Starhub’s FY2023 Earnings Soar: 7 Key Takeaways for Investors

February 9, 2024

In a remarkable tale of resilience and strategic foresight, StarHub Ltd (SGX: CC3) has emerged as a beacon of growth and innovation in the telecommunications sector, marking the fiscal year 2023 with monumental financial achievements and pivotal strategic milestones.

The Group has just reported strong earnings in FY2023, declaring higher dividends than expected and is guiding for further increases for the coming FY2024.

With so much optimism from the telco player, here is a look at seven key takeaways from 2HFY2023 and FY2023 earnings.

  • Earnings Growth: StarHub’s earnings for 2HFY2023 were $72.9 million, up from $1.3 million in the same period the previous year, marking a 139% year-on-year increase. The full-year earnings for FY2023 totaled $149.6 million, a 140.4% increase from the previous year.
  • Operational Performance: Operational profit in 2HFY2023 saw a 102.2% increase year-over-year to $119.3 million, supported by a 3.4% growth in mobile revenue to $306.3 million. This was achieved despite a decrease in operating profit from cybersecurity services and a drop in non-operating expenses by 72.3% year-over-year to $16.6 million, largely due to lower impairment losses.
  • Dividends: The company declared a final dividend of 4.2 cents per share for 2HFY2023, leading to a total dividend of 6.7 cents per share for FY2023, exceeding the previous year’s total of 5.0 cents per share and translating to a yield of 6.3%.
  • DARE+ Costs and Savings: StarHub plans to incur around S$80 million in DARE+ related costs for FY2024, with expectations to start realising cost savings in the second half of the year. The company is focused on streamlining IT and network functions and moving away from legacy systems, forecasting a service EBITDA margin of 21.9% for FY2024.
  • Growth in Cybersecurity and Mobile Segments: Ensign, StarHub’s cybersecurity arm, is expected to see stronger growth through increased scale and a favorable shift in product mix, especially following the divestment of D’Crypt. However, the mobile segment faces competitive pressures, despite postpaid ARPU growth mainly from roaming recovery.
  • Industry Consolidation: With a healthy net debt-to-EBITDA ratio of 1.36x as at the end of FY23, StarHub is open and ready for industry consolidation to enhance its competitive positioning and expand its market share.
  • Market is optimistic of StarHub: According to Wall Street Journal, market analysts are generally optimistic about the prospect of StarHub with an average target price of S$1.22, representing an upside of 14.0% from its current level of S$1.07.

Strong growth potential for Starhub

Overall, StarHub’s robust financial performance, strategic investments, and optimistic future outlook underscore its successful growth initiatives and readiness for further expansion and consolidation opportunities in the telecommunications sector. Investors, stakeholders, and industry watchers should watch this space closely. Yet, as with any narrative of progress and innovation, it is imperative to navigate with a lens of prudence and awareness of the inherent risks that accompany such rapid expansion and strategic shifts.

Disclaimer: ProsperUs Head of Content & Investment Lead Billy Toh doesn’t own shares of any companies mentioned.

Billy Toh

Billy is deeply committed to making investment accessible and understandable to everyone, a principle that drives his engagement with the capital markets and his long-term investment strategies. He is currently the Head of Content & Investment Lead for Prosperus and a SGX Academy Trainer. His extensive experience spans roles as an economist at RHB Investment Bank, focusing on the Thailand and Philippines markets, and as a financial journalist at The Edge Malaysia. Additionally, his background includes valuable time spent in an asset management firm. Outside of finance, Billy enjoys meaningful conversations over coffee, keeps fit as a fitness enthusiast, and has a keen interest in technology.

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