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
Masyitah Rosmin (603) 2146 7658
8 September 2017
Affin Hwang Investment Bank Bhd (14389-U) www.affinhwang.com Page 2 of 12
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
Axiata DIGI Maxis TM Sector
2QCY16 1QCY17 2QCY17RMm
Source: Affin Hwang, companies
8 September 2017
Affin Hwang Investment Bank Bhd (14389-U) www.affinhwang.com Page 3 of 12
Fig 3: Quarterly revenue Fig 4: Effective tax rates
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
Axiata DIGI Maxis TM Sector
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
Affin Hwang Investment Bank Bhd (14389-U) www.affinhwang.com Page 4 of 12
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
Source: Affin Hwang, companies Source: Affin Hwang, companies
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
Source: Affin Hwang, companies
8 September 2017
Affin Hwang Investment Bank Bhd (14389-U) www.affinhwang.com Page 5 of 12
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
Source: Affin Hwang, companies Source: Affin Hwang, companies
8 September 2017
Affin Hwang Investment Bank Bhd (14389-U) www.affinhwang.com Page 6 of 12
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
Source: Affin Hwang, companies Source: Affin Hwang, companies
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
Source: Affin Hwang, companies Source: Affin Hwang, companies
8 September 2017
Affin Hwang Investment Bank Bhd (14389-U) www.affinhwang.com Page 7 of 12
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
Affin Hwang Investment Bank Bhd (14389-U) www.affinhwang.com Page 8 of 12
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
Affin Hwang Investment Bank Bhd (14389-U) www.affinhwang.com Page 9 of 12
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
Source: Affin Hwang, companies
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
Affin Hwang Investment Bank Bhd (14389-U) www.affinhwang.com Page 10 of 12
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
3.00
3.50
4.00
4.50
5.00
5.50
6.00
6.50
7.00
Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16 Jan-17 May-17 Sep-17
(RM)
Source: Affin Hwang, Bloomberg
Digi Price Chart
3.00
3.50
4.00
4.50
5.00
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6.00
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Maxis Price Chart
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8 September 2017
Affin Hwang Investment Bank Bhd (14389-U) www.affinhwang.com Page 11 of 12
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
TM Price Chart
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8 September 2017
Affin Hwang Investment Bank Bhd (14389-U) www.affinhwang.com Page 12 of 12
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