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.
2 Companies to Watch This Week (StarHub Ltd and ComfortDelGro Corporation Ltd)
Two companies taking centre stage this week.