Journey to Wealth
Telekom Malaysia -OUTPERFORM- 31 May 2012
Period 1Q12
Actual vs. Expectations
1Q12 core NP of RM183m came in slightly above the street and our estimate due mainly to a lower direct cost and a lower effective tax rate.
The NP effectively made up 27.3% and 25.3% of ours and the street's full year estimates respectively.
Dividends No dividend was announced during the quarter.
Key Result Highlights
YoY, revenue rose by 11% to RM2.38b, driven by higher contribution from all its segments, i.e. Voice (+3%), Data (+11%), Internet (+24%) and other telco related services (17%). Reported EBITDA grew by 7% to RM783m although the margin dipped by 1.2pp to 32.4% mainly due to the higher direct and maintenance costs.
QoQ, turnover was lower by 3% due to lower revenue from Data (-6%) and other telco related services (-19%) but this was partially cushioned by the increase in the Voice (+3%) and Internet (+4%) divisions. Despite the moderate drop in revenue, the core NP, however, fell 58% due mainly to the absence of deferred tax income.
Unifi subscribers grew by 34% QoQ to 316k in end-1Q12 with a blended ARPU of RM182 (-RM2 QoQ). To date, Unifi's subscribers have reached 365k on the back of 1.22m premises covered in 81 exchange areas. This translates into a take-up rate of 30%. Streamyx subscribership, on the other hand, dropped by 1.7% to 1.66m with a slightly higher ARPU of RM79 (+RM1 QoQ).
Outlook No change in its FY12 headline KPIs target (aiming 5.0% revenue growth and 32% in its EBITDA margin).
Change to Forecasts
We have raised FY12-FY14E core NP by 6%-8% to RM722m-RM849m after lowering 1) the direct cost (from 19.5% to 18.5% as a % of sales) and 2) the effective tax rate (from 23% to 15%).
Rating Maintain OUTPERFORM
Valuation In tandem with the earnings upgrade, we have raised our TP to RM5.65 (from RM5.52 previously) based on a higher FY12 targeted EV/forward EBITDA of 7.2x (+2 SD) from 7.0x previously.
Risks A potential slowdown in broadband subscribers
Persisting margin pressure.
Source: Kenanga
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This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
