AXIATA (6888) : Axiata Q3 core earnings miss CIMB Research expectations
KUALA LUMPUR: Axiata Group’s core net profit in the third quarter ended Sept 30, 2014 (Q3FY14) fell 15.2% on-quarter (down 35.4% on-year) which was below CIMB Equities Research and consensus estimates.
CIMB Research said on Tuesday the core net profit missed its expectations, with 9MFY14 core net profit at 66% of its full-year forecast and 69% of consensus.
“We cut our FY14-16 core net profit by 8-13% for weaker-than-expected Celcom and associate earnings, plus much higher depreciation. Our sum-of-parts based target price is cut by 1.4% to RM7.10.
“With rebounds expected at Celcom and XL, we see stronger earnings for Axiata in FY15; though consensus numbers appear to have factored this in. Axiata is now guiding for steady to marginally higher capex in FY15, which is possibly a negative surprise for the market,” it said.
CIMB Research said Axiata was still its preferred Malaysian telco pick for its earnings recovery story.
It expected Celcom’s performance to improve from Q4FY14 onwards. Celcom’s revenue fell for the third consecutive quarter, by 0.9% on-quarter (-4.2% on-year), still plagued by IT and network issues. EBITDA margin also fell 1.6% pts on-quarter (-2.8% pts on-year) due to the booking of USP cost during the quarter.
“We expect performance to gradually improve from 4Q14 onwards as the telco has launched new prepaid products in mid-October after resolving its IT/network issues. New postpaid products are also in the pipeline, to be launched before year-end.
“Overall, we forecast Celcom’s revenue to fall 3.3% in FY14, then rise 3.0%/2.7% in FY15/FY16, partly driven by the positive GST impact.
“XL will take one to two quarters to regain momentum. XL’s EBITDA was flat on-quarter (-8.6% on-year) on soft revenue performance due to the slowdown in 3G network deployment and subscriber churn. In RM terms, EBITDA fell 2.5% on-quarter (-18.4% on-year).
“On the positive side, XL has managed to reduce Axis’s standalone operating expenditure by 70% since October 2013 and is guiding for more network-related cost savings in 4Q14 and 1Q15, after the full shutdown of the Axis network. It aims for Axis to break even at EBITDA level by 1Q15,” it said.
CIMB Research said in Q3FY14, Robi and Dialog posted more modest 0.2% on-quarter (+3.1% on-year) and 3.8% on-quarter (+4.0% on-year) EBITDA growth, respectively. Smart’s EBITDA continued to grow strongly 9% on-quarter.
Combined, they make up 21% of group EBITDA versus 18% a year ago.
“We believe growth will remain strong due to the generally lower market penetration, although more intense competition could affect growth in Bangladesh in the short term,” it added.
http://www.thestar.com.my
KUALA LUMPUR: Axiata Group’s core net profit in the third quarter ended Sept 30, 2014 (Q3FY14) fell 15.2% on-quarter (down 35.4% on-year) which was below CIMB Equities Research and consensus estimates.
CIMB Research said on Tuesday the core net profit missed its expectations, with 9MFY14 core net profit at 66% of its full-year forecast and 69% of consensus.
“We cut our FY14-16 core net profit by 8-13% for weaker-than-expected Celcom and associate earnings, plus much higher depreciation. Our sum-of-parts based target price is cut by 1.4% to RM7.10.
“With rebounds expected at Celcom and XL, we see stronger earnings for Axiata in FY15; though consensus numbers appear to have factored this in. Axiata is now guiding for steady to marginally higher capex in FY15, which is possibly a negative surprise for the market,” it said.
CIMB Research said Axiata was still its preferred Malaysian telco pick for its earnings recovery story.
It expected Celcom’s performance to improve from Q4FY14 onwards. Celcom’s revenue fell for the third consecutive quarter, by 0.9% on-quarter (-4.2% on-year), still plagued by IT and network issues. EBITDA margin also fell 1.6% pts on-quarter (-2.8% pts on-year) due to the booking of USP cost during the quarter.
“We expect performance to gradually improve from 4Q14 onwards as the telco has launched new prepaid products in mid-October after resolving its IT/network issues. New postpaid products are also in the pipeline, to be launched before year-end.
“Overall, we forecast Celcom’s revenue to fall 3.3% in FY14, then rise 3.0%/2.7% in FY15/FY16, partly driven by the positive GST impact.
“XL will take one to two quarters to regain momentum. XL’s EBITDA was flat on-quarter (-8.6% on-year) on soft revenue performance due to the slowdown in 3G network deployment and subscriber churn. In RM terms, EBITDA fell 2.5% on-quarter (-18.4% on-year).
“On the positive side, XL has managed to reduce Axis’s standalone operating expenditure by 70% since October 2013 and is guiding for more network-related cost savings in 4Q14 and 1Q15, after the full shutdown of the Axis network. It aims for Axis to break even at EBITDA level by 1Q15,” it said.
CIMB Research said in Q3FY14, Robi and Dialog posted more modest 0.2% on-quarter (+3.1% on-year) and 3.8% on-quarter (+4.0% on-year) EBITDA growth, respectively. Smart’s EBITDA continued to grow strongly 9% on-quarter.
Combined, they make up 21% of group EBITDA versus 18% a year ago.
“We believe growth will remain strong due to the generally lower market penetration, although more intense competition could affect growth in Bangladesh in the short term,” it added.
http://www.thestar.com.my
