Telco DiGi Telekom Axiata Maxis - Affin Hwang Capital · 9/8/2017 · counter this, management guided that it has already diverted away from the migrant segment and progressively

8 September 2017

Affin Hwang Investment Bank Bhd (14389-U) www.affinhwang.com Page 1 of 12

2Q17 results wrap

2Q17 results were broadly in line with expectations. Although the

sequential momentum was positive, aided by improved earnings at

Axiata (+48% qoq), 1H17 sector earnings were nevertheless still

lower by 4% yoy due to higher competition and costs (depreciation

and interest expense). We had earlier cut our earnings forecasts for

Digi due to a less optimistic outlook, and for Maxis to take into

account the termination of the 3G Ran share agreement with U

Mobile. With limited catalysts for the sector and potentially another

round of price competition sparked by the 4th player, we would prefer

to stay clear of the cellular space. We remain Neutral on the sector

with TM as our top pick.

1H17 sector core net profit slipped by 4% yoy – broadly in line

1H17 saw earnings contract 4% yoy, due to earnings declines at Axiata (-

23.3%) and DiGi (-10.7%). 2Q17 sector earnings improved 4% qoq and

1% yoy, with the former largely driven by Axiata’s sharp earnings rebound

of 48% qoq, albeit from a low base in 1Q17.

Operational trends

Cellular operators continue to be impacted by a shrinking prepaid market

although we are seeing a progressive shift towards the postpaid segment.

We think that the major drivers behind this could be improving 4G

coverage (77-89%) and growing demand for data, although we believe that

competition has heated up as UMobile is also gaining traction in the

prepaid segment. Postpaid net adds have generally been positive and with

the higher ARPUs and stronger loyalty in this segment, the incumbents

could benefit.

Sector earnings likely to grow at a slower 1% for 2017E Post the results and earnings forecast revisions, our 2017E sector

earnings growth is lowered to +0.7% from +2.5% yoy. The revisions were

led by the lower service revenue guidance by Digi, and higher depreciation

and amortisation charges coming from the 900MHz and 1800MHz that

started in 2H17.

Maintain our Neutral rating, TM our sector pick

We maintain our NEUTRAL sector weighting as we expect 2017 to be a

challenging year and we do not foresee any earnings catalysts in the near

term. We think that competition in the cellular space will intensify with U

Mobile likely to be more aggressive in the months ahead (with more

spectrum and strong shareholders, we think this is likely). For sector

exposure, we like TM give the limited competitive pressure that we expect

in the cellular space. Furthermore, its CY17-18E dividend yields at 3.3-

3.4% are also on a par with the sector.

Peer Comparison

Rating Sh Pr TP Mkt Cap Year EV/EBITDA P/B

(RM) (RM) (RMm) end CY17E CY18E CY17E CY18E (x) (x) CY17E CY18E CY17E CY18E

Axiata HOLD 5.09 5.00 44,878 Dec 33.6 28.5 12.4 17.7 6.8 1.9 5.6 6.5 1.8 2.6

DiGi HOLD 4.87 4.74 37,864 Dec 25.4 25.5 -8.8 -0.3 14.1 72.9 286.6 285.7 3.9 3.9

Maxis HOLD 5.77 5.30 45,064 Dec 22.8 25.0 0.9 -8.9 11.6 8.7 40.0 34.1 3.5 3.5

TM HOLD 6.41 6.15 24,089 Dec 27.8 26.7 2.2 4.2 7.9 3.1 11.5 11.5 3.3 3.4

Average 151,895 27.0 26.8 0.7 1.6 10.1 21.6 85.9 84.4 3.1 3.3

Core PE (x) ROE (%) Div. Yield (%)EPS growth (%)

Source: Bloomberg, Affin Hwang forecasts. Note: Pricing as of close on 7 September 2017.

Note: our 12-month target prices are based on a DCF valuation.

