StarHub Earnings: In Line With Guidance on Underlying Basis

We make no changes to our forecasts for StarHub CC3 or our SGD 1.24 fair value estimate after its first-quarter result. At a headline level StarHub’s first-quarter result looked like it was ahead of full-year guidance, with first-quarter 11% year-on-year services revenue growth compared with full-year guidance of 8%-10%; first-quarter service EBITDA margin of 22.4% compared with 20% full-year guidance; and first-quarter capital expenditure to sales of 3.1% compared with 13%-15% guidance. However, given My Republic was consolidated from the second quarter of 2022 and the ex-My Republic services revenue growth was 6.8% in the first quarter, if this revenue growth was maintained for the remainder of the year StarHub would report service revenue growth just below the bottom end of its guidance for the full year. In addition, StarHub launched its Premier League coverage in August 2022, so this will boost year-on-year service revenue growth for the first half of 2023 but not the second half. The services EBITDA margin is partially a function of the level of DARE+ expenses included in the quarter, and StarHub related that this level was lower in the first quarter than it expected to incur in the remaining quarters. The level of DARE+ capital expenditure was also lower in the first quarter, and the first-quarter capital expenditure is also seasonally lower than in other quarters. Overall, based on this result, we would not expect StarHub to substantially lift its 2023 guidance at the half-year mark.