2 Companies to Watch This Week (StarHub Ltd and ComfortDelGro Corporation Ltd)
- Original Post from The Motley Fool Sg

This week, a host of companies will be giving updates on their results for the final quarter of 2018. Two companies in particular are in the spotlight:StarHub Ltd (SGX: CC3) and ComfortDelGro Corporation Ltd (SGX: C52). Here’s what investors should be looking out for when they release their results later this week.


Pay TV on the decline


StarHub Ltd is Singapore’s second largest telecommunications company. Its business can be divided into five main business segments: mobile, pay TV, broadband, enterprise fixed, and equipment sales.


In the past year, Starhub’s share price has fallen nearly 40% from its high of S$2.99 in 2018 due to disruptive competition from online streaming and a fourth telco company making its way into Singapore.


The company has suffered from lower revenue and profit from its mobile services and pay TV segments in the first nine months of 2018.


Despite a higher customer base recorded in its mobile services segment, there was an 8.3% decline in average revenue per user in the third quarter of 2018, which resulted in a 4.2% decrease in revenue from its mobile services.


Its pay TV segment has suffered due to competition from online streaming services such as Netflix. As a result, its customer base in the pay TV segment was down by 44,000, and average revenue per user decreased by $4 to S$47.


The lower average revenue per user has squeezed margins in the group, and so far this year, net profit has declined by close to 17%.



Source: StarHub Ltd 2018 Q3 Investor Presentation


In the upcoming earnings update, investors should watch for updates on the pay TV and mobile services segments. Is the company planning for strategic changes to tackle the decline, and what are its expectations for 2019? Hopefully, these answers will give investors a clearer idea of what’s in store in the future.


Bus and train services on the up


Like Starhub Ltd, ComfortDelGro is another company that has been facing disruptions to one of its core business segments. Ride-hailing apps such as Grab and Uber (when it was still in operation) have caused a decline in the ComfortDelGro taxi business. In Singapore, ComfortDelGro has been forced to decrease the size of its fleet, which has resulted in lower revenue contributions from the taxi business.


That said, ComfortDelGro also has other important business contributors, such as its public transports services business, which contributed 71% of the company’s revenue in the third quarter of 2018. Revenue from this segment grew by 15.1% in that quarter.In addition, ComfortDelGro has looked to expand its business overseas through the acquisition of bus lines in Australia and Wales.


In its last reporting quarter, the land transport giant said that it expects growth in its public transport services in Singapore and Australia due to the new bus lines. Its other segments are expected to be stable.


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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Jeremy Chia doesn't own shares in any companies mentioned.


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ComfortDelGro’s Latest Earnings: Strong Start to the Year
- Original Post from The Motley Fool Sg

ComfortDelGro Corporation Ltd (SGX: C52) is a Singapore-based land transportation conglomerate with business interests in the bus, taxi and rail services. Apart from Singapore, it has a presence in six other countries, namely, China, the UK, Australia, Malaysia, Ireland, and Vietnam.


ComfortDelGro announced its financial results for the first quarter ending 31 March 2019, yesterday. Let’s have a quick look to see how it did.


Financial highlights


Here are some of the key financial highlights from the latest full-year results:


1) Revenue grew 7.8% year-on-year to S$947.3 million. The increase in revenue was on the back of strong contributions from new acquisitions which accounted for close to 80% of the increase in revenue.


2) Total operating costs followed suit increased by 7.3% to S$839.9 million. The increase in operating cost was due to staff costs associated with the new acquisitions.


3) As a result, operating profit rose by 12.2% to S$107.4 million.


4) Profit attributable to shareholders saw a 6.2% rise, from S$66.3 million to S$70.4 million.


5) Consequently, earnings per share moved from 3.06 cents to 3.25 cents, up 6.2%.


6) As of 31 December 2018, ComfortDelGro’s balance sheet had S$586.1 million in cash and bank balances, and S$569.9 million in total debt. This translates to a net cash position of S$16.2 million. This is lower year-on-year when compared to 2017 when ComfortDelGro reported a net cash position of S$273.9 million.


7) Operating cash flow, improved by 49.1%, from S$64.1 million a year ago to S$95.6 million. Capital expenditure, on the other hand, increased from S$37.7 million to S$95.2 million. This resulted in ComfortDelGro’s free cash flow dropping sharply by 98.5%, from S$26.4 million S$0.4 million.


Outlook


ComfortDelGro Managing Director/Group CEO, Mr. Yang Ban Seng, commented,


“The robust first quarter’s results show growth from the new acquisitions as well as existing businesses. The acquisitions we made in the last year have started to reap returns and we expect that they will continue to do so. We will continue to grow our core businesses, look at investment opportunities and explore new areas for growth, particularly in those that leverage technology and strengthen our core expertise.”


