By Amanda Lee
StarHub shares gained their most in more than three years Friday, with investors welcoming improved profitability and plans for higher payouts despite signs of softening sales in the fourth quarter.
Shares ended Friday's session 8.4% higher at 1.16 Singapore dollars, notching their largest one-day percentage gain since March 2020.
The Singapore-based telecommunications company said late Thursday that its 2023 net profit more than doubled to S$149.6 million (US$111 million), from S$62.2 million a year ago.
The bottom line was helped by a drop in expenses and spending on the company's multiyear transformation plan that includes establishing a 5G network and other information technology initiatives.
The company's net profit slightly beat consensus expectations in a FactSet poll.
StarHub also said it would boost full-year dividends.
Citi analyst Arthur Pineda said in a note that the results were a "significant improvement," even though the bottom line was helped by tempered investment spending that will be rolled forward into the new year, and with results raising some questions about demand.
"We do see hairline cracks in the business-as-usual operation given softening revenue growth trends into the fourth quarter which would have typically been the seasonal peak," he said in a research note, pointing to sequentially weaker sales in mobile and broadband divisions. Overall, fourth quarter "service revenue trends had been underwhelming," rising 0.3% from the prior quarter and slipping 1.4% from a year earlier, he said.
"These operating concerns however are likely to be overshadowed by a more generous dividend," he added.
Pineda kept his rating on the stock at a buy and lifted his target price to S$1.26 from S$1.24, saying that the company's high yields will pay off for investors waiting for the effects of its ongoing investments to take hold.
Write to Amanda Lee at amanda.lee@wsj.com
(END) Dow Jones Newswires
February 09, 2024 00:38 ET (05:38 GMT)
Copyright (c) 2024 Dow Jones & Company, Inc.
Comments