CIMB Report - 25 March 2008

What’s on the table

StarHub (S$3.07) - Concerns are lifting The wall of worry due to SingTel's mioTV threat, mobile number portability (MNP) and Next-Generation Broadband Networks (NGNBN) risks have unduly weighed on StarHub's share price over the past 12 months.

We see signs that these concerns are receding, setting the stage for a sustained share price advance beyond the 12-month trading range. Looking ahead, cable TV could post upside surprise. StarHub has beefed up its line-up with 14 new channels since mid-07 which is likely to spur new subscribers and take-up of add-on packages.

In addition, the Sports Group repricing provides significant ARPU tailwind in 2008. Scope for dividend/capital return upgrades by consensus estimates of 18 cts/share (5.9% yield) towards our expectation of 30 cts/share (9.8% yield) should be an additional catalyst.

Our estimate is effectively backed by free cashflow and the management is highly committed to returning capital to shareholders. Reiterate Outperform with unchanged DCF-based target price of S$3.76. StarHub remains our top Singapore telco pick.

Quick Takes

· Regional Aviation - Risk-reward favours rebound in aviation stocks
· Oil & Gas Sector - Adjusting USDollar assumptions
· Consumer Price Index - Slight cooling in February Corporate News
· JPMorgan ups Bear Stearns bid by four times
· Cosco’s Financial Controller resigns
· MBK extends AsiaPharm offer to end of March
· Sing Lun told of general offer talks
· Aluminium unit of Midas wins 62m yuan deal