Broker: DBS Group Research
Date of Report: 28 July 2026
Excerpt from DBS Group Research report.
Report Summary
Stock Focus: StarHub Ltd (STH SP)
Action: Upgrade to BUY
Target Price (TP): SGD 1.40 (up from SGD 0.94)
Key Investment Highlights:
- DBS upgrades StarHub to BUY with a revised target price of SGD 1.40, citing industry recovery, potential sector consolidation, and strong earnings growth prospects.
- The report highlights a potential M1 acquisition by StarHub as a significant catalyst: If completed, it could drive ~SGD70mn in annual synergies by FY29F and uplift the consolidated EBITDA growth rate to 14% CAGR over FY26F-29F, compared to a regional average of 4%.
- Valuation is based on two approaches: (1) Standalone value for StarHub at SGD 1.02 per share (7.3x EV/EBITDA), plus SGD 0.18 per share from Ensign, and synergy value of SGD 0.35 per share; (2) 9x forward EV/EBITDA for the merged entity, leading to a value of SGD 1.44 per share. The average yields the new TP of SGD 1.40.
- The proposed StarHub-M1 transaction is estimated to be EPS accretive (~120% in year 2 and ~250% in year 3 post-merger), with anticipated integration costs offset by synergy realisation beginning FY28F.
- Major risks include execution of the potential merger. Failure to achieve assumed synergies or if the merger does not materialise could lower the target price by 35 Scts to SGD 1.05.
- Dividend yield is expected to be around 5.5% through FY27F, though a temporary reduction may occur as leverage peaks post-acquisition.
- Key financials (FY2027F): Revenue SGD 2,398mn, EBITDA SGD 356mn, Net Profit SGD 58.4mn, EPS 3.37 Scts, Dividend per share 6.02 Scts.
Implications:
- Investors should monitor the progress of the StarHub-M1 merger, as it is the main swing factor for valuation upside.
- StarHub offers an attractive risk/reward profile with strong re-rating potential if the consolidation play succeeds, especially as Singapore’s mobile ARPU is expected to recover in a more rationalised market.
Above is an excerpt from a report by DBS Group Research. Clients of DBS Group Research can access the full research report from the broker’s website.
