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QuestionsCategory: MiscellaneousTelecommunication sector
Gloria asked 4 years ago

Hi Victor& Rusmin
It seems like the telecommunication market is quite saturated and is facing competition from the new entrant.  What are your views on starhub in such a period and would you think that the company is able to continue to do reasonable well?
Thanks!

2 Answers
Victor Chng answered 4 years ago

Hi Gloria,
 
I don;t think a company will do well when new entrant entering a saturated market. Moreover, you must know that starhub have traditional pay very high dividend sometime the dividend amount are even more than their free cash flow. The dividend they are paying now may not be sustainable. I think there is a high chance that they will cut their dividend further. 

Gloria replied 4 years ago

Hi Victor

Thanks for the reply! It also seems like the management of starhub and Singtel are buying their shares recently. Could I get your thought on that, pls? I used the financial analysis flowchart and noted that there were many indicators which points us to avoid the company.

Thanks!

Victor Chng answered 4 years ago

Hi Gloria,
When management buy back the share are usually a good sign but it also depend on whether they are paying the right price. Everything boil down to valuation and the price you pay. If I see the company is undervalue and the management is buying back it is definitely a good sign but if the share is not cheap and the management is buying, I don;t think it is good as it reflect the management capital allocation may not be good.