KLCI Stock - MAXIS / 6012 - 2010 Quarter 1

Market Cap : 7500000000*5.31 = 39,825,000,000 (Large)
NTA per share : (8988000-10999000)/7500000 = -0.2681
P/BV : Negative
Forecast P/E now : (3.82-0.275)/0.4934 = 7.18 (Low)
ROE : 11.76% (2 quarter)
DY : 0.32/5.31*100 = 6.03% (Moderate)
Fixed Asset Turnover(3 year) : 0.4613 (Low)
Liquidity Ratio : 1776/2751 = 0.6456 (Weak)
Receivables Collection Period : 831000/2/(7985000/365) = 18 days (Good)
My Target Price : 4.72+0.32 = 5.04 (PE 16, EPS 0.2952, DPS 0.32)
My Decision : NOT BUY unless price below 4.9
My Comment : Revenue and profit almost same as recent quarter result, free cash flow, remain high debt but slightly decreased, navps increasing
Technical Support Price : 5
Risk Rating : MODERATE (Due to high PE)

My notes based on 2010 Q1 report (number in '000):
- The Group registered a 3% increase in the total mobile subscriptions over the preceding quarter to bring the total mobile subscription base to 12,691,000. Monthly ARPU for postpaid and prepaid decreased by RM5 and RM3 respectively as a result of erosion in voice yield coupled with decrease in MOU and fewer calendar days in the quarter. The wireless broadband’s ARPU also decreased by RM16 or 19% due to the launch of free 2-month subscription promotional packages in the preceding quarter and lower take up rate for packages with higher subscription fees. Average MOU per subscription for both postpaid and prepaid decreased by 19 minutes and 2 minutes respectively mainly due to lower mobile traffic within Maxis’ networks and with other operators networks during the current quarter as a result of fewer calendar days in the quarter. Consequently, revenue decreased by 3%
- EBITDA decreased by 2% over the previous quarter on the back of lower revenue partly offset by lower operating costs due to lower sales and marketing costs and lower allowance for doubtful debts. The resultant EBITDA margin improved by 0.3% point from the previous quarter
- PBT was 10% higher than the preceding quarter. The increase was mainly due to one-time costs approximately RM77 million recognised in the preceding quarter relating to (i) the share-based payment in relation to discount on shares issued to retail investors of RM53 million and (ii) listing and quotation related expenses of RM24 million. Consequently, profit for the period was higher at RM552 million compared to RM503 million in the preceding quarter
- Revenue grew by 1% on the back of higher mobile subscription base. Mobile subscriptions grew 1,425,000 or 13% contributed by prepaid growth of 1,207,000 or 14%, postpaid growth of 56,000 or 2% and wireless broadband growth of 162,000, bringing the total mobile subscription base to 12,691,000 as at 31 March 2010. Monthly ARPU for prepaid and wireless broadband dropped by RM5 and RM28 respectively, mainly due to erosion in voice yield as a result of migration to lower priced plans and introduction of lower priced tariff packages and promotional packages offering free 2-month subscription. Monthly postpaid ARPU remains flat during the current quarter. Average postpaid MOU per subscription decreased by 7 minutes mainly driven by lower outgoing calls whilst prepaid MOU per subscription increased by 11 minutes driven by higher usage from increased mobile traffic within Maxis’ networks and with other operators networks during the period
- EBITDA increased by 1% on the back of higher revenue partly offset by higher direct expenses of RM12 million on account of higher device expenses from sales of Blackberry and iPhones. The resultant EBITDA margin decreased by 0.1% point from 50.4% to 50.3%
- For the current period, PBT increased by RM20 million or 3% due to higher EBITDA and lower depreciation and amortisation of RM59 million offset by higher net finance costs of RM49 million. Consequently, profit for the period was higher at RM552 million compared to RM547 million in the preceding period
- Estimate next 4Q eps after 2010 Q1 result announced = 0.328*0.9 = 0.2952, estimate PE on current price 5.31 = 16.9(DPS 0.32)
- Estimate next 4Q eps after 2009 Q4 result announced = 0.082*4 = 0.328, estimate highest/lowest PE = 16.07/14.82 (DPS 0.24)
- Estimate next 4Q eps after 2009 Q3 result announced = 0.082*4 = 0.328, estimate highest/lowest PE = 16.1/15.52 (DPS 0.24)

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