StarHub – Trend Reversal?

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StarHub was on a free fall for last few trading days. Yesterday StarHub closed at $1.93 with a bullish harami candles formed. This pattern implies a pause in a down trend and is a realiable signal for a possible change in sentiment. The down trend may have stopped and the StarHub may move sideway or reverse the trend. Next session candle is important to confirm the subsequent movement. If next Monday StarHub opens with a gap up with increase in volume, a Three Inside Up pattern is formed which confirm a trend reversal.

 
 
StarHub looks very bearish and the stock price is below 20D, 50D and 200D MA. 20D MA crosses down 200D indicates strong down trend momentum in the short term. The sentiment is bad towards StarHub after losing the EPL right to SingTel and the downgrade by analysts. I am avoiding StarHub for the time being until everything is stabling down. Although the dividend yield is attrative (ex-dividend payout date in mid November), I have to be careful that I may lose more money in the stock price than the dividend payout. StarHub’s share price will probably move into consolidation phase before deciding the next move. I don’t want to put my money in StarHub and get my money stucked there long term.
 
Key indicators to watch:
  • Next immediate resistance at $1.94 and critical support at $1.83. Can StarHub break the resistance and hold above these critical supports?
  •  When can 20D MA crosses up 50D and 200D MA?
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StarHub – Big sell down!

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StarHub had big sell down with huge volume for two days and closed at $2.00 as StarHub lost its bid on English Premier League rights for 2010-2013 seasons to SingTel. The stock price broke 200D MA support line and $2.01 level (38.2% Fibonacci Retracement level).

The stock price may move further down as StarHub’s future earnings will be affected. Will continue to monitor this after shock effect of StarHub stock price and have no hurry to enter the trade until StarHub’s management give a new guidance in the coming quarterly earning briefing. StarHub dividend will probably be affected as well.

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StarHub – Fundamental & Intrinsic Value

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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!)

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