StarHub (CC3) Q2 2024 earnings summary

Executive summary

• Service revenue grew 2.4% year-on-year in 1H2024, mainly driven by strong Enterprise Business growth (up 10.8%), with Managed Services up 33% and Cybersecurity up 29%, offset by declines in Mobile, Broadband, and Entertainment.

• Net profit attributable to shareholders rose 8.7% year-on-year to $83.3 million, outpacing EBITDA growth and reflecting cost efficiencies and transformation initiatives.

• Total revenue increased 1.0% year-on-year to $1.1 billion, with higher service revenue offset by lower equipment sales.

• Interim dividend of 3.0 cents per share declared for 1H2024, with full-year guidance of at least 6.0 cents per share and a policy to distribute at least 80% of adjusted net profit.

• Free cash flow remained robust at $101.6 million, consistently above net profit, supporting dividends and growth investments.

Financial highlights

• Service EBITDA margin reached 22.8% (up from prior year), with EBITDA at $227 million.

• Net profit after tax attributable to shareholders was $83.3 million, with EPS at $0.046.

• Free cash flow for 1H2024 was $101.6 million; cash and cash equivalents stood at $564 million.

• Net debt to EBITDA improved to 1.23x as of 30 June 2024, down from 1.36x at end-2023.

• CapEx payments were $82.5 million (7.5% of revenue), below guidance.

Outlook and guidance

• FY2024 service revenue guidance remains at 1–3% growth (excluding D'Crypt divestment), with service EBITDA margin around 22%.

• CapEx spending to accelerate in 2H2024 as DARE+ investments are completed; full-year CapEx commitment of 11–13% of revenue.

• DARE+ transformation spend expected to decline after 2024, with cost efficiencies and legacy system decommissioning to drive further margin improvements in 2025.

• Dividend policy to be applied to full-year results, with potential for review of capital return strategy.

• DARE+ programme nearing completion, with benefits expected to materialize from FY2025.