Investment of starhub
Executive Summary
This report intends to highlight the current issues StarHub faces and its impact on their earnings and share valuations. Telco industry in Singapore only has three players – StarHub, SingTel and M1, thus, we would also look at SingTel and M1 to aid in our analysis.
In our report, we first use the SWOT analysis and Michael Porter’s five forces to address StarHub current issues as the issues identified would affect StarHub future earnings. The majority of the threats that StarHub faced is brought up by SingTel. Example, SingTel won the BPL rights which results in a drop of subscribers for Cable TV for StarHub. However, there are still opportunities to grow, from an example of reaping the benefits from the existing market. By using Michael Porter’s five forces, we analyzed that the level of competitive rivalry for the industry is strong.
The historical calculations reflect the current issues that StarHub faced hence deriving with various estimated valuation of StarHub’s stock.
The DuPont ROE approach gauges StarHub’s recent financial performance, in comparison with the other two operators. By putting all figures together, we saw that StarHub ROE has always been the highest throughout the past few years in 2008 to 2012. Thus, we forecasted that StarHub ROE will remain higher than its competitors.
With application of various valuation models, we can examine the intrinsic value of StarHub’s share price and make assumptions and estimation. Thereafter, this value was compared with the current market price to determine if the share is worth investing in. After much computation, the intrinsic share price of StarHub is higher than the market share price, thus, it was undervalued.
Therefore, our group has decided to go forth with a SELL decision at the time of valuation.
Contents
1. About StarHub Ltd
1.1. Company Background
StarHub Ltd, which started in year 2000, is the second operator in the Singapore telecommunications
This report intends to highlight the current issues StarHub faces and its impact on their earnings and share valuations. Telco industry in Singapore only has three players – StarHub, SingTel and M1, thus, we would also look at SingTel and M1 to aid in our analysis.
In our report, we first use the SWOT analysis and Michael Porter’s five forces to address StarHub current issues as the issues identified would affect StarHub future earnings. The majority of the threats that StarHub faced is brought up by SingTel. Example, SingTel won the BPL rights which results in a drop of subscribers for Cable TV for StarHub. However, there are still opportunities to grow, from an example of reaping the benefits from the existing market. By using Michael Porter’s five forces, we analyzed that the level of competitive rivalry for the industry is strong.
The historical calculations reflect the current issues that StarHub faced hence deriving with various estimated valuation of StarHub’s stock.
The DuPont ROE approach gauges StarHub’s recent financial performance, in comparison with the other two operators. By putting all figures together, we saw that StarHub ROE has always been the highest throughout the past few years in 2008 to 2012. Thus, we forecasted that StarHub ROE will remain higher than its competitors.
With application of various valuation models, we can examine the intrinsic value of StarHub’s share price and make assumptions and estimation. Thereafter, this value was compared with the current market price to determine if the share is worth investing in. After much computation, the intrinsic share price of StarHub is higher than the market share price, thus, it was undervalued.
Therefore, our group has decided to go forth with a SELL decision at the time of valuation.
Contents
1. About StarHub Ltd
1.1. Company Background
StarHub Ltd, which started in year 2000, is the second operator in the Singapore telecommunications