3Q18 EBITDA and core earnings advanced 6.3% and 46.9% qoq amidst better performance across all segment except Celcom and NCell (Table 2). Earnings recovery was mainly due to higher subscriber base, better ARPU, and stronger local currency for both Robi (Bangladesh) and Dialog (Sri Langka).
On the flipside, EBITDA and core earnings fell -12.4% and -37.4% yoy. This led to 9M18 EBITDA and core earnings declining -9.5 and -34.4% respectively. The poor results were mainly due to forex translation loss and new accounting standard adjustments. On constant currency basis, 9M18 EBITDA would be flat as the underperformance of Celcom is offset by Robi and Dialog (Table 3). Celcom was impacted by a one-off employee restructuring cost.
We believe Robi and Dialog remains its growth driver as subscriber base has grown to 46.7m and 13.4m in 3Q18 (4Q17: 42.9m, 12.8m). Coupled with cost optimization at Celcom, these would translate to better yield overall. Also, low smartphone and data penetration in regional markets would provide further growth to its revenue base.
We upgrade our call to BUY and maintain our TP of RM4.60. The recent sell down could be due to the concerns over its exposure in regional currencies. While translation risk is unavoidable, we believe its regional growth outlook remains largely intact in the longer term albeit near term impact from currency volatility is inherent.
Source: BIMB Securities Research - 26 Nov 2018
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AXIATACreated by kltrader | Aug 12, 2024
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