Axiata Group Bhd (Jan 30, RM4.75)
Maintain buy at RM4.77 with target price of RM5.85: Axiata’s Indonesian subsidiary, Axiata XL released its FY11 earnings last Friday. Its earnings of 2.83 trillion rupiah (RM960 million) came marginally below our expectation at 96.1% of our full-year estimates as we underestimated net finance expenses.
For FY11, XL posted revenue of 18.712 trillion rupiah, which was within our expectations, growing by 7.2% year-on-year (y-o-y). The revenue growth was underpinned by strong growth in data revenue. The combined revenue of SMS data and value added services (VAS) grew by +26.5%y-o-y to 7.346 trillion rupiah. In contrast, voice revenue declined by 7% y-o-y to 7.864 trillion rupiah. In terms of non discounted revenue contribution, voice revenue contributed 41.6% while SMS and data contributed 21.5% and 17.3%, up from 19.7% and 13.2% in FY10.
Earnings before interest, tax, depreciation and amortisation (Ebitda) grew marginally by 0.7% y-o-y to 9.35 trillion rupiah in FY11 and Ebitda margin (net revenue after discount) was maintained at circa 50% despite the impact of severance payment provision for the network managed services solution.
We like the fact that XL also posted strong growth in subscriber base, data traffic and minutes of usage (MOU). Subscriber base continued its double digit growth, growing by 14.9% y-o-y to 46.4 million. The highest growth was recorded in the pre-paid segment, which grew by 15% to 46.1 million. MOU expanded by 12.9% y-o-y despite a higher number of subs, which we believe contributed to revenue growth. Data traffic growth was tremendous, growing by 295% y-o-y to 10.6 petabyte. Hence, we are not surprised that data continues to be a focus in Indonesia. We believe the data market in Indonesia will continue to gather pace as the smartphone penetration rate increases.
We believe XL’s good performance suggests that Axiata will post similar strong FY11 results. XL contributed 39% to Axiata’s 9MFY11 revenue and 46% to Ebitda. For FY11, we are expecting Axiata’s earnings and revenue to hit RM2.83 billion and RM16.4 billion respectively. We are maintaining our FY11 and FY12 forecast for Axiata pending release of its FY11 results. We continue to like Axiata due to its growth potential and stable Ebitda despite operating in very competitive markets. We maintain our “buy” recommendation for Axiata. — MIDF Research, Jan 30
This article appeared in The Edge Financial Daily, January 31, 2012.
Maintain buy at RM4.77 with target price of RM5.85: Axiata’s Indonesian subsidiary, Axiata XL released its FY11 earnings last Friday. Its earnings of 2.83 trillion rupiah (RM960 million) came marginally below our expectation at 96.1% of our full-year estimates as we underestimated net finance expenses.
For FY11, XL posted revenue of 18.712 trillion rupiah, which was within our expectations, growing by 7.2% year-on-year (y-o-y). The revenue growth was underpinned by strong growth in data revenue. The combined revenue of SMS data and value added services (VAS) grew by +26.5%y-o-y to 7.346 trillion rupiah. In contrast, voice revenue declined by 7% y-o-y to 7.864 trillion rupiah. In terms of non discounted revenue contribution, voice revenue contributed 41.6% while SMS and data contributed 21.5% and 17.3%, up from 19.7% and 13.2% in FY10.
Earnings before interest, tax, depreciation and amortisation (Ebitda) grew marginally by 0.7% y-o-y to 9.35 trillion rupiah in FY11 and Ebitda margin (net revenue after discount) was maintained at circa 50% despite the impact of severance payment provision for the network managed services solution.
We like the fact that XL also posted strong growth in subscriber base, data traffic and minutes of usage (MOU). Subscriber base continued its double digit growth, growing by 14.9% y-o-y to 46.4 million. The highest growth was recorded in the pre-paid segment, which grew by 15% to 46.1 million. MOU expanded by 12.9% y-o-y despite a higher number of subs, which we believe contributed to revenue growth. Data traffic growth was tremendous, growing by 295% y-o-y to 10.6 petabyte. Hence, we are not surprised that data continues to be a focus in Indonesia. We believe the data market in Indonesia will continue to gather pace as the smartphone penetration rate increases.
We believe XL’s good performance suggests that Axiata will post similar strong FY11 results. XL contributed 39% to Axiata’s 9MFY11 revenue and 46% to Ebitda. For FY11, we are expecting Axiata’s earnings and revenue to hit RM2.83 billion and RM16.4 billion respectively. We are maintaining our FY11 and FY12 forecast for Axiata pending release of its FY11 results. We continue to like Axiata due to its growth potential and stable Ebitda despite operating in very competitive markets. We maintain our “buy” recommendation for Axiata. — MIDF Research, Jan 30
This article appeared in The Edge Financial Daily, January 31, 2012.
