Company Info
My Analysis
Research House
Accounting Ratio
My notes based on 2010 quarter 3 report (number in '000):-
- The Group revenue grew by 14.8% in the current quarter (“Q3’10”) to RM3,937.2 million from RM3,430.7 million recorded in the third quarter 2009 (“Q3’09”), attributed to the higher revenue contribution from XL, Celcom and Robi Axiata Limited (“Robi”). XL revenue grew in tandem with the increase in subscriber base of 56.6% as compared to Q3’09. Celcom revenue grew 6.7% driven by increase in prepaid net additions of 35.0% and broadband subscribers of 69.0%. While Robi revenue grew by 25.8% resulted from increased in prepaid usage and interconnect revenue
- The fluctuation of RM against local currencies had unfavourably affected the overall Group’s translated revenue. At constant currency using Q3’09 exchange rate, the Group revenue would have registered a higher growth of 16.7%
- The Group other operating costs increased by 2.3% to RM2,103.9 million in Q3’10 from RM2,057.2 million in Q3’09, mainly driven by Celcom and XL. Celcom and XL recorded higher marketing costs during the current quarter due to marketing and product promotion activities undertaken in conjunction with the World Cup event. Increase in XL other operating costs in the current quarter is also due to higher interconnect and VAS cost in line with higher revenue
- The Group net finance costs was lower in current quarter at RM117.4 million as compared to RM168.6 million in Q3’09 as a result of repayment of debt and reduction of overall debt position at Group level
- For the current quarter, the Group recorded foreign exchange losses of RM55.8 million as compared to foreign exchange gains of RM184.7 million in Q3’09, mainly arising from revaluation of lower USD borrowings and payables in Q3’10
- The Group profit after tax (“PAT”) was RM745.2 million, increased by 40.1% from RM531.8 million reported in Q3’09. This was driven by positive PAT contribution from Dialog Axiata Plc (“Dialog”) and Robi compared to loss contribution in Q3’09 and improved PAT contribution in Celcom and XL
- The Group revenue improved by 2.2%, from RM3,854.1 million recorded in the second quarter 2010 (“Q2’10”) to RM3,937.2 million in Q3’10. The growth was primarily attributed to higher revenue contribution from XL, Robi and Celcom as a result of increased subscribers, voice and data revenue. Q3’10 also saw higher revenue contribution from broadband of Celcom and XL
- The Group other operating costs increased by 3.0% to RM2,103.9 million in Q3’10 from RM2,041.6 million in Q2’10, mainly resulted from Celcom and XL. The increase in other operating costs from Celcom was mainly due to higher marketing costs and increase in bad debts. The increase in XL other operating costs was resulted from higher marketing costs and higher interconnect and VAS cost in line with higher revenue
- Depreciation, amortisation and impairment in current quarter decreased by RM104.9 million mainly resulted from FRS impairment charge arising from impairment assessment performed in Q2’10
- The Group recorded a lower other operating income of RM14.8 million in Q3’10 from RM55.1 million in Q2’10 due to the net gain on partial disposal of equity interest in XL recorded in Q2’10
- As a result of repayment of debt and reduction of overall debt position at Group level, the Group recorded lower net finance costs of RM117.4 million in Q3’10 compared to RM128.0 million in Q2’10
- The Group recorded foreign exchange losses of RM55.8 million in Q3’10 as compared to foreign exchange losses of RM21.2 million in Q2’10, mainly arising from revaluation of USD denominated fixed deposits
- The Group PAT increased by 10.3% to RM745.2 million in Q3’10 from RM675.5 million recorded in Q2’10. This was mainly due to higher depreciation, amortisation and impairment recorded in Q2’10, resulted from FRS impairment charge arising from impairment assessment performed in Q2’10
- Estimate next 4Q eps after 2010 Q3 result announced = 0.0752*4*1.05 = 0.3158, estimate PE on current price 4.91 = 15.58
- Estimate next 4Q eps after 2010 Q2 result announced = 0.0681*4*1.05 = 0.286, estimate highest/lowest PE = 16.29/15.24
- Estimate next 4Q eps after 2010 Q1 result announced = 0.265(no adjustment due to higher profit is from non-repeatable income), estimate highest/lowest PE = 16.98/13.89
- 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 highest/lowest PE = 15.28/13.21
- 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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| Market Capital (Capital Size) | 41,465,708,374 (Very Large) |
| Par Value | RM 1.00 |
My Analysis
| Forecast P/E now | 4.91/0.3158 = 15.55 (Moderate) |
| Target Price | 0.3158*16.0 = 5.05 (PE 16.0, EPS 0.3158) |
| Decision | BUY |
| Comment | Revenue is highest all the time, eps increased and higher than preceding year corresponding quarter, free and net cash flow increasing, liquidity ratio increasing at low level now, gearing ratio decreasing at above moderate level now, all accounting period are better ratio, weakening IDR against MYR, weakening USD against MYR |
| First Support Price | 4.6 |
| Second Support Price | 4.4 |
| Risk Rating | MODERATE |
Research House
| CIMB Target Price | 5.9 (2010-10-22) |
| AMMB Target Price | 6.4 (2010-10-29) |
| RHB Target Price | 5.52 (2010-11-16) |
| Credit Suisse Target Price | 5.8 (2010-11-25) |
