StarHub (STH SP)
2021: In Line; Short-term Pain In 2022 For Sustainable Growth
4Q21 core net profit rose 14% yoy and 3% qoq to S$41m, driven by good cost discipline
and lower depreciation. 2021 net profit of S$148m (+17% yoy) is in line with
expectations. Starhub paid 2021 DPS of 6.4 cents (80% PAT payout) which was above
expectations. For 2022, Starhub expects 10% service revenue growth, with EBITDA
margin falling to 20% (from 30%) on frontloaded transformation investments. We cut FY22/23 earnings by 12/6%. Maintain HOLD. Target price: S$1.30. |
Digital Core REIT (DCREIT SP)
Extending Footprint To Asia Pacific And Europe
We expect DCREIT to explore the acquisition of data centres in Asia Pacific (Singapore and Australia) and Europe (France, Germany, the Netherlands and the UK) from its sponsor pipeline. We raised our 2023F DPU forecast by 14.3% to 5.2 US cents after factoring in the potential acquisition valued at US$500m as at end-22 with full contributions in 2023. DCREIT will provide a distribution yield of 4.5% for 2023 (KDCREIT: 5.0% and MINT: 5.9%). Maintain BUY with a higher target price of US$1.32.
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mm2 Asia (MM2 SP)
Reaching Inflection Point For A Strong Recovery
We expect earnings to post a sharp recovery from FY22 onwards, driven by all three
segments:
a) cinema attendance expected to recover as the majority of Singapore’s and
Malaysia’s populations are vaccinated,
b) robust pipeline of core production business of S$150m-190m in the next 2-3 years, and
c) resumption of in-person concerts. mm2 plans to launch Metaviva, a NFT marketplace. Mm2’s 5x FY24F PE is expected to expand closer to global peers’ average of 21x. Maintain BUY with a higher target price of S$0.115.
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Singapore Telecommunications (ST SP)
On Track To Deliver Growth For Shareholders
9MFY22 results may mirror 1HFY22’s mid-teen yoy growth. The quarter will be
characterised by positive postpaid momentum in Singapore, a good run for Optus and narrowed digital losses. 3QFY22 will see the return of roaming revenue, albeit it still being early days. Separately, data centre development in Thailand is underway as Singtel aims to hold 170MW of DC capacity in the next 3-5 years (at a valuation of S$7b8b). Maintain BUY on share price weakness with a DCF-based target price of S$2.75.
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