Sector Update

Telco Neutral (maintain) Absolute Performance (%)

1M 3M 12M Axiata +5.4% +1.4% -9.6% Maxis -0.3% -6.9% -7.8% DiGi +1.5% -2.4% -4.1% TM +0.2% -2.6% -7.0% Relative Performance to KLCI (%)

-35

-30

-25

-20

-15

-10

-5

0

5

10

Ja

n-1

6

Fe

b-1

6

Ma

r-16

Ap

r-16

Ma

y-1

6

Ju

n-1

6

Ju

l-1

6

Au

g-1

6

Se

p-1

6

Oct-

16

Nov-1

6

Dec-1

6

Ja

n-1

7

Fe

b-1

7

Ma

r-17

Ap

r-17

Ma

y-1

7

Ju

n-1

7

Ju

l-1

7

Au

g-1

7

Se

p-1

7

DiGi Telekom Axiata Maxis

%

Source: Affin Hwang, Bloomberg

Kevin Low (603) 2146 7479

[email protected]

Masyitah Rosmin (603) 2146 7658

[email protected]

8 September 2017


2Q17 results round up

1H17 sector core net profit slipped by 4% yoy

1H17 saw earnings fall 4% yoy, due to earnings declines at Axiata

(-23.3%) and DiGi (-10.7%). Axiata’s weaker earnings were predominantly

attributed to losses from Idea of RM135m in 1H17 compared to a profit of

RM80m in 1H16, due to the disruption by the new entrant, and higher

depreciation charges (15.9% yoy) and finance costs (19.3% yoy) as a

result of its strategic acquisitions in the region (80% stake in Ncell

amongst others). For DiGi, the weaker earnings were due to service

revenue contraction as it faced a huge prepaid subscriber loss of 154k in

1H17 compared to a net add of 36k in 1H16. Higher depreciation charges

(+23.8% yoy) and interest expenses (+104.3% yoy) from its Sukuk

programme further squeezed its earnings.

Fig 1: 1H17 sector earnings down 4% yoy

-

500

1,000

1,500

2,000

2,500

3,000

Axiata DIGI Maxis TM Sector

1H16 1H17RMm

Source: Affin Hwang, companies

2Q17 sector earnings improved 4% qoq

The sector’s earnings momentum improved 4% qoq and 1% yoy in 2Q17,

with the former largely driven by Axiata’s sharp earnings rebound of 48%

qoq, albeit from a low base in 1Q17. Axiata is the only telco that registered

earnings growth sequentially, underpinned by healthy revenue growth at

its operating companies (Celcom +1% qoq, XL 6% qoq, Robi +4% qoq,

Dialog +2% and Ncell +5%) and lower tax charges. On a yoy basis, Maxis

and TM recorded stronger earnings growth due to improved revenue

growth and lower effective tax rates respectively.

Fig 2: 2Q17 sector earnings up 4% qoq and 1% yoy

-

200

400

600

800

1,000

1,200

1,400

1,600


2QCY16 1QCY17 2QCY17RMm


8 September 2017


Fig 3: Quarterly revenue Fig 4: Effective tax rates

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000


2QCY16 1QCY17 2QCY17RMm

-

10

20

30

40

50

60

Axiata DIGI Maxis TM

2QCY16 1QCY17 2QCY17(%)

Source: Affin Hwang, companies Source: Affin Hwang, companies

1H17 results broadly in line with expectations

On the whole, all telecoms companies under our coverage reported results

that were broadly within our expectations, with the exception of Digi. Digi is

still facing headwinds from its prepaid segment (63% of revenue). To

counter this, management guided that it has already diverted away from

the migrant segment and progressively upgraded its prepaid subscribers to

its postpaid plan.

EPS forecast cuts for Digi and Maxis

We have cut our 2017-19 EPS forecasts for Digi by 9-11%. We have also

cut our 2017-19 EPS forecasts for Maxis by 2-11%, with the bulk in 2018-

19E (-10% and -11% respectively) due to the progressive termination of

the 3G RAN sharing agreement with U Mobile, which is expected to end by

end 2018.

