In a report released today, Paul Chew from Phillip Securities downgraded StarHub (SRHBF – Research Report) to a Hold, with a price target of S$1.08.
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Paul Chew has given his Hold rating due to a combination of factors affecting StarHub’s financial performance and market conditions. The company’s recent quarterly results fell short of expectations, with revenue and EBITDA significantly below forecasts. A key issue is the ongoing decline in Mobile ARPU, which has been impacted by intense competition in the market, including price pressures from roaming and MVNOs. This competitive environment is expected to worsen with upcoming spectrum payments, adding further financial strain.
Additionally, while there is some positive momentum in the broadband segment with rising ARPU and revenue growth, it is not sufficient to offset the challenges faced in the mobile sector. The company’s EBITDA forecasts have been revised downward, and the target price has been reduced due to lower earnings and valuations. These factors, combined with the need for cost realignment in a consolidating industry, underpin the Hold rating, as the company navigates through a period of heightened competition and financial pressure.