StarHub’s Balanced Outlook: Hold Rating Amid Modest Gains and Competitive Challenges

In a report released today, Lee Len Chong from UOB Kay Hian downgraded StarHub (SRHBF – Research Report) to a Hold, with a price target of S$1.26.

Lee Len Chong has given his Hold rating due to a combination of factors influencing StarHub’s current market position. The company reported a modest increase in service revenue and profit after tax and minority interests (PATMI) for 2024, primarily driven by the broadband and enterprise segments. However, despite these gains, the mobile segment continues to struggle with intense pricing competition, which poses a challenge to sustained growth.
Furthermore, while the enterprise segment is expected to drive growth in 2025, the overall valuation of the company appears fair at present price levels, suggesting limited upside potential. Although StarHub offers a decent dividend yield, the adjusted lower final dividend indicates a cautious outlook. These elements combined lead to the conclusion that a Hold rating is appropriate, reflecting a balanced view of potential risks and rewards.