StarHub posts sterling 1Q results; expect good dividend payout

StarHub's 1Q revenue increased by 14% to S$426.8 million and its net profit of S$61.4 million was nearly twice that of last year for the same period. The results was an improvement from the last quarter and the huge jump in net profit shows a good integration of the 3 services under the StarHub banner, consisting of its mobile, broadband, and cable TV services. While its mobile division consisted about 51% of the group's revenue, it represented up to 66% of the group's EBITDA. However the highest growth comes from its broadband division as revenue rose by 31% from last year and 7% from last quarter to reach S$52.5 million. With the economy expanding and the higher employment expected, broadband penetration is expected to increase and it seems that StarHub's broadband package seems to be leading so far.

Going forward, StarHub is still expected to post good results in the next few quarters especially through its higher subscription of cable TV due to the upcoming World Cup matches. Analysts have mentioned StarHub to be the key beneficiary amongst listed stocks due to the World Cup 2006. OCBC Investment Research puts a fair value of S$2.45 for StarHub and expects a S$0.19/share dividend for the year 2006 which would translate to a good yield of 8.5%. This is on an assumption of a cash payout of S$200 million to its shareholders on top of the annual dividend of S$0.10.