KLCI Stock - MAXIS / 6012 - 2010 Quarter 2

Market Cap : 7500000000*5.4 = 40,500,000,000 (Very Large)
NTA per share : (8702000-11007000)/7500000 = -0.31
P/BV : Not applicable
Forecast P/E now : (5.4-0.32)/0.3091 = 16.43 (High)
ROE : ~24%
DY : 0.32/5.4*100 = 5.93% (Moderate)
Fixed Asset Turnover(3 year) : 0.4976
Liquidity Ratio : 1907/3250 = 0.5868 (Weak)
Receivables Collection Period : 814000/(8710000/365) = 34 days (Good)
My Target Price : 4.95+0.32 = 5.27 (PE 16, EPS 0.3091, DPS 0.32)
My Decision : NOT BUY unless price below 5.3
My Comment : Revenue and profit almost same with recent quarter result, good cash flow, high debt and increased, navps decreased, wireless broadband usage growing
Technical Support Price : 5
Risk Rating : MODERATE
OSK Target Price : 5.4 (01 Sep 10)

My notes based on 2010 quarter 2 report (number in '000):

- Revenue for the six months ended 30 June 2010 increased by 2% over the corresponding period last year due to increased non-voice revenue generated from the mobile services. The growth in non-voice revenue was primarily due to increased usage of mobile internet and wireless broadband services. Mobile subscriptions grew 14% with prepaid and wireless broadband growing by 1,312,000 and 277,000 subscriptions respectively

- Both the ARPU for prepaid and wireless broadband were impacted by the higher take up of lower priced plans with postpaid maintaining its monthly ARPU at RM103. The average monthly blended MOU per subscription remained relatively flat at 173 minutes as a result of increase from the prepaid segment that was partially offset by a decline in the postpaid segment

- The Group’s EBITDA and EBITDA margin were largely impacted by higher sales and marketing costs incurred for the 2010 FIFA World Cup sponsorship and increased in device expenses in tandem with higher device revenue, partly offset by lower allowance for doubtful debts from improved collection and cost savings from cost management initiatives

- As a result of the lower EBITDA and higher finance costs partly offset by lower depreciation charge, PBT was 3% lower than the corresponding period last year. Consequently, profit for the period was 5% lower compared to the corresponding period last year

- The Group recorded a quarter on quarter revenue growth of 2% primarily driven by an increase in revenue from advance data services (ADS), wireless broadband and hubbing business. ADS revenue has increased by 9% with the continued growth in mobile internet usage aided by the wide usage of smartphones and the additional products and services launched. Wireless broadband revenue grew by 32% due to an increase in the number of subscriptions from 313,000 as at 31 March 2010 to 448,000 as at 30 June 2010

- The increase in ADS revenue has also contributed to the increase in the monthly postpaid ARPU whilst the monthly prepaid ARPU was impacted by the higher take up of lower priced plans. Despite competition, the wireless broadband maintained its ARPU at RM69

- The Group’s EBITDA and EBITDA margin were impacted by the cost incurred for the 2010 FIFA World Cup sponsorship and the increased interconnect costs on higher hubbing traffic in the quarter, partly offset by cost savings from cost management initiatives

- As a result of the lower EBITDA and higher finance costs partly offset by lower depreciation charge, PBT was 6% lower than the preceding quarter

- Estimate next 4Q eps after 2010 Q2 result announced = 0.0736*4*1.05 = 0.3091, estimate PE on current price 5.4 = 16.43(DPS 0.32)
- Estimate next 4Q eps after 2010 Q1 result announced = 0.328*0.9 = 0.2952, estimate highest/lowest PE = 17.68/16.46 (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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