Fig 5: Changes post 2Q17 results

Financial EPS vs Affin

vs

consensus Call

Change

Previous

Call

Revised

Call

TP

Change

Previo

us TP

Revised

TP Company quarters Change estimates Estimates

RM RM

Axiata 2QFY17 ◄► Inline Inline ◄► Hold Hold ◄► 5.00 5.00

DiGi.Com 2QFY17 ▼ Below Below ◄► Hold Hold ▼ 4.88 4.74

Maxis 2QFY17 ▼ Inline Inline ◄► Hold Hold ▼ 6.49 5.30

Telekom

Malaysia

2QFY17 ◄► Inline Inline ◄► Hold Hold ◄► 6.15 6.15

Source: Affin Hwang forecasts

Note: EPS forecast changes and TP changes had been made earlier after the 2Q17 results, not in this report

8 September 2017


Cellular subscriber share

Incumbents continue to see prepaid share loss

Celcom and Maxis continued to lose prepaid subscriber market share in

2Q17, extending their loss over the past seven and eight quarters

consecutively. On the other hand, DiGi recorded an incremental net add of

151k prepaid subscribers after four consecutive quarters of loss.

Fig 6: Prepaid net adds Fig 7: Postpaid net adds

(1,000)

(800)

(600)

(400)

(200)

-

200

400

600

1Q

15

2Q

15

3Q

15

4Q

15

1Q

16

2Q

16

3Q

16

4Q

16

1Q

17

2Q

17

Celcom Digi Maxis'000

(150)

(100)

(50)

-

50

100

150

1Q

15

2Q

15

3Q

15

4Q

15

1Q

16

2Q

16

3Q

16

4Q

16

1Q

17

2Q

17

Celcom Digi Maxis'000


Postpaid segment growth healthy

Meanwhile, the postpaid segment saw an increase of 93k net adds in

2Q17 but at a slower rate qoq (1Q17: +98K) as the momentum was slowed

by Celcom (-30k). Maxis has maintained its top spot in the postpaid

segment since 2013 with 3m subscribers, followed by Celcom (2.9m) and

Digi (2.3m).

Shift from prepaid to postpaid

We think that the prepaid segment is seeing a decline as subscribers are

shifting to the postpaid segment. The listed incumbents are also losing

market share to non-listed 4th player U Mobile. We believe that the shift to

postpaid is underpinned by subscribers’ appetite for bigger data allocation.

The 3 big cellcos and the smaller players have offered attractive postpaid

packages with generous data allocation at affordable price points. Data

usage as of 2Q17 has reached an average of 6.3GB per month or a 20%

increase compared to the previous quarter (1Q17 data usage: 5.3GB per

month).

Fig 8: Data is in demand

3.2

2.6

3.73.9

3.3

4.95

3.7

6.26.2

4.3

7.1

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

Celcom Maxis (Prepaid) Maxis (Postpaid)

3Q16 4Q16 1Q17 2Q17GB/month


8 September 2017


Service Revenue

Celcom posted 1.4% growth in service revenue

Celcom was the only incumbent that registered growth in service revenue

in 2Q17, thanks to its marginally improved postpaid and prepaid ARPU.

We believe its turnaround plan to stabilize its revenue share in 4Q16-1Q17

and grow its revenue share faster than the industry in 2Q17-4Q17 has

contributed to its positive results, although the growth came from a low

base.

…but Maxis dominates service revenue share

However, in terms of service revenue market share among the

incumbents, Celcom is still far behind Maxis, which dominates with 42%

while Celcom and Digi have a stake of 29% each. We believe Maxis’

premium pricing strategy, combined with its extensive network

infrastructure, has resulted in its customers’ loyalty towards the brand. Its

customers’ priority of having a premium network, and hence service, has

been key, in our view.

Fig 9: Quarterly service revenue growth Fig 10: Maxis holds the largest service revenue market

share

(10)

(8)

(6)

(4)

(2)

0

2

4

1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17

Celcom Digi Maxis Industry%

32% 31% 31% 31% 29% 29% 29% 29% 29% 29%

29% 30% 29% 29% 30% 31% 30% 30% 29% 29%

39% 39% 40% 40% 41% 40% 41% 41% 42% 42%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1Q

15

2Q

15

3Q

15

4Q

15

1Q

16

2Q

16

3Q

16

4Q

16

1Q

17

2Q

17

Celcom Digi Maxis


8 September 2017


Data business

Data as growth driver

With the sharp spike in data usage, we believe that the cellcos’ revenue

will be driven by data growth as consumers are substituting voice and SMS

with widely used over-the-top (OTT) applications. Furthermore, with cellcos

bundling their packages with social media applications, coupled with

affordable smartphone offerings and wider 4G population coverage, we

believe that this will further escalate the data growth. Data revenue now

accounts for nearly half of service revenue compared to about a third just 3

years ago.

