KLCI Stock - AXIATA / 6888 - 2010 Quarter 1

Market Cap : 8445154455*3.74 = 31,584,877,661.70 (Large)
NTA per share : (18508589-7663626)/8484579 = 1.28
P/BV : 3.74/1.28 = 2.9219
Forecast P/E now : 3.74/0.265 = 14.11 (High)
ROE : 12.87% (Moderate)
DY : -
Fixed Asset Turnover(3 year) : (0.3622+0.2985+0.7475)/3 = 0.4694 (Low)
Liquidity Ratio : 6675645/7637986 = 0.874 (Weak)
Receivables Collection Period : (3693746+1651616)/2/(14006386/365) = 69 days (Acceptable)
My Target Price : 3.71 (PE 14, EPS 0.265)
My Decision : NOT BUY unless price below 3.6
My Comment : Revenue increased but profit increase not much(exclude non-repeatable income), good cash flow, debt decreased, navps increasing
Technical Support Price : 3.6, 3.4
Risk Rating : LOW
OSK Target Price : 4.8 (4 Jun 10)

My study based on 2010 Q1 report (number in '000):
- The Group revenue grew by 31.0% compared to Q1’09 was resulted from continuous improvement in Opcos particularly in XL, Axiata (Bangladesh) Limited (“AxB”) and Celcom. XL’s revenue growth was in tandem with the increase in subscriber base. The subscribers with event, ARPM and ARPU grew by 67%, 17% and 21% respectively. AxB revenue grew by 25.4% compared to Q1’09 mainly resulted from increased in prepaid usage. Celcom revenue grew by 15.1% mainly due to increase in revenue generating base of 12%
- The depreciation of RM in current quarter against IDR had favourably affected the Group’s translated revenue. At constant currency using Q1’09 exchange rate, the Group revenue would have registered a lower growth of 25.9%
- The Group other operating costs increased by 18.0% compared to Q1’09, mainly driven by Celcom, XL and AxB. Celcom recorded higher marketing costs during the quarter, which was in line with higher revenue performance and aggressive marketing programs undertaken in Q1’10. While in XL, costs increased mainly resulted from sales and marketing costs, network frequency fee and licencing fee costs, which associate with 487% increase in XL’s Blackberry subscribers. AxB recorded higher costs resulted from higher subscriber acquisition and rebranding exercise during the current quarter
- The Group other operating income increased by 151.7% compared to Q1’09, mainly arising from one-off gain on disposal of shares in XL of RM307.5 million. The Group recorded a lower net finance costs as a result of repayment of debt and reduction of overall debt position at Group level
- The Group recorded a foreign exchange gain of RM23.8 million in the current quarter as compared to loss of RM216.2 million in Q1’09 mainly due to strengthening of RM and IDR against USD
- The Group recorded a one-off gain on of RM173.2 million arising from the merger of Spice and Idea on 17 March 2010. Contribution from associates and a jointly controlled entity showed a loss of RM115.9 million compared to profit of RM6.8 million in Q1’09. This was mainly resulted from share of loss from licence fee write off of RM181.0 million in Spice and Idea merger exercise
- Estimate next 4Q eps after 2010 Q1 result announced = 0.265(no adjustment due to higher profit is from non-repeatable income), estimate PE on current price 3.74 = 14.11
- Estimate next 4Q eps after 2009 Q4 result announced = 0.631(average recent 3 quarter)*4 = 0.2524+(0.05*0.2524) = 0.265(5% grow from 0.2524), estimate PE on current price 3.75 = 14.86
- Estimate next 4Q eps after 2009 Q3 result announced = 0.0595*4 = 0.238, estimate highest/lowest PE = 14.71/12.61
- Estimate next 4Q eps after 2009 Q2 result announced = 0.0579*4 = 0.2316, estimate highest/lowest PE = 14.12/12.52

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