CGS International has reduced StarHub’s FY2025 to FY2027 core net profit estimates by 25.8%, 21.1% and 20.0% respectively. CGSI also switched its valuation method from a discounted cash flow (DCF) model — assuming a 7.5% weighted average cost of capital and 0.5% long-term growth — to a Gordon Growth Model (ROE 17.5%, COE 8.5%, LT growth 3%), to better reflect StarHub’s medium-term profit trajectory. “This resulted in a lower target price of $1.19, from S$1.30 previously,” wrote analyst Prem Jearajasingam.
Analysts at CGS International, DBS Group Holdings and Maybank Securities have reiterated their “hold” calls on StarHub after the telco posted weaker 1HFY2025 earnings and cut its profit guidance.
Core net profit for the half-year fell 23% year-on-year (y-o-y) to $62 million. StarHub also lowered its FY2025 ebitda forecast to 88% to 92% of FY2024 levels as it aims to be “more aggressive in the domestic mobile segment” to drive long-term industry repair.