Fig 11: 4G population coverage Fig 12: Data revenue as % of total revenue

77%

86%

89%

30%

40%

50%

60%

70%

80%

90%

100%

2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17

Celcom Digi Maxis

44%

49%

20%

25%

30%

35%

40%

45%

50%

55%

1Q

15

2Q

15

3Q

15

4Q

15

1Q

16

2Q

16

3Q

16

4Q

16

1Q

17

2Q

17

Celcom Digi


Cost optimization has kept margins stable With the exception of Celcom, EBITDA margins for the incumbents have

held up relatively well despite the competition from U Mobile. We think that

this could be due to better cost optimization by the cellcos and also

improved utilization of their 4G network.

Fig 13: EBITDA margins have been relatively stable Fig 14: Annual margin

25

30

35

40

45

50

55

60

4Q

14

1Q

15

2Q

15

3Q

15

4Q

15

1Q

16

2Q

16

3Q

16

4Q

16

1Q

17

2Q

17

Celcom Digi Maxis%

30%

35%

40%

45%

50%

55%

2010 2011 2012 2013 2014 2015 2016

Celcom DiGi Maxis


8 September 2017


Fixed line operator

TM’s business remains steady

While TM’s traditional voice business continued to suffer a structural

decline with the ongoing mobile substitution, its other businesses,

particularly the Internet, are growing steadily, bolstered by strong demand

for connectivity and speed. TM currently has 2.36m (-0.3% yoy) broadband

customers, of whom 43% are its high speed broadband Unifi customers. Of

the Unifi customers, 88% are on packages with speeds of 10mbps and

above, compared to 68% in the same period last year. Surprisingly, Unifi’s

ARPU has been stable at RM200/month, thanks to a higher take-up rate of

its IPTV content and its upselling strategy.

Fig 15: Voice revenue declines

2.8

2.9

3

3.1

3.2

3.3

3.4

3.5

3.6

3.7

3.8

720

740

760

780

800

820

840

860

880

900

920

1Q

14

2Q

14

3Q

14

4Q

14

1Q

15

2Q

15

3Q

15

4Q

15

1Q

16

2Q

16

3Q

16

4Q

16

1Q

17

2Q

17

Voice revenue No of DEL (m)RMm mil

Source: Affin Hwang, company

Fig 16: Unifi and Streamyx ARPU Fig 17: Churn of Streamyx subs mitigated by Unifi net adds

74

76

78

80

82

84

86

88

90

92

94

165

170

175

180

185

190

195

200

205

1Q

13

2Q

13

3Q

13

4Q

13

1Q

14

2Q

14

3Q

14

4Q

14

1Q

15

2Q

15

3Q

15

4Q

15

1Q

16

2Q

16

3Q

16

4Q

16

1Q

17

2Q

17

Streamyx ARPU (RHS) Unifi ARPURM/month RM/month

-80

-60

-40

-20

0

20

40

60

1Q

14

2Q

14

3Q

14

4Q

14

1Q

15

2Q

15

3Q

15

4Q

15

1Q

16

2Q

16

3Q

16

4Q

16

1Q

17

2Q

17

Streamyx Unifi Total

'000

Source: Affin Hwang, company Source: Affin Hwang, company

Moving forward, we believe that the key growth driver for TM will be the

HSBB2 and SUBB roll-out, as these will help deliver superfast connectivity

to TM customers and widen its broadband coverage.

8 September 2017


Our key concern for TM is, however, its mobility segment. While webe has

attained good traction at 5.6% of TM’s household penetration, we estimate

that its losses have continued to widen (Fig 18), likely due to higher

operational costs as coverage is expanded. Nevertheless, this has not

impacted TM’s costs significantly its EBITDA margins have remained fairly

stable (Fig 19). Our other concern lies in the rather flat broadband

subscriber base (Fig 20), which means that future growth would need to

come from upscaling, which may be difficult as net adds would likely be

marginal subscribers.

