Axiata Group Bhd (Dec 2, RM4.90)
Maintain hold at RM4.83 with revised target price of RM4.80 (from RM5.10): Celcom Axiata Bhd’s migration to an intelligent network (IN) platform from its 15-year-old legacy infrastructure caused new prepaid packages and bundles to be deferred from 3Q11 to 4Q11. As such, we expect minimal declines in voice and SMS revenues this quarter, supported by the sale of these packages as well as continued efforts to resuscitate voice revenues. To date eight million new subscribers have been migrated to the new IN. Celcom also attributed slower wireless broadband growth to the substitution effect as dongle users increasingly go for medium screen tablets and smartphones. But overall, data is still growing at a double digit pace.
Management guided for capital expenditure to range between RM4.1 billion and RM4.4 billion in FY11, driven by XL Axiata Tbk’s accelerated deployment of network coverage infrastructure. XL will take up RM2.3 billion, and Celcom RM950 million. The remaining RM850 million will be split between Dialog, Robi, Hello and others. We understand this trend may extend to 2012, when XL completes its network expansion. Capital management plans are under review, but management is currently sticking to its 30% dividend payout policy.
We trimmed FY11 to FY13F earnings by 3% to 4% after imputing larger depreciation charge for Axiata’s network modernisation and USP and raised capex assumptions to guided numbers. Coupled with rolling over our target valuation base to FY12F, we derived a sum-of-parts fair value of RM4.80. — HwangDBS Vickers Research, Dec 2
This article appeared in The Edge Financial Daily, December 5, 2011.
Maintain hold at RM4.83 with revised target price of RM4.80 (from RM5.10): Celcom Axiata Bhd’s migration to an intelligent network (IN) platform from its 15-year-old legacy infrastructure caused new prepaid packages and bundles to be deferred from 3Q11 to 4Q11. As such, we expect minimal declines in voice and SMS revenues this quarter, supported by the sale of these packages as well as continued efforts to resuscitate voice revenues. To date eight million new subscribers have been migrated to the new IN. Celcom also attributed slower wireless broadband growth to the substitution effect as dongle users increasingly go for medium screen tablets and smartphones. But overall, data is still growing at a double digit pace.
Management guided for capital expenditure to range between RM4.1 billion and RM4.4 billion in FY11, driven by XL Axiata Tbk’s accelerated deployment of network coverage infrastructure. XL will take up RM2.3 billion, and Celcom RM950 million. The remaining RM850 million will be split between Dialog, Robi, Hello and others. We understand this trend may extend to 2012, when XL completes its network expansion. Capital management plans are under review, but management is currently sticking to its 30% dividend payout policy.
We trimmed FY11 to FY13F earnings by 3% to 4% after imputing larger depreciation charge for Axiata’s network modernisation and USP and raised capex assumptions to guided numbers. Coupled with rolling over our target valuation base to FY12F, we derived a sum-of-parts fair value of RM4.80. — HwangDBS Vickers Research, Dec 2
This article appeared in The Edge Financial Daily, December 5, 2011.
