BIMB SECURITIES RESEARCH

Wednesday, 23 May, 2012

MARKET INSIGHT

Results Review

PP16795/03/2013(031743)

Neutral

Axiata Group
Inline

Higher Revenue, Lower Margins

Stock Data
Bloomberg Ticker
Market Cap
Issued shares
52-week range (H)
52-week range (L)
3-mth avg daily volume
Free Float
Shariah Compliant

AXIATA
45,675.7
MK Equity
8,489.9
5.44
4.43
12,818,80
0
42.1%
Y

Financial Derivatives

n.a.

Share Performance (%)

Absolute
vs. KLCI

Altman Z-score
YTD price chg
YTD KLCI chg
Beta
Major Shareholders

2.7
4.7%
1.1%
0.9

Khazanah Nasional
EPF
S. Amanah Saham Bumi

39.1%
11.1%
7.7%

1mth
1.1
7.4

3mth
5.7
6.4

12mth
11.8
7.4

Financial Highlights
FY 31 Dec (RMm)
2009
2010
2011
2012E
2013E
Turnover
13,312.2 15,620.7 16,447.9 17,147.6 18,311.0
EBIT
3,105.2 4,459.1 4,000.0 4,123.3 4,379.1
Pretax profit
2,666.2 3,205.7 3,576.6 3,821.5 4,048.9
Net Profit
1,652.7 1,770.4 2,345.6 2,522.2 2,672.3
EPS (sen)
19.5
20.9
27.7
29.8
31.6
PER (x)
32.4
17.5
19.4
18.1
17.0
DPS (sen)
0.0
10.0
19.0
19.0
19.0
Div. Yield (%)
0.0%
1.9%
3.5%
3.5%
3.5%
NTA/share (RM)
1.14
1.31
1.29
1.40
1.53
EBIT margin
Pretax margin
Effective tax rate
ROE
ROA
Net Gearing (x)

23.3%
20.0%
37.6%
9.1%
4.5%
0.6

28.5%
20.5%
26.9%
9.6%
4.7%
0.3

24.3%
21.7%
24.2%
12.3%
6.0%
0.3

24.0%
22.3%
25.0%
12.8%
6.3%
0.3

23.9%
22.1%
25.0%
12.9%
6.7%
0.3

Growth ratios
Turnover
EBIT
Pretax profit
Core Net profit
EPS

17.3%
18.5%
194.3%
23.6%
23.9%

17.3%
43.6%
20.2%
85.6%
85.5%

5.3%
-10.3%
11.6%
-10.2%
-10.1%

4.3%
3.1%
6.8%
7.5%
7.6%

6.8%
6.2%
6.0%
6.0%
6.0%

Share Price Chart

5.40

RM5.38
(-0.2% upside) RM5.37

Axiatas 1QFY12 net earnings of RM565.6m is inline with

our expectation as well as consensus estimates.
Revenue and earnings grew by 8% and 3.1% respectively
driven by strong topline growth of Celcom and XL. ARPU
for Celcom and XL remained stable. We maintain our
earnings forecast. Target price is unchanged at RM5.37
using SOP valuation. Maintain NEUTRAL.
Decent YoY topline growth. YoY revenue grew by 8.0%
mainly attributed to higher growth from key operators;
Celcom (9.3%) and XL (7.0%). Celcom broadband revenue
registered growth of 15.2% driven by 8.1% increase in
subscribers of 947,000. Revenue from data for XL grew by
72.5% YoY pushing Indonesias total net revenue up 15%.
Meanwhile Bangladesh and Sri Lanka also grew strongly
at 9.6% and 7.2% respectively.
Lower YoY margin. Overall YoY EBIT margin has declined
to 23.5% from 29.2% YoY, mainly due to higher direct
expenses, network cost and promotional expenses.
Stronger QoQ overall. The groups registered flat revenue
growth QoQ while earnings increased by 2.9% due to
lower operating cost and translation loss in the previous
quarter.
Stable ARPU for Celcom. ARPU for Celcoms postpaid and
prepaid remains strong at RM96 and RM37 respectively,
similar to previous quarter. Meanwhile XLs blended
ARPU has declined slightly from IDR30,000 to IDR29,000.
For similar period, Celcoms subscribers have declined
slightly by 0.2% to 11.95m users while XL has improved by
0.2% to 46.441m users.
Maintaining our forecasts. We are maintaining our FY12
and FY13 net earnings at RM2.52bn and RM2.67bn
respectively.
Dividend forecast. Axiata increased their dividend payout
ratio from 50% to 60% and we expect Axiata to pay 19sen
for FY12, translating into yield of 3.5%.

5.20
5.00

View & Valuation. Target price remains unchanged at

RM5.37 using SOP valuation. With not much potential
upside, we maintain our NEUTRAL recommendation on
Axiata.