Fig 18: Estimated webe losses Fig 19: TM’s EBITDA margin

-250

-200

-150

-100

-50

0

4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17

Webe lossesRMm

0%

5%

10%

15%

20%

25%

30%

35%

40%

1,800

2,000

2,200

2,400

2,600

2,800

3,000

3,200

3,400

1Q

15

2Q

15

3Q

15

4Q

15

1Q

16

2Q

16

3Q

16

4Q

16

1Q

17

2Q

17

Revenue Ebitda marginRMm

Source: Affin Hwang Source: Affin Hwang, company

Fig 20: Broadband subs – Unifi and Streamyx

0

500

1000

1500

2000

2500

1Q

14

2Q

14

3Q

14

4Q

14

1Q

15

2Q

15

3Q

15

4Q

15

1Q

16

2Q

16

3Q

16

4Q

16

1Q

17

2Q

17

Streamyx Unifi'000 subs

Source: Affin Hwang, company

8 September 2017


Earnings Outlook

We expect sector earnings to grow at a slower 1% for 2017E Post the results and earnings forecast cuts, we adjust slightly our 2017

sector earnings growth forecast to +0.7% from +2.5% yoy. The sector

earnings forecast revisions were led by the lower service revenue

guidance from Digi, and higher depreciation and amortisation charges from

the 900MHz and 1800MHz that started in 2H17. We now expect 2018E

core net profit to grow at 1.6% vs +4.4% previously after our earnings

forecast revisions for Digi and Maxis. The 2017-18E improvement in sector

earnings is driven primarily by Axiata as earnings are still coming off a low

base. Fig 21: Sector earnings growth

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

700

720

740

760

780

800

820

840

860

880

900

2015 2016 2017E 2018E 2019E

Core net profit Growth (%)RMm


Valuations and recommendation

Maintain our Neutral rating, TM our sector pick

We maintain our NEUTRAL sector weighting as we expect 2017 to be a

challenging year and we do not foresee any earnings catalysts in the near

term. As for top line growth, competition and ARPU compression will still

take time to moderate and stabilise, while the bottom line will likely be

constrained by increasing depreciation and amortisation charges, as the

amortisation fees of 900/1800MHz will start in the second half of 2017, and

possible additional spectrum fees by MCMC by the end of this year. We

think that competition in the cellular space will intensify with U Mobile likely

to be more aggressive in the months ahead, especially with more

spectrum and strong shareholders. For sector exposure, we like TM give

the limited competitive pressure in its fixed line business. Furthermore, its

2017-18E dividend yields of 3.3-3.4% are also on a par with the sector.

Sector risks

The key upside risk to our Neutral sector call is that the telcos are large-

cap, liquid and Shariah compliant, which continue to benefit from strong

fund flows, despite earnings disappointment and dividend yield

compression. Downside risks include intense price competition,

incumbents losing more spectrum to smaller new entrants and paying too

high a price for future spectrum that are re-farmed.

8 September 2017


Axiata (AXIATA MK, HOLD, TP: RM5.00)

Earnings & Valuation Summary FYE 31 Dec 2015 2016 2017E 2018E 2019E Revenue (RMm) 19,883.5 21,565.4 23,606.4 23,838.5 24,326.5 EBITDA (RMm) 7,284.1 8,012.6 8,841.8 9,092.7 9,186.4 Pretax profit (RMm) 3,331.1 1,139.6 2,171.1 2,572.3 2,786.1 Net profit (RMm) 2,554.2 504.3 1,336.2 1,572.5 1,732.9 EPS (sen) 29.0 5.7 15.2 17.8 19.7 PER (x) 17.0 86.2 32.5 27.6 25.1 Core net profit (RMm) 2,848.8 1,189.3 1,336.2 1,572.5 1,732.9 Core EPS (sen) 23.5 13.5 15.2 17.8 19.7 Core EPS growth (%) (7.9) (42.6) 12.4 17.7 10.2 Core PER (x) 21.0 36.5 32.5 27.6 25.1 Net DPS (sen) 20.0 8.0 9.1 13.4 16.7 Dividend Yield (%) 4.1 1.6 1.8 2.7 3.4 EV/EBITDA (x) 7.5 7.5 6.7 6.2 5.9 Chg in EPS (%) - - - Affin/Consensus (x) 1.0 1.0 1.0 Source: Company, Affin Hwang estimates, Bloomberg

