KLCI Stock - AXIATA / 6888 - 2011 Quarter 1

Company Info

Market Capital (Capital Size)	42,705,392,043 (Very Large)
Par Value	RM 1.00

My Analysis

Forecast P/E now	(5.05-0.1)/0.3024 = 16.37 (High)
Target Price	4.84+0.1 = 4.94 (PE 16.0, EPS 0.3024, DPS 0.1)
Decision	Not interested unless revenue and profit increase more
Comment	Revenue decreased 1.9% but higher than preceding year corresponding quarter 3.3%, eps increased 249.3% but lower than preceding year corresponding quarter 40.6%, cash generated from operating enough to cover all expenses and still got extra, stronger liquidity ratio but still at low level now, lower gearing ratio at above moderate level now, high payables, all country profit increase
First Support Price	4.7
Second Support Price	4.5
Risk Rating	MODERATE

Research House

Maybank Target Price	5.6 (2011-02-24)
HwangDBS Target Price	5.6 (2011-03-23)
Credit Suisse Target Price	6.1 (2011-03-30)
AMMB Target Price	6.24 (2011-04-04)
RHB Target Price	5.75 (2011-04-19)
ECM Target Price	6.08 (2011-06-01)
MIDF Target Price	5.7 (2011-06-01)
OSK Target Price	5.77 (2011-06-02)
HLG Target Price	5.6 (2011-06-07)
CIMB Target Price	6.08 (2011-06-14)

Accounting Ratio

Return on Equity	6.75%
Dividend Yield	1.98%
Profit Margin	22.90%
Tax Rate	28.94%
Asset Turnover	0.4075
Net Asset Value Per Share	2.26
Net Tangible Asset per share	1.36
Price/Net Tangible Asset Per Share	3.68
Cash Per Share	0.77
Liquidity Current Ratio	1.4577
Liquidity Quick Ratio	1.4458
Liquidity Cash Ratio	1.0705
Gearing Debt to Equity Ratio	0.9274
Gearing Debt to Asset Ratio	0.4604
Working capital per thousand Ringgit sale	17.8%
Days to sell the inventory	4
Days to collect the receivables	45
Days to pay the payables	274

My notes based on 2011 quarter 1 report (number in '000):-
- Celcom revenue grew 1.9% driven by 37.7% increase in broadband subscribers and 7.9% increase in revenue generating base customers offset marginally by decrease in interconnection revenue from reduction in termination rates

- Revenue of XL grew 8.7%, in tandem with the increase in subscriber base of 19.6% compared to
Q1’10

- Robi Axiata Limited (“Robi”) revenue grew 19.0% mainly from higher prepaid and interconnect revenue, which increased by 17.7% and 41.7% respectively

- Revenue of market leader in Sri Lanka, Dialog, grew by 10.0% mainly from higher prepaid, postpaid and interconnect revenue which increased by 2.7%, 8.4% and more than 100.0% respectively

- The fluctuation of RM against local currencies of OpCo had unfavourably affected the overall Group’s translated revenue. At constant currency using Q1’10 exchange rate, the Group revenue would have registered a higher growth of 7.8%, quarteron-quarter

- Major OpCo operating costs of the Group increased by 3.5% to RM2,209.4 million in Q1’11 from RM2,134.4 million in Q1’10, mainly driven by XL and Celcom. XL recorded higher VAS cost and interconnect cost in line with higher revenue whilst Celcom recorded higher leased circuit charges and VAS costs in line with upsurge in broadband revenue

- The Group other operating income decreased by 97.7% to RM7.5 million in Q1’11 from RM319.6 million in Q1’10, mainly arising from one-off gain on disposal of shares in XL of RM307.5 million recorded in Q1’10

- As a result of repayment of debt and reduction of overall debt position of the Group level and higher finance income recorded, the Group recorded lower net finance costs of RM99.9 million for the financial period under review as compared to RM156.1 million in the corresponding financial period

- The Group recorded a lower other operating income for the current quarter under review of RM7.5 million from RM45.4 million in Q4’10. The decrease was mainly resulted from net gain on disposal of an associate of RM17.0 million recorded in Q4’10

- Estimate next 4Q eps after 2011 Q1 result announced = 0.3024, estimate PE on current price 4.8 = 16.37(DPS 0.1)
- Estimate next 4Q eps after 2010 Q4 result announced = 0.072*4*1.05 = 0.3024, estimate highest/lowest PE = 16.47/15.08 (DPS 0.1)
- Estimate next 4Q eps after 2010 Q3 result announced = 0.0752*4*1.05 = 0.3158, estimate highest/lowest PE = 16.12/13.93
- 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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