4.80
4.60
4.40

4.20
May-11

Price:
Target Price:

Jul-11

Sep-11

Nov-11

Jan-12

Mar-12

The Research Team

research@bimbsec.com.my
03-26918887 ext 111

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23 May 2012

Results Review: Axiata 1QFY12

Quarterly figures
FY 31 Dec (RMm)
Revenue
Malaysia
Indonesia
Bangladesh
Sri Lanka
Others
EBIT
Pretax profit
Taxation
Profit before MI
Malaysia
Indonesia
Bangladesh
Sri Lanka
Others
Minority Interest
Net Profit
EPS (sen)
Net gearing (x)
EBIT margin (%)
PBT margin (%)
Net profit
margin
(%)tax rate
Effective
(%)

1QFY11
3,940.4
1,732.0
1,533.1
301.5
301.4
72.4
998.3
902.2
(261.1)
641.1
427.7
258.0
2.3
30.5
(77.3)
(92.8)
548.4
6.5
0.2
25.3%
22.9%
13.9%
28.9%

2QFY11
4,038.8
1,745.0
1,603.0
316.7
304.8
79.2
1,027.8
1,010.7
(245.7)
765.0
437.9
269.2
141.7
36.8
23.2
(102.0)
663.1
7.8
0.2
25.4%
25.0%
16.4%
24.3%

3QFY11
4,204.5
1,821.3
1,657.5
317.5
320.8
108.2
1,084.7
963.3
(284.2)
679.1
381.5
228.8
(149.0)
37.5
33.1
(89.4)
589.7
7.0
0.2
25.8%
22.9%
14.0%
29.5%

4QFY11
4,264.3
1,884.1
1,718.5
334.7
336.8
85.3
750.5
700.3
(73.4)
626.9
520.0
227.0
149.2
(139.0)
(126.8)
(82.4)
544.5
6.4
0.3
17.6%
16.4%
12.8%
10.5%

1QFY12
4,255.8
1,892.3
1,640.5
330.3
323.0
69.6
1,048.9
905.1
(260.2)
644.9
470.7
224.9
4.3
(13.9)
(41.0)
(79.3)
565.6
6.7
0.2
24.6%
21.3%
13.3%
28.7%

QoQ Chg
-0.2%
0.4%
-4.5%
-1.3%
-4.1%
-18.4%
39.8%
29.2%
254.3%
2.9%
-9.5%
-0.9%
-97.1%
-90.0%
-67.7%
-3.8%
3.9%
3.9%
-26.1%
40.0%
29.5%
4.1%
174.2%

YoY Chg
8.0%
9.3%
7.0%
9.6%
7.2%
-3.8%
5.1%
0.3%
-0.3%
0.6%
10.0%
-12.8%
84.8%
-145.6%
-47.0%
-14.5%
3.1%
3.1%
-4.7%
-2.7%
-7.1%
-4.5%
-0.7%

1QFY11
3,940.4
1,732.0
1,533.1
301.5
301.4
72.4
998.3
902.2
(261.1)
641.1
427.7
258.0
2.3
30.5
(77.3)
(92.8)
548.4
6.5
0.2
25.3%
22.9%
13.9%
28.9%

1QFY12
YTD Chg
4,255.8
8.0%
1,892.3
9.3%
1,640.5
7.0%
330.3
9.6%
323.0
7.2%
69.6
-3.8%
1,048.9
5.1%
905.1
0.3%
(260.2)
-0.3%
644.9
0.6%
470.7
10.0%
224.9
-12.8%
4.3
84.8%
(13.9)
-145.6%
(41.0)
-47.0%
(79.3)
-14.5%
565.6
3.1%
6.7
3.1%
0.2
-4.7%
24.6%
-2.7%
21.3%
-7.1%
13.3%
-4.5%
28.7%
-0.7%
Source: BIMB Securities

Axiata - SOP valuation

Companies
Equity Stake
Celcom (M'sia)
100.0%
XL Axiata (Indonesia)
68.5%
Dialog (Sri Lanka)
84.8%
Robi (Bangladesh)
70.0%
Idea Cellular (India)
19.0%
Mobile One (Singapore)
29.7%
Total
Less: Debt
Valuation
No of shares
Implied FY12 PER

Basis
DCF - WACC 10.2%
DCF - WACC 14.6%
5X EBITDA
5X EBITDA
Market Value
Market Value

Attributable
Equity Value equity value Value per
(RMm)
(RMm)
share (RM)
25,826.2
25,826.2
3.051
21,991.5
15,064.2
1.779
2,633.7
2,233.4
0.264
2,153.9
1,507.7
0.178
15,496.0
2,944.2
0.348
5,572.6
1,655.1
0.195
49,230.8
(3,844.2)
45,386.6

5.82
(0.45)
5.37

8,466.0
18.0

Source: BIMB Securities

www.bimbsec.com.my

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23 May 2012

Results Review: Axiata 1QFY12

Income Statement
FY 31 Dec (RMm)
Revenue
EBITDA
Pretax profit
Tax
MI
Net profit
Core Net Profit
Core EPS (sen)
EPS growth (%)
DPS (sen)
NTA/ share (RM)
Net gearing (x)
PER (x)
Div. yield (%)
P/ NTA (x)
ROE (%)
ROA (%)