ComfortDelGro’s share price ended trading on Tuesday at S$2.57, resulting in a price-to-earnings ratio of 18.4 and a dividend yield of 4.1%.


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Motley Fool writer Esjay contributed to this article. Esjay does not own shares in Comfortdelgro.


The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Tim Phillips doesn’t own shares in any companies mentioned.


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Starhub Ltd’s Q1 2019 Earnings Update: Revenue Grew but Profit Fell
- Original Post from The Motley Fool Sg

Last Friday, StarHub Ltd(SGX: CC3) released its 2019 first-quarter earnings update. As a quick introduction, StarHub is one of the three companies in the telecommunication industry.


Here, let’s look at 10 important things from the earnings update.



  1. Revenue for the quarter was up 6% year-on-year to S$597 million. Yet, service revenue declined 1% year-on-year to S$444 million.

  2. Operating profit was down 14% year-on-year to S$72 million.

  3. Quarterly earnings before interest tax depreciation and amortisation (EBITDA) improved 5% year-on-year to S$162 million.

  4. Service segment’s EBITDA margin for the quarter improved from 31.7% last year to 33.7% this quarter.

  5. Profit attributable to investors fell by 14% year-on-year to S$54.0 million.

  6. Free cash flow grew from S$10 million a year ago to S$21 million this quarter.

  7. As of 31 March 2019, net debt stood at S$857 million and the debt-to-EBITDA ratio was 1.49. Net debt and debt-to-EBITDA ratio were S$862 million and 1.52, respectively, as of 31 December 2018.

  8. For the quarter, revenue from sales of equipment and Enterprise business were up by 33% and 14%, respectively, as compared to the same period last year. On the other hand, revenue for Mobile and Pay TV were down by 5% and 12%, respectively, as compared to last year.

  9. Starhub declared a dividend per share of 2.25 cents in the quarter.

  10. The telco also gave the following outlook guidance for 2019:


“Based on the current outlook, we expect the Group’s 2019 service revenue to be stable to a decline of 2% YoY. Group service EBITDA margin is expected to be between 30% to 32% (after SFRS(I) 16 adoption).


In 2019, CAPEX commitment, excluding spectrum payment of S$282.0 million, is expected to be between 11% to 12% of total revenue. The Group intends to pay-out at least 80% of net profit attributable to shareholders (adjusted for one off, non-recurring items), as dividend. For FY2019, the Group intends to pay a dividend of at least 9 cents per ordinary share, at a rate of 2.25 cents per quarter. Any payment above 9 cents would occur in the last quarterly payment.”


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Starhub Ltd’s Share Price Plunged 37% In The Last 12 Months. Here’s Why.
- Original Post from The Motley Fool Sg

StarHub Ltd (SGX: CC3)is one of thethree companies in the telecommunication industry, behindSingapore Telecommunications Limitedand ahead ofM1 Ltdin market cap. StarHub has five business segments, namely, Mobile, Pay TV, Broadband, Fixed Network Services and Handset sales.


In the last 12 months, StarHub’s share price was down by 37%. In this article, let’s try to understand what might have caused the decline.


Reasons for decline


There are many reasons that cause the stock price to move. Generally, stock price movement is driven either by business performance or investor’s sentiment.


The former is related to how a business performs in a given period, looking at metrics like growth, margins, production and others. Here, the ultimate driver is profit.


The latter is driven more by investors’ overall mood, which is described by emotional pairs such as greed and fear, optimistic and pessimistic, bull and bear etc.


In this case of Starhub, I believe the former was the main culprit causing the decline in share price.


Here are some numbers.


For the year ended 31 December 2018, Starhub reported that revenue fell 2.0% year-on-year to S$2.36 billion. Similarly, profit attributable to investors was down 26.2% year-on-year to S$201.5 million. The weaker profitability was due to poor performance in the Mobile and Pay TV segments. Consequently, Starhub’s free cash flow was 21.4% lower at S$173.8 million as compared to S$221.3 million in the same period last year.


Moreover, StarHub would be paying out lesser dividend from 2019. As Starhub is generally categorised as an income stock (mainly due to its strong dividend track record), the reduction in dividend might have prompted income-focused investors to reduce their holding.


In all, the weaker financial performance and the dividend cut might have contributed towards the decline in Starhub’s share price.


What’s next


Going forward, Starhub expects 2019 to remain challenging. Based on its latest outlook, Starhub forecasts revenue to remain flat to a decline of 2% year-on-year. Moreover, dividend pay-out will fall from the current four cents per share in each quarter to 2.25 cents per quarter (or at least 80% of net profit attributable to shareholders).In other words, Starhub’s investors will need to embrace another challenging year ahead.


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StarHub Ltd Is Trading Close To Its 52-Week Low Share Price: Is It Cheap Now?
- Original Post from The Motley Fool Sg

StarHub Ltd(SGX: CC3) is one of thethree listed companies in the Singapore telecommunication industry.


