23 May 2012
Nothing to see for now. The seasonally weaker 1Q12 came in at 22%
of our full year forecasts, in line with expectations. Data grew strongly
but at the expense of margins and free cashflow, a double whammy
that is unlikely to lift until 2013. Regulatory risks in India and
Bangladesh are key concerns, as are rising competitive risks in
Malaysia courtesy of Maxis. Maintain HOLD with a raised EV-derived
TP of MYR5.30 (+4%).
Within expectations. A relatively decent quarter, all things considered.
Net profit of MYR566m (+3% YoY, +4% QoQ) formed 22% of our full
year forecasts amidst a seasonal slowdown. We note the consensus
mean has come off 6% in the last three months as the MYR
appreciated against pretty much every currency. No dividends were
declared. Cash hit a record high of MYR7.5b but this will be depleted
by MYR1.3b once the 15 sen final DPS is paid in June.
Double whammy from data. As expected, EBITDA margin fell 1.5
percentage points YoY as data demand soared, especially in Indonesia
where data jumped 71% YoY. Data still carries just half the margin of
voice. This was amplified by the continued push to expand data
coverage in Malaysia and Indonesia, which bumped capex up by 28%
YoY. Group-wide, capex intensity was high at 25% and management
expects it to stay high in the next few quarters.
Currency, regulatory and competitive concerns. Currency risks
loomed large in 2012’s KPIs, which call for a rather muted 5.3% topline
and 1.8% EBITDA growth. In Malaysia, Celcom has Maxis’ challenge in
prepaid and IDD to face, while overseas, Idea and Robi may have to
pay and invest a lot more for 2G/3G spectrum. Market leader Bharti has
also recently slashed 3G tariffs by up to 70%, which will surely drive the
Indian market into another tariff war.
No change to forecasts, maintain HOLD. Axiata has been resilient
but other than the doubling of dividend payout to 65% for FY12, we see
no other positive catalysts until 2013 when data margins could start to
improve. Yield is also not outstanding but not too bad at 4%. Our EVbased target price is raised to MYR5.30 on a lower beta assumption.
Share price: MYR5.38
Target price: MYR5.30
[Source]
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