StarHub – Fundamental & Intrinsic Value

Base on Q2, 2009 financial report:

  • PE = 11.9
  • Dividend Yield = 8.3%
  • NAV = $0.0723
  • Net Earning = 15.1% (14.6% in 2008)
  • Current Ratio = 0.5 (Telecommunication industry characteristic, SingTel current ratio is 0.7, M1 is 0.48)
  • ROA = 18.7% (Base on 2008 Full Year)
  • ROE = 288% (base on 2008 Full Year)
  • Cash Flow = S$237.2 Million   

Stock Background

  • 3 years historal high = $3.2
  • Current Price = $2.17 (only 68% of 3 years high)

Intrinsic Value Calculation

PE Model

 

  • Fair value PE = 15, intrinsic value= $2.73 (base on EPS $0.18186)
  • PEG = 1.03

DCF Model

 

  • Growth Rate = 15.26% (capped at 15%, from 2004A to 2008A)
  • Discount Rate = 5%
  • Number of Shares = 1,711.73 million
  • 2008A Net Operating Cash Flow = S$597.5 million, intrinsic value = $5.86

Discounted EPS Model

  • Growth Rate = 11.6% (From 2005A to 2008A)
  • Discount Rate = 5%
  • 2008A EPS = $0.18186
  • Intrinsic Value = $2.58

  Intrinsic Value for StarHub (the most conservative number of the three numbers) = $2.58 (Current price is 15.9% discount to the intrinsic value!)

StarHub – A defensive stock with good dividend

Current Price (today closed) = $2.18
PE = 12
Dividend Yield = 8.3%

I plan to buy this stock as long term investment to collect dividend. It is much better than putting money in the bank.
The stock price may go down trend if 20D and 50D MA support are broken. I plan to start accumulating at $2.10 as my first entry level.  $2.07 is a very strong support level as it is a 200D MA support and 50% of the Fibonacci retracement level.