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!)