At the current price of S$1.66, StarHub’s stock price is 5% higher than its 52-week low of S$1.58. This raises a question: Is StarHub cheap now? This question is important because if the company’s shares are cheap, it might be a good opportunity for investors.


Unfortunately, there is no easy answer. However, we can still get some insight by comparing StarHub’s current valuations with the market’s valuation. The three valuation metrics I will focus on are the price-to-book (PB) ratio, price-to-earnings (PE) ratio, and dividend yield.


I will be using the SPDR STI ETF (SGX: ES3) as a proxy for the market; the SPDR STI ETF is an exchange-traded fund that tracks the fundamentals of Singapore’s stock market benchmark, the Straits Times Index (SGX: ^STI).


StarHub currently has a PB ratio of 5.2, which is higher than the SPDR STI ETF’s PB ratio of 1.2. Similarly, its PE ratio is higher than that of the SPDR STI ETF’s (14.4 vs 11.4). On the other hand, its dividend yield of 8.4% is higher than the market’s yield of 3.6%. The higher a stock’s yield is, the lower is its valuation. Do note that StarHub has cut its dividend from the2019 financial year, so the adjusted dividend yield would be much lower at 5.4%.


In sum, we can argue that StarHub is priced at a premium to the market average due to its high PB and PE ratios. Still, dividend investors might be attracted to the company due its high adjusted dividend yield.


Click here nowfor yourFREEsubscription toTake StockSingapore, The Motley Fool’s free investing newsletter. Written byDavid Kuo,Take Stock Singaporetells you exactly what’s happening in today’s markets, and shows how you can GROW your wealth in the years ahead.


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StarHub Ltd’s 2018 Earnings: Another Disappointing Year
- Original Post from The Motley Fool Sg

Yesterday, StarHub Ltd (SGX: CC3) announced its earnings results for the full year ended 31 December 2018. StarHub is Singapore’s second largest telecommunications company with five business segments – Mobile, Pay TV, Broadband, Enterprise Fixed and Sales of Equipment.


Here are the quick takeaways from StarHub’s 2018 financial results:


1. Total revenue for 2018 fell 2% year-on-year to S$2.36 billion. All businesses fared poorly, except for Enterprise Fixed, whose revenue grew 16% to S$510.8 million.


2. Mobile revenue came in at S$824.5 million, down 8.1%. This was due to lower IDD (international direct dialling), voice and excess data usage revenues, and a higher mix of SIM-only plans.


3. Pay TV revenue tumbled 11.9% to S$311.3 million on the back of lower subscriber numbers. On average, 4,000 customers per month terminated their long-term pay TV contracts in 2018 for “alternative sources of content and entertainment”.


4. Broadband service revenue was S$185.8 million, inching down by 0.5%, while revenue from sales of equipment also fell 0.5% to S$529.6 million.


5. Moving on, 2018’s net profit crashed 26.2% to S$201.5 million mainly due to the lower revenue and higher operating expenses.


6. Consequently, diluted earnings per share in 2018 was S$0.112, a fall from S$0.155 one year ago.


7. StarHub’s balance sheet weakened for the year. As of 31 December 2018, the telco’s cash and bank balances stood at S$166 million while it had S$1.03 billion in total debt. This translates to a net debt position of S$862.4 million, compared to S$632.3 million in net debt at the end of 2017. The net-debt-to-EBITDA (earnings before interest, tax, depreciation and amortisation) ratio was 1.52 for 2018, up from 0.98 in 2017.


8. Free cash flow for 2018 fell 21.4% to S$173.8 million. On a diluted per share basis, free cash flow was at S$0.10, down from around S$0.127 in 2017.


9. StarHub’s board is proposing a final dividend of S$0.04 for the fourth quarter, bringing the total dividend to S$0.16 for 2018, unchanged from 2017.


10. From 2019, StarHub is changing its dividend policy; it intends to pay out at least 80% of net profit (adjusted for one-off items) as dividend. For 2019, StarHub plans to pay a total dividend of at least S$0.09 per share, divided into S$0.0225 each quarter. Any payment above S$0.09 per share corresponding to new dividend policy would be paid out in the fourth quarter.


It was another disappointing year for StarHub, whose earnings have been falling in recent history. The company is continuing to face challenging business conditions, especially in the areas of mobile and pay TV. Competition in the telco industry is poised to increase with the entry of the fourth telco, TPG Telecom, and StarHub must find creative ways to turnaround its business.


It was also about time that StarHub reviewed its dividend policy as the previous policy of paying out S$0.16 per share was unsustainable, putting further drag on its business.StarHub’s share price closed at S$1.90 on Thursday. At that price, the telco had a price-to-earnings ratio of 17 and a dividend yield of 4.7%, based on the new dividend policy.


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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.


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