Malaysia telecommunications sector is of great interests to investors due to its potential technological advancements and future prospects. Maxis, Digi, Celcom (Axiata) and XOX are main providers of mobile network services, while Telekom and Time DotCom are providers of telecommunications infrastructures, such as fibre optics networks.

 

Below is a comparison of the abovementioned counters, in terms of earnings, dividend return and efficiency of the management. Scores are assigned to each indicator and added up together to obtain an overall performance score for each manufacturer, which gives an indication of the glove counters most worthy to invest in.

 

SECTION 1 – CURRENT EARNINGS, SHARE PRICE AND PRICE TO EARNING (P/E) RATIO

 

In terms of share price and earning per share, MAXIS, DIGI and TIMECOM are the top three performers. Overall, TIMECOM has the highest earning per share value. As shown by the five-year earning per share trend, most counters earnings remain steady from year 2015 to 2019. Only Axiata shows a clear decreasing trend. Most counters show a P/E ratio above 15, which indicates that they are relatively expensive to invest in.

 

 

Dividend payout by listed companies to shareholders is an additional return of investment to shareholders in addition to the increase of share values. Generous dividend payout to shareholders will attract more investors to invest in the counter.

 

TIMECOM pays the highest dividend per share overall. However, due to the expensive share price, the dividend yield is around 2%, which is lower than fixed deposit rate. Noted MAXIS and DIGI’s result in a dividend yield of more than 3.5%, which are more worthy to invest in. Also notable that MAXIS, DIGI and AXIATA are among the most generous in dividend payout, whereby they paid out more than 85% of their earnings in the latest financial year.

SECTION 3 – PERFORMANCE OF THE MANAGEMENT TEAM

The long term success and profitability of the telecommunications counters will depend of the efficiency and smart strategies of the companies’ management team. Some of the indicators offer some ideas on the strength of the management teams.

 

Among the telecommunications counters investigated, it is shown that DIGI has the highest return on equity, meaning it earns the most profit per unit of capital provided by the shareholders. Also it has the lowest cost-to-income ratio, meaning it is able to control operational cost to the lowest possible level. Noted that TELEKOM has unusually high cost-to-income ratio, indicating that it needs very high cost to generate per unit of income. Improvement on this aspect is highly beneficial for future profitability of the counter.

Overall, most of the telecommunications counters have significant capex spending in order to maintain and improve their networks capability and provide better services to their customers. This is important for the future developments of the companies.

SECTION 4 – CASH AND ASSETS VALUES

Sufficient amounts of assets and cash are important for security of the companies in case any emergency situations happen. According to below graphs, it is shown that except for XOX, most of the companies investigated are well-supported by sufficient amount of assets, such as net tangible assets (NTA), market capital and cash flows. So, overall these counters are safe to invest in.
SECTION 5 – MARKET CONFIDENCE ON THE COUNTERS

Overall, there is great interest invest in the telecommunications counters, such as MAXIS, DIGI and TELEKOM, which is shown by the number of shareholders and daily trading volume. Also noted most of these counters are well supported by institutional investors such as EPF, foreign and local investments funds and insurance companies.

SECTION 6 – OVERALL PERFORMANCE AND SCORING OF THE TELECOMMUNICATIONS COUNTERS

Each of the investigated telecommunications counters are assigned a score based on the above indicators. For each indicator, the best performing counter is given score 6, the second best performing counter is given score 5 and so on. The total score for each counter is added up to give an overall performance score of each counter. According to the below graph, overall best performing counters are MAXIS, DIGI and TELEKOM, respectively. In conclusion to the above analysis, these are the three counters most recommended to invest in in the telecommunications sector.

 

NOTES:

**DATA BASED ON ROLLING 4 QUARTERS AS OF 12/12/2019 AND THE LATEST PUBLISHED FINANCIAL REPORTS.

VOL: VOLUME, EPS: EARNING PER SHARE, NTA: NET TANGIBLE ASSET PER SHARE, DPS: DIVIDEND PER SHARE,

P/E: PRICE EARNING RATIO, ROE: RETURN ON EQUITY, DY: DIVIDEND YIELD, DPR: DIVIDEND PAYOUT RATIO

 

Latest analysis reports of individual telecommunications counters:

1.       MAXIS

https://louisesinvesting.blogspot.com/2019/12/comments-on-maxis-berhad-6012.html

2.       DIGI

https://louisesinvesting.blogspot.com/2019/12/comments-on-digicom-berhad-6947.html

3.       AXIATA

https://louisesinvesting.blogspot.com/2019/12/comments-on-axiata-group-berhad-6888.html

4.       XOX

https://louisesinvesting.blogspot.com/2019/12/comments-on-xox-berhad-0165.html

5.       TELEKOM

https://louisesinvesting.blogspot.com/2019/12/comments-on-telekom-malaysia-berhad-4863.html

6.       TIMECOM

https://louisesinvesting.blogspot.com/2019/12/comments-on-time-dotcom-berhad-5031.html

 

Disclaimer: The content of the blog posts are for sharing purpose only. Readers are encouraged to carry out further research and analysis as well as follow up latest update information before making any investment decisions.

 

 

 

http://louisesinvesting.blogspot.com/2019/12/comparison-of-major-telecommunications.html