Is Starhub stock worth buying? - Seedly

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Asked by Anonymous

Asked on 24 Apr 2019

Is Starhub stock worth buying?

Would like to hear some advices from you guys.

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Hey there!

Similar thoughts with Kenneth, I wouldn't invest into Starhub at the moment too. Things aren't looking very bright for Singapore telcos ever since

Decreasing revenue coupled with increasing costs = decrease in profits. How long can Stahub sustain it's dividend payouts for? I'd go for a REIT should I intend to obtain high dividend-yielding stocks.

If Starhub lowers it's dividend to ensure business is sustainable = shareholders won't be pleased = reflected in share price = decrease in share price

If Starhub maintains its dividend to please shareholders, but unless it can find ways to make sure this dividend payout is sustainable (either by increase revenue cost or decrease cost more than revenue), or increase its revenue streams (i.e. venturing overseas) I wouldn't go into Starhub for it's dividend.

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Kenneth Lou
Kenneth Lou, Co-founder at Seedly
Level 8. Wizard
Answered on 25 Apr 2019

Hey friend!

Personally I would NOT buy it.

You can read some discussion here also: https://seedly.sg/questions/is-starhub-cc3-si-a-good-stock-to-buy-for-a-dividend-portfolio

I will quote and answer here:

"While you may have 9% dividend yield, your paper loss from fall in price may very well offset any gain from dividends.

With many new competitors (Circle.Life, Zero, My Republic...) and the low entry barrier, market share for Starhub is bound to fall, ceteris paribus. With Singapore's internet and smartphone penetration rate both more than 80%, the room for growth locally is rather weak. I find the outlook rather bleak. Unless there are more concrete plans for the near future, personally I would refrain."

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No, I wouldn't. From different point of views it's just too unstable to buy Starhub stock.

1 - product offering. StarHub used to have an edge over the others because MIO was weak and Netflix hasn't yet hold a foothold in SG. Now, it is pushing clients to fibre TV in bid to fight competition from cable box; Netflix and still not show their edge.

2 - business model. In current Singapore market StarHub model cannot sustain for the long term. If you observe closely; you would see that the old players like Singtel & Starhub are on a defensive stance and only react when the new players comes up to literally slap them in the face and snatch their clients away. As long as they stick to the old methods (be it customer retention; service level; product offering etc.) They are on the losing trend.

3 - Everything that shows what you need to prove in facts and numbers. Check some of the urls that fellow members have shared previously. I believe the numbers can be negative and not promising on short term basis for some businesses but not for StarHub; as mentioned theirs stems from the inability to adapt to the new playing grounds in Sg.

Hope this helps!

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Goh Kah Kiat
Goh Kah Kiat
Level 4. Prodigy
Answered on 28 Apr 2019

Https://risknreturns.com/2019/03/15/wont-invest-in-starhub/

TLDR

Weak balance sheet, dividends may not be sustainable due to Dividends close to exceeding Free Cash Flow, I will avoid.

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Aik Kai
Aik Kai
Level 5. Genius
Answered on 26 Apr 2019

Personal opinion, no. Avoid telco stock if you can. The telco industry is being disrupted right now and it is a mistake to enter.

Just look at M1. De-listed.

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