2009
13,312.2
5,931.5
2,666.2
(910.3)
(103.2)
1,652.7
1,406.7
16.6
23.9%
0.0
1.14
0.6
32.4
0.0%
4.7
9.1%
4.5%

2010
15,620.7
7,194.1
3,205.7
(1,089.2)
(346.2)
1,770.4
2,611.4
30.8
85.5%
10.0
1.31
0.3
17.5
1.9%
4.1
9.6%
4.7%

2011
16,447.9
7,147.1
3,576.6
(864.3)
(366.6)
2,345.6
2,345.6
27.7
-10.1%
19.0
1.29
0.3
19.4
3.5%
4.2
12.3%
6.0%

2012E
2013E
17,147.6
18,311.0
7,695.6
8,277.4
3,821.5
4,048.9
(955.4)
(1,012.2)
(343.9)
(364.4)
2,522.2
2,672.3
2,522.2
2,672.3
29.8
31.6
7.6%
6.0%
19.0
19.0
1.40
1.53
0.3
0.3
18.1
17.0
3.5%
3.5%
3.8
3.5
12.8%
12.9%
6.3%
6.7%
Source: BIMB Securities

Balance Sheet
FY 31 Dec (RMm)
Non Current Assets

2009

2010

2011

2012E

2013E

33,330.0

29,680.9

31,144.3

31,382.5

31,094.7

Current Assets

3,697.7

8,420.1

9,407.0

7,886.4

8,877.4

Total Assets

37,027.8

38,101.0

40,551.2

39,268.8

39,972.1

Current Liabilities

6,633.8

6,063.5

8,086.9

6,362.1

5,776.5

Non Current Liabilities

11,513.6

11,758.8

11,343.5

11,343.5

11,343.5

Shareholders' Fund

18,184.1

18,725.3

19,288.5

20,202.5

21,270.0

Minority Interests

696.4

1,553.3

1,832.4

1,360.7

1,582.1

Equity & Liabilities

37,027.8

38,101.0

40,551.2

39,268.8

39,972.1

Source: BIMB Securities

www.bimbsec.com.my

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23 May 2012

Results Review: Axiata 1QFY12

DEFINITION OF RATINGS
BIMB Securities uses the following rating system:
STOCK RECOMMENDATION
BUY
Total return (price appreciation plus dividend yield) is expected to exceed 10% in the next 12 months.
TRADING BUY
Share price may exceed 15% over the next 3 months, however longer-term outlook remains uncertain.
NEUTRAL
Share price may fall within the range of +/- 10% over the next 12 months
TAKE PROFIT
Target price has been attained. Fundamentals remain intact. Look to accumulate at lower levels.
TRADING SELL
Share price may fall by more than 15% in the next 3 months.
SELL
Share price may fall by more than 10% over the next 12 months.
NOT RATED
Stock is not within regular research coverage.
SECTOR RECOMMENDATION
OVERWEIGHT The Industry as defined by the analysts coverage universe, is expected to outperform the relevant primary market
index over the next 12 months
NEUTRAL
The Industry as defined by the analysts coverage universe, is expected to perform in line with the relevant primary
market index over the next 12 months
UNDERWEIGHT The Industry as defined by the analysts coverage universe, is expected to underperform the relevant primary market
index over the next 12 months
Applicability of ratings
The respective analyst maintains a coverage universe of stocks, the list of which may be adjusted according to needs. Investment
ratings are only applicable to the stocks which form part of the coverage universe. Reports on companies which are not part of the
coverage do not carry investment ratings as we do not actively follow developments in these companies.
Disclaimer
The investments discussed or recommended in this report not be suitable for all investors. This report has been prepared for
information purposes only and is not an offer to sell or a solicitation to buy any securities. The directors and employees of BIMB
securities Sdn Bhd may from time to time have a position in or either the securities mentioned herein. Members of the BIMB Group
and their affiliates may provide services to any company and affiliates of such companies whose securities are mentioned herein. The
information herein was obtained or derived from sources that we believe are reliable, but while all reasonable care has been taken to
ensure that stated facts are accurate and opinions fair and reasonable, we do not represent that it is accurate or complete and it
should not be relied upon as such. No liability can be accepted for any loss that may arise from the use of this report. All opinions and
estimates included in this report constitute our judgements as of this and are subject to change without notice. BIMB Securities Sdn
Bhd accepts no liability for any direct, indirect or consequential loss arising from use of this report.

Published by

BIMB SECURITIES SDN BHD (290163-X)

A Participating Organisation of Bursa Malaysia Securities Berhad
Level 32, Menara Multi Purpose, Capital Square,
No. 8 Jalan Munshi Abdullah,
50100 Kuala Lumpur
Tel: 03-2691 8887, Fax: 03-2691 1262
http://www.bimbsec.com.my

www.bimbsec.com.my

Kenny Yee
Head of Research

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