DBS Group Research is maintaining its "fully valued" call on StarHub with an unchanged target price of 94 cents, following the announcement of the telco's agreement to sell down its stake in Ensign InfoSecurity.
Under the deal, StarHub will sell a 16.81% stake in Ensign to Temasek for $121 million in cash, trimming its shareholding to 38.92% from 55.73%. "[That] implies a $720 million valuation for 100% of Ensign, which is lower than our valuation of $1 based on 2x Price to 12-month forward sales," analyst Sachin Mittal writes in his April 16 note.
StarHub expects to record a gain of over $200 million from the revaluation of its existing stake, with Mittal noting the cash proceeds are "likely to be used towards strategic investment in enterprise business and/or cybersecurity compliance".
He also projects a 20% decline in ebitda for FY2026, before a gradual recovery from FY2027. The six-cent dividend commitment is seen as supporting the shares.
As at 3.57pm, shares in StarHub are trading 2 cents higher, or 1.90%, at $1.07.
