KUALA LUMPUR (Feb 24): HwangDBS Vickers Research said Axiata Group Bhd’s 4QFY11 core net profit fell 14% on-quarter to RM585 million, bringing FY11 core earnings to RM2.539 billion (up 2% on-yeary), in line with its and street estimates.
It said on Friday that XL’s core EBITDA was 4% lower on-quarter despite 3% revenue growth (supported by data revenues) mainly due to higher network costs.
“Core EBITDA margin narrowed to 48% from 50%. Celcom recorded 4% higher revenues QoQ, driven by higher subscriptions across the board (+6% prepaid subs, +2% postpaid subs), greater Minutes of Use (postpaid: 366; prepaid: 194) and relatively stable ARPUs,” it said.
HDBSVR said Axiata’s 4QFY11 group tax rate declined to 10% due to RM140m tax incentive for Celcom. The group is proposing a 15 sen final tax exempt DPS, which if approved, would amount to 19 sen FY11 DPS, a substantial 60% payout from its current 30% policy.
“We expect near term EBITDA margins to likely see some compression arising from a growing portion of data-based revenue (which fetch lower margins). Capex is expected to be RM4.4 billion, with XL taking the lion’s share (RM2.5 billion).
“We cut FY12-13F earnings by 7% each due to: (i) larger-than-expected decline in Celcom prepaid and WBB ARPUs from intense competition; and (ii) lower EBITDA margins from increasing data contributions. Earnings impact will be mitigated as the effective tax rate on Celcom is expected to be 23% (vs normal corporate tax of 25%) from last-mile broadband investment incentives,” it said.
HDBSVR said it expected medium-to-long term growth should see upside from cost savings in infrastructure sharing and outsourcing, falling capex and reaching a critical mass in data users, resulting in recovering EBITDA margins.
As a result, it lifted its sum-of-parts based target price to RM5.15.
It said on Friday that XL’s core EBITDA was 4% lower on-quarter despite 3% revenue growth (supported by data revenues) mainly due to higher network costs.
“Core EBITDA margin narrowed to 48% from 50%. Celcom recorded 4% higher revenues QoQ, driven by higher subscriptions across the board (+6% prepaid subs, +2% postpaid subs), greater Minutes of Use (postpaid: 366; prepaid: 194) and relatively stable ARPUs,” it said.
HDBSVR said Axiata’s 4QFY11 group tax rate declined to 10% due to RM140m tax incentive for Celcom. The group is proposing a 15 sen final tax exempt DPS, which if approved, would amount to 19 sen FY11 DPS, a substantial 60% payout from its current 30% policy.
“We expect near term EBITDA margins to likely see some compression arising from a growing portion of data-based revenue (which fetch lower margins). Capex is expected to be RM4.4 billion, with XL taking the lion’s share (RM2.5 billion).
“We cut FY12-13F earnings by 7% each due to: (i) larger-than-expected decline in Celcom prepaid and WBB ARPUs from intense competition; and (ii) lower EBITDA margins from increasing data contributions. Earnings impact will be mitigated as the effective tax rate on Celcom is expected to be 23% (vs normal corporate tax of 25%) from last-mile broadband investment incentives,” it said.
HDBSVR said it expected medium-to-long term growth should see upside from cost savings in infrastructure sharing and outsourcing, falling capex and reaching a critical mass in data users, resulting in recovering EBITDA margins.
As a result, it lifted its sum-of-parts based target price to RM5.15.
