Axiata Q2 earnings expected to be unexciting on stronger ringgit (6888)

PETALING JAYA: Axiata Group Bhd's
second quarter (Q2) earnings are expected to be flat on-year as the
stronger ringgit could mitigate the better performance of its overseas
operations.
Analysts said in terms of dividends, Axiata would stick to its policy of 65% payout.
The telecommunication company, which is scheduled to announce its results on Aug 30, has RHB Research Institute maintaining an “outperform” call with a sum-of-parts fair value of RM6.60.
The share price closed unchanged at RM6 yesterday.
Axiata's operations include Idea Cellular Ltd in India, Dialog Axiata PLC in Sri Lanka, PT XL Axiata Tbk in Indonesia and Celcom Axiata Bhd in Malaysia.
RHB
Research forecasts its financial year ending Dec 31, 2012 (FY12)
earnings to be RM2.66bil on the back of RM17.28bil in revenue.
“While
we have seen strong year-on-year (y-o-y) revenue growth from XL and Sri
Dialog, margin erosion will continue to cap earnings growth,” said RHB
Research analyst Lim Tee Yang in a note to investors, adding that
margin was pressured by the weaker Indonesian rupiah and the Sri Lankan
rupee against ringgit.
He expected steady high single-digit
revenue growth at Celcom although its earnings before interest, taxes,
depreciation and amortisation margin might trend lower y-o-y from
aggressive handset subsidies and higher network costs.
Meanwhile, CIMB Equities Research senior analyst Kelvin Goh said Axiata's earnings would be driven mainly by Celcom, XL Axiata, Dialog and Idea.
“XL's
earnings were driven by reflating its voice revenues in addition to the
strong growth in data. Idea's earnings are driven by subscriber growth
while Celcom's earnings should be driven by voice and data revenues,”
he said in an e-mail to StarBiz.
An analyst from Hong Leong Investment Bank (HLIB) told StarBiz he was neutral on Axiata's Q2 results.
“Celcom
should be able to sustain what it gained from the first quarter along
the growth in data. It will get a boost in second half of 2012 due to
the festive season and the introduction of the latest iPhone,” he said.
CIMB
Equities Research's Goh opined that Axiata should grow faster than its
domestic peers given its overseas exposure while the analyst from HLIB
said it was exposed to regulatory risks especially in India.
On
dividend payout, Lim said Axiata might exceed the 65% payout guidance
with the recent issuance of Celcom's RM5bil sukuk and establishment of
a US$1.5bil (RM4.5bil) sukuk facility.
“If we assume a 80%
payout, this implies FY12 dividend per share of 25.1 sen, translating
into a decent yield of 4.2%,” he wrote in his report.
However,
the analyst from HLIB expected the company to stick to its 65% dividend
payout policy as the RM5bil sukuk raised would be used for its working
capital and refinancing.
“I don't think there will be a special dividend payout this quarter,” he added.
Commenting
on its share price, Goh said, “It has been driven a flight to safety
and quality given the uncertain economic conditions globally