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Starhub bonds
05 Jul 2020 (280 views)

My friend invested in Starhub bonds. He asked if if the bonds are safe. (He had invested in Hyflux preference shares and lost nearly all of his invested sum).

I look at the financials in Yahoo Finance. 
https://finance.yahoo.com/quote/CC3.SI/financials?p=CC3.SI

During the past five years, the share price dropped from a high of $3.92 to $1.29 now. It is a drop of 67%.

At the current price of $1.29, the price earning ratio is 12.5 times (implying an earnings yield of 8%. The current dividend yield is 6.98%.

I looked at the financial figures over the past 4 years. (see the table below).

The net income available to shareholders dropped from $341 million in 2016 to $186 million in 2019. 

The interest payment on the bonds is $38 million, as it is covered by 4.9 times by the net profit. I conclude that the bonds are safe. The profit has to drop sharply before the bonds are at risk.

Is the share price attractive for an investor? I think so. I might buy the shares and get a dividend yield of 6.9%. I expect that the financial figures for 2020 should be better, as they have received a wage subsidy from the government and their revenue should be steady.

Tan Kin Lian


 


Starhub bonds
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My friend invested in Starhub bonds. He asked if if the bonds are safe. (He had invested in Hyflux preference shares and lost nearly all of his invested sum).

I look at the financials in Yahoo Finance. 
https://finance.yahoo.com/quote/CC3.SI/financials?p=CC3.SI

During the past five years, the share price dropped from a high of $3.92 to $1.29 now. It is a drop of 67%.

At the current price of $1.29, the price earning ratio is 12.5 times (implying an earnings yield of 8%. The current dividend yield is 6.98%.

I looked at the financial figures over the past 4 years. (see the table below).

The net income available to shareholders dropped from $341 million in 2016 to $186 million in 2019. 

The interest payment on the bonds is $38 million, as it is covered by 4.9 times by the net profit. I conclude that the bonds are safe. The profit has to drop sharply before the bonds are at risk.

Is the share price attractive for an investor? I think so. I might buy the shares and get a dividend yield of 6.9%. I expect that the financial figures for 2020 should be better, as they have received a wage subsidy from the government and their revenue should be steady.

Tan Kin Lian