Digi (DIGI MK, HOLD, TP: RM4.74)

Earnings & Valuation Summary FYE 31 Dec 2015 2016 2017E 2018E 2019E Revenue (RMm) 6,913.9 6,597.1 6,301.6 6,379.8 6,447.7 EBITDA (RMm) 2,982.3 2,954.9 2,835.8 2,857.8 2,883.0 Pretax profit (RMm) 2,308.7 2,238.1 1,990.6 1,973.2 1,972.7 Net profit (RMm) 1,722.5 1,632.6 1,488.3 1,483.5 1,482.1 EPS (sen) 22.2 21.0 19.1 19.1 19.1 PER (x) 22.1 23.3 25.5 25.6 25.7 Core net profit (RMm) 1,748.3 1,632.6 1,488.3 1,483.5 1,482.1 Core EPS (sen) 22.5 21.0 19.1 19.1 19.1 Core EPS growth (%) (14.1) (6.6) (8.8) (0.3) (0.1) Core PER (x) 21.7 23.3 25.5 25.6 25.7 Net DPS (sen) 22.0 20.9 19.1 19.1 19.1 Dividend Yield (%) 4.5 4.3 3.9 3.9 3.9 EV/EBITDA (x) 13.2 13.6 14.2 14.1 14.0

Chg in EPS (%) (8.6) (9.9) (11.4)

Affin/Consensus (x) 0.9 0.9 0.9 Source: Company, Affin Hwang estimates, Bloomberg

Maxis (MAXIS MK, HOLD, TP: RM5.30)

Earnings & Valuation Summary

FYE 31 Dec 2015 2016 2017E 2018E 2019E Revenue (RMm) 8,601.0 8,612.0 8,712.6 8,431.5 8,221.5 EBITDA (RMm) 4,385.0 4,593.0 4,549.0 4,360.1 4,272.1 Pretax profit (RMm) 2,460.0 2,737.0 2,681.6 2,443.8 2,421.7 Net profit (RMm) 1,739.0 2,013.0 1,980.4 1,804.4 1,788.1 EPS (sen) 22.3 25.8 25.4 23.1 22.9 PER (x) 24.8 21.5 21.8 23.9 24.2 Core net profit (RMm) 1,960.0 1,963.0 1,980.4 1,804.4 1,788.1 Core EPS (sen) 25.1 25.1 25.4 23.1 22.9 Core EPS growth (%) 0.9 0.2 0.9 (8.9) (0.9) Core PER (x) 22.0 22.0 21.8 23.9 24.2 Net DPS (sen) 20.0 20.0 20.0 20.0 20.0 Dividend Yield (%) 3.6 3.6 3.6 3.6 3.6 EV/EBITDA (x) 12.1 11.6 11.7 12.2 12.4

Chg in EPS (%) (1.8) (9.9) (11.1) Affin/Consensus (x) 1.0 1.0 0.9 Source: Company, Affin Hwang forecasts, Bloomberg

Axiata Price Chart

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Digi Price Chart

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8 September 2017


Telekom Malaysia (T MK, HOLD, TP: RM6.15)

