StarHub shares surged more than 10% following better-than-expected earnings for FY2023 and higher than expected dividend payout on Feb 8.
As the company is guiding for further earnings and dividend growth this year, analysts have stayed positive on this counter.
"We think StarHub is set for sustained earnings growth over FY2024-FY2026," write Kenneth Tan and Lim Siew Khee of CGS-CIMB in their Feb 8 note.
They have upgraded the stock from "hold" to "buy", along with a higher target price of $1.25 from $1.19 previously.
The telco is in the midst of a multi-year transformation cum cost-cutting programme and results are finally showing up.
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StarHub is guiding a dividend payout of at least 6 cents for the current FY2024.
Tan and Lim believe StarHub will pay 7.5 cents for FY2024, which translates into a yield of 7% at current prices.
For its FY2023, its total payout of 6.7 cents has beat expectations.
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The Singapore Research team at RHB Bank Singapore has remained "neutral" on StarHub but with a higher target price of $1.18 from $1.15.
"StarHub’s results trumped estimates on lower-than-expected depreciation," writes the team in its Feb 9 report. StarHub's core earnings of $149.6 million for the FY2023 stood at 109% of the team's full-year forecast.
"While the bulk of its transformation investments will be booked by end-2024, uncertainties remain as to the realisation of benefits and cost savings," it adds.
The team's new target price includes a 2% environmental, social and governance (ESG) premium to align with the latest country median.
