“We conservatively value Ensign at 24 cents to 40 cents per share based on two to three times FY2025 revenue with mid-point at 32 cents per share,” says Mittal, adding that the venture’s enterprise value (EV) could reach between $750 million and $1.2 billion. This values StarHub’s 55.73% stake at $417 million to $694 million, equivalent to 19% to 32% of its current $2.2 billion market cap.
As such, Mittal is keeping his “buy” call but with a lower target price of $1.38 from $1.46, as StarHub reported 1QFY2025 profit of $31.8 million, down 18.4% y-o-y.
Citi Research analysts Arthur Pineda and Luis Hilado also remain upbeat on StarHub, reiterating their “buy” call with a target price of $1.43.
“1QFY2025 net profit after tax (NPAT) was on the disappointing side, with a 16% q-o-q decline in profits. [However,] we maintain our “buy” on StarHub with downside risk likely contained by its 6% yield. At our target price, we estimate StarHub would trade at 7.2 times FY2025 EV/Ebitda, which remains at a discount to its long-run average multiple of 8.6 times,” wrote the analysts in a note dated May 13.
They expect the telco to gain momentum in 2HFY2025 as cost efficiencies kick in with the wind-down of its transformation programme, 90% of which is already completed. The resulting reduction in related cost bookings should support profitability despite ongoing revenue pressures.
StarHub has also maintained its dividend commitments, offering downside support for the stock. Any progress toward market consolidation could provide further upside if it materialises, note Pineda and Hilado.
Morningstar’s Dan Baker is similarly optimistic, reiterating his three-star rating out of a maximum five for StarHub along with a fair value estimate of $1.20.
He notes that 2024 ebitda was boosted by a $22.6 million provision and estimates the 2025 guidance to represent around 5% underlying growth.
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“StarHub will be looking for a further bounce in profitability in 2026 as its Dare+ investment costs are completed in the first half of 2025 and new revenue opportunities are opened up,” says Baker, referring to StarHub’s transformation programme.
“We forecast 2.5% per year revenue growth and 4.3% per year operating profit growth over the next five years,” he adds.
Cautious outlook
Meanwhile, Maybank Securities and UOB Kay Hian are keeping their “hold” calls on StarHub, with target prices of $1.10 and $1.26, respectively.
Maybank Securities analyst Hussaini Saifee anticipates mobile competition to remain intense, noting that consolidation will offer limited relief to StarHub given the presence of both Mobile Network Operators and Mobile Virtual Network Operators.
“We think competition in the consumer market is likely to remain elevated given the presence of sub-scale Simba, which also has a strong balance and is delivering strong growth despite intense competition in Singapore’s mobile space,” he says.
Following a softer-than-expected start to the year, Hussaini trimmed his FY2025 to FY2027 ebitda forecasts by 4% and NPAT estimates by 8% to 10%. He expects FY2025 ebitda to fall 3% y-o-y, compared to management’s guidance of flat growth.
UOB Kay Hian analysts Chong Lee Len and Llelleythan Tan echo the cautious outlook, noting that ebitda growth will remain under pressure from ongoing costs tied to decommissioning legacy systems and the Dare+ transformation programme, with full benefits only expected to materialise in 2026.
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“Given that Dare+ is reaching its tail-end, we opine that the group would likely not exceed the 2025 capex commitment guidance, which excludes the upcoming $282 million spectrum payment,” wrote the analysts. They project a 2025 total dividend of around 6.8 cents per share, implying an 80% profit after tax and minority interest payout and a 5.8% dividend yield.
“Despite an attractive 2025 dividend yield of 5.8%, we opine that a declining consumer segment, along with muted margins and minimal earnings growth, would likely cap share price performance in 2025. Thus, we recommend investors wait for better entry points,” add UOB Kay Hian’s analysts.
Similarly, PhillipCapital analyst Paul Chew foresees that cost savings from dismantling legacy IT systems under the Dare+ programme will unlikely be realised until FY2026. He also flags additional cost pressure from the upcoming spectrum payment due July 1.
“The additional spectrum or capacity in the industry could lead to further price competition to capture some benefits of scale. We think a consolidation can stabilise the current hyper competition. But any acquirer is usually burdened by additional integration costs and risk of market share loss,” he notes.
As such, he has downgraded StarHub to “neutral” from “accumulate” with a target price of $1.08, down from $1.29.
RHB Bank Singapore strikes a similarly cautious tone, maintaining a “neutral” call on StarHub with a slightly lowered target price of $1.14 from $1.18. Its analysts believe the upside from the Dare+ transformation will likely be diluted by continued pressure in the consumer mobile segment.
“In our view, the positive outcomes from the transformation may be a tall order considering the significant shift in competitive dynamics since the transformation started in 2022 and the challenging industry revenue outlook with the group focusing on revenue market share gains,” says RHB.