Earnings & Valuation Summary FYE 31 Dec 2015 2016 2017E 2018E 2019E Revenue (RMm) 11,721.6 12,060.9 12,282.9 12,479.4 12,638.5 EBITDA (RMm) 3,556.7 3,822.4 3,914.8 4,127.0 4,122.3 Pretax profit (RMm) 911.8 918.5 1,046.8 1,063.6 1,080.1 Net profit (RMm) 700.3 776.0 891.9 903.3 894.5 EPS (sen) 18.6 20.6 23.7 24.0 23.8 PER (x) 34.5 31.1 27.1 26.7 27.0 Core net profit (RMm) 894.9 847.9 866.7 903.3 894.5 Core EPS (sen) 23.8 22.6 23.1 24.0 23.8 Core EPS growth (%) (4.2) (5.1) 2.0 4.2 (1.0) Core PER (x) 27.0 28.4 27.8 26.7 27.0 Net DPS (sen) 21.4 21.5 21.4 21.6 21.4 Dividend Yield (%) 3.3 3.3 3.3 3.4 3.3 EV/EBITDA (x) 8.0 7.8 7.9 7.6 7.5 Chg in EPS (%) - - - Affin/Consensus (x) 1.0 1.0 0.9 Source: Company, Affin Hwang estimates, Bloomberg

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8 September 2017


Equity Rating Structure and Definitions

BUY Total return is expected to exceed +10% over a 12-month period

HOLD Total return is expected to be between -5% and +10% over a 12-month period

SELL Total return is expected to be below -5% over a 12-month period

NOT RATED Affin Hwang Investment Bank Berhad does not provide research coverage or rating for this company. Report is intended as information

only and not as a recommendation

The total expected return is defined as the percentage upside/downside to our target price plus the net dividend yield over the next 12 months.

OVERWEIGHT Industry, as defined by the analyst’s coverage universe, is expected to outperform the KLCI benchmark over the next 12 months

NEUTRAL Industry, as defined by the analyst’s coverage universe, is expected to perform inline with the KLCI benchmark over the next 12 months

UNDERWEIGHT Industry, as defined by the analyst’s coverage universe is expected to under-perform the KLCI benchmark over the next 12 months

This report is intended for information purposes only and has been prepared by Affin Hwang Investment Bank Berhad (14389-U) (“the Company”) based on sources believed to be reliable. However, such sources have not been independently verified by the Company, and as such the Company does not give any guarantee, representation or warranty (express or implied) as to the adequacy, accuracy, reliability or completeness of the information and/or opinion provided or rendered in this report. Facts, information, views and/or opinion presented in this report have not been reviewed by, may not reflect information known to, and may present a differing view expressed by other business units within the Company, including investment banking personnel. Reports issued by the Company, are prepared in accordance with the Company’s policies for managing conflicts of interest arising as a result of publication and distribution of investment research reports. Under no circumstances shall the Company, its associates and/or any person related to it be liable in any manner whatsoever for any consequences (including but are not limited to any direct, indirect or consequential losses, loss of profit and damages) arising from the use of or reliance on the information and/or opinion provided or rendered in this report. Any opinions or estimates in this report are that of the Company, as of this date and subject to change without prior notice. Under no circumstances shall this report be construed as an offer to sell or a solicitation of an offer to buy any securities. The Company and/or any of its directors and/or employees may have an interest in the securities mentioned therein. The Company may also make investment decisions or take proprietary positions that are inconsistent with the recommendations or views in this report. Comments and recommendations stated here rely on the individual opinions of the ones providing these comments and recommendations. These opinions may not fit to your financial status, risk and return preferences and hence an independent evaluation is essential. Investors are advised to independently evaluate particular investments and strategies and to seek independent financial, legal and other advice on the information and/or opinion contained in this report before investing or participating in any of the securities or investment strategies or transactions discussed in this report. Third-party data providers make no warranties or representations of any kind relating to the accuracy, completeness, or timeliness of the data they provide and shall not have liability for any damages of any kind relating to such data. The Company’s research, or any portion thereof may not be reprinted, sold or redistributed without the consent of the Company . The Company, is a participant of the Capital Market Development Fund-Bursa Research Scheme, and will receive compensation for the participation. This report is printed and published by: Affin Hwang Investment Bank Berhad (14389-U) A Participating Organisation of Bursa Malaysia Securities Berhad 22nd Floor, Menara Boustead, 69, Jalan Raja Chulan, 50200 Kuala Lumpur, Malaysia. T : + 603 2146 3700 F : + 603 2146 7630 [email protected] www.affinhwang.com

Documents

Telco DiGi Telekom Axiata Maxis - Affin Hwang Capital · 9/8/2017 · counter this, management guided that it has already diverted away from the migrant segment and progressively