3.SG) target price to $2.20 from $2.06 after changing valuation basis to discounted cashflow model from P/E “as investors increasingly focus on free cash flow”, says Dow Jones. Still, keeps Fully Valued call as stock trading about revised target.
DBS Vickers says market’s focus in 2H10 will be telco’s non-mobile telephony business, which could come under pressure with Singapore’s high-speed national broadband network being rolled out, and pay-TV competition intensifying.
“The key question is whether gains in the corporate (broadband) business can offset the loss in the consumer broadband business,” says the brokerage.
My question is: They should have been using Discounted Cashflow for a long time for companies with predictable cashflow as Telecoms! What took them so long!
I agree somewhat that, earnings will be better, but cashflow would be affected by increase CAPEX.
Do note that we will see first hand this time how losing the EPL affects them. Since the EPL has ended many people that watches EPL would have cancelled their Cable TV plan and move to Mio.
As a Tech Blogger, I do see a trend where Singtel and M1’s broadband package being better than Starhub. There could be a decline in broadband usage.
Here are the DBS report and OCBC report on the iPhone situation:
2010-Jul-28 – DBS Vickers – Starhub 2010-Jul-28 – OCBC – Telecoms Sector
Related posts:
- Starhub, M1 and Singtel’s existing telecom business model approaches end of life
- Starhub Q2 2010 Results:Declining Earning Escalating Costs
- A closer look at Starhub
- Starhub:Highest dividend yielding Singapore STI blue chip comes through FY2010 well
- Starhub Q1 2010 Results:Competition is getting very very intense
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