Starhub – all time oversold, price near five year low (22 Nov 16)

November 22, 2016 el15

Starhub has plunged 30.3% from an intraday high of $3.96 on 3 Aug 2016 to trade $2.76 today. This is near a five year low.

What has caused the sharp fall in Starhub?

Some of the possible reasons may be

1. Market is pricing almost a 100% chance of a rate hike in Dec. Furthermore, there seems to be rising interest rate expectations on faster than expected tightening in 2017;

2. After IDA’s announcement on 16 Nov 2016 that MyRepublic and Australian telco TPG Telecom will get to participate in the 4G mobile airwave auction slated to complete by next month (December), most analysts believe M1 and Starhub will be more affected than Singtel. Some of them have subsequently reduced their target prices.

Although most analysts believe that M1 may be the most affected with the entrant of a 4th telco, Starhub seems to have fallen more than M1. (See Table 1 below)

Table 1: Local telcos’ price performance

Based on Chart 1, Starhub is on a strong downtrend, as depicted by its downwards sloping exponential moving averages (EMAs). However, there are some noteworthy points on the chart. Firstly, the doji formed on 21 Nov may indicate that there may be a retracement in the recent downtrend. However, we need positive price confirmation in the next couple of days to be sure. Secondly, Starhub’s RSI last traded at 12.5 today which is an all time low level since IPO (2004). Furthermore, a 12.5 RSI is very low on an absolute basis. Based on the above factors, there is a good chance that there may be some technical rebound in the near term. However, this is likely to be a technical rebound and not a trend reversal.

Chart 1: Starhub extremely oversold

Source: Chartnexus as on 21 Nov 2016

Near term supports: $2.73 / 2.70 / 2.65

Near term resistances: $2.82 / 2.88 – 2.90 / 2.95

Conclusion

The above write-up summarises the recent share price movements on the telcos especially Starhub which has been sold down severely, resulting in extreme oversold conditions on its chart. Starhub’s share price will be interesting to observe in the next couple of days on whether there is a technical rebound.

Disclaimer

Please refer to the disclaimer HERE

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66 thoughts on “Starhub – all time oversold, price near five year low (22 Nov 16)”

Thanks for the article. The other reason why StarHub’s share price dropped is also because of poor Q3 results, it dropped to $3.20/$3.30 level prior to the further drop in recent days.

I like to think of this counter as a dividend play. Current annual dividend is $0.20, and dividend pay-out ratio is almost 100%. How would earnings be impacted and thus dividend, may be $0.16 to $0.17 level? What dividend rate would investors be happy with for this counter? I agree this stock is over-sold.

Dear Liong Hai, thanks for reading my write-up. As the basis on my Starhub write-up is technical in nature, you may wish to refer to the various analyst reports on Starhub’s fundamental picture. Starhub has already staged a technical rebound from around $2.75-2.76 and touched an intraday high of $2.90 (my previously mentioned resistance). FYI.

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