| HLG Target Price | 5.05 (2010-11-25) |
| TA Target Price | 5.9 (2010-11-25) |
| JP Morgan Target Price | 5.9 (2010-12-09) |
| Maybank Target Price | 5.45 (2010-12-15) |
| MIDF Target Price | 5.5 (2010-12-27) |
| OSK Target Price | 5.8 (2010-12-30) |
| HwangDBS Target Price | 5.1 (2011-01-06) |
Accounting Ratio
| Return on Equity | 13.25% |
| Dividend Yield | - |
| Profit Margin | 26.52% |
| Tax Rate | 28.63% |
| Asset Turnover | 0.3946 |
| Net Asset Value Per Share | 2.27 |
| Net Tangible Asset per share | 1.38 |
| Price/Net Tangible Asset Per Share | 3.25 |
| Cash Per Share | 0.69 |
| Liquidity Current Ratio | 1.2692 |
| Liquidity Quick Ratio | 1.257 |
| Liquidity Cash Ratio | 0.9393 |
| Gearing Debt to Equity Ratio | 0.9325 |
| Gearing Debt to Asset Ratio | 0.464 |
| Working capital per thousand Ringgit sale | 11.1% |
| Days to sell the inventory | 3 |
| Days to collect the receivables | 37 |
| Days to pay the payables | 191 |
My notes based on 2010 quarter 3 report (number in '000):-
- The Group revenue grew by 14.8% in the current quarter (“Q3’10”) to RM3,937.2 million from RM3,430.7 million recorded in the third quarter 2009 (“Q3’09”), attributed to the higher revenue contribution from XL, Celcom and Robi Axiata Limited (“Robi”). XL revenue grew in tandem with the increase in subscriber base of 56.6% as compared to Q3’09. Celcom revenue grew 6.7% driven by increase in prepaid net additions of 35.0% and broadband subscribers of 69.0%. While Robi revenue grew by 25.8% resulted from increased in prepaid usage and interconnect revenue
- The fluctuation of RM against local currencies had unfavourably affected the overall Group’s translated revenue. At constant currency using Q3’09 exchange rate, the Group revenue would have registered a higher growth of 16.7%
- The Group other operating costs increased by 2.3% to RM2,103.9 million in Q3’10 from RM2,057.2 million in Q3’09, mainly driven by Celcom and XL. Celcom and XL recorded higher marketing costs during the current quarter due to marketing and product promotion activities undertaken in conjunction with the World Cup event. Increase in XL other operating costs in the current quarter is also due to higher interconnect and VAS cost in line with higher revenue
- The Group net finance costs was lower in current quarter at RM117.4 million as compared to RM168.6 million in Q3’09 as a result of repayment of debt and reduction of overall debt position at Group level
- For the current quarter, the Group recorded foreign exchange losses of RM55.8 million as compared to foreign exchange gains of RM184.7 million in Q3’09, mainly arising from revaluation of lower USD borrowings and payables in Q3’10
- The Group profit after tax (“PAT”) was RM745.2 million, increased by 40.1% from RM531.8 million reported in Q3’09. This was driven by positive PAT contribution from Dialog Axiata Plc (“Dialog”) and Robi compared to loss contribution in Q3’09 and improved PAT contribution in Celcom and XL
- The Group revenue improved by 2.2%, from RM3,854.1 million recorded in the second quarter 2010 (“Q2’10”) to RM3,937.2 million in Q3’10. The growth was primarily attributed to higher revenue contribution from XL, Robi and Celcom as a result of increased subscribers, voice and data revenue. Q3’10 also saw higher revenue contribution from broadband of Celcom and XL
- The Group other operating costs increased by 3.0% to RM2,103.9 million in Q3’10 from RM2,041.6 million in Q2’10, mainly resulted from Celcom and XL. The increase in other operating costs from Celcom was mainly due to higher marketing costs and increase in bad debts. The increase in XL other operating costs was resulted from higher marketing costs and higher interconnect and VAS cost in line with higher revenue
- Depreciation, amortisation and impairment in current quarter decreased by RM104.9 million mainly resulted from FRS impairment charge arising from impairment assessment performed in Q2’10
- The Group recorded a lower other operating income of RM14.8 million in Q3’10 from RM55.1 million in Q2’10 due to the net gain on partial disposal of equity interest in XL recorded in Q2’10
- As a result of repayment of debt and reduction of overall debt position at Group level, the Group recorded lower net finance costs of RM117.4 million in Q3’10 compared to RM128.0 million in Q2’10
- The Group recorded foreign exchange losses of RM55.8 million in Q3’10 as compared to foreign exchange losses of RM21.2 million in Q2’10, mainly arising from revaluation of USD denominated fixed deposits
- The Group PAT increased by 10.3% to RM745.2 million in Q3’10 from RM675.5 million recorded in Q2’10. This was mainly due to higher depreciation, amortisation and impairment recorded in Q2’10, resulted from FRS impairment charge arising from impairment assessment performed in Q2’10
- Estimate next 4Q eps after 2010 Q3 result announced = 0.0752*4*1.05 = 0.3158, estimate PE on current price 4.91 = 15.58
- Estimate next 4Q eps after 2010 Q2 result announced = 0.0681*4*1.05 = 0.286, estimate highest/lowest PE = 16.29/15.24
- Estimate next 4Q eps after 2010 Q1 result announced = 0.265(no adjustment due to higher profit is from non-repeatable income), estimate highest/lowest PE = 16.98/13.89
- 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 highest/lowest PE = 15.28/13.21
- 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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