Axiata unit’s net profit within expectations

by **Cals** Mon 10 Feb 2014, 10:38

Business & Markets 2014

Written by HLIB Research

Monday, 10 February 2014 10:21

Axiata Group Bhd
(Feb 7, RM6.49)
Maintain hold with a target price of RM7.05. On the back of a turnover of 21,350 billion rupiah (RM6.03 billion), the group’s Indonesian unit PT XL Axiata Tbk’s FY13 core net profit of 1,809 billion rupiah came in within expectations, accounting for 97.8% of consensus’ full-year forecast.

Year-to-date, revenue was flat with data and value-added services (VAS) the fastest growing segments with double digit growth of 16% and 34% respectively, while voice and SMS declined by 7% and 4% respectively. Non-voice revenue contributed 54% (+4ppt year-on-year [y-o-y]) of XL’s total usage revenue.

Financial year 2013 ended Dec 31 (FY13) earnings before interest, tax, depreciation and amortisation (Ebitda) decreased 11% y-o-y while margin contracted from 46% to 41% largely due to, among others, the introduction of SMS interconnect.

XL recorded 60.5 million subscribers or 32% increase year-on-year (y-o-y). Data and VAS experienced sustainable exponential growth increasing 142% y-o-y and reaching 54,615 terabyte per annum. Data subscribers reached 33 million or about half of the total subscriber base. Data has remained the fastest growing service in FY13 with its contribution to overall sales increasing from 20% to 23%.

Catalysts for Axiata Group include higher smartphone penetration boosting data average revenue per user, strong growth in low penetration developing markets and more cost savings from collaboration with DiGi.Com Bhd.

Risks include regulatory risks, foreign exchange fluctuations and competitive risks.

Despite the challenging environment, Axiata’s main operating companies (Celcom Axiata Bhd, XL and Dialog Axiata Plc in Sri Lanka) continue to execute well. Maintain “hold” call on the stock with unchanged sum-of-parts target price of RM7.05. — HLIB Research, Feb 7

This article first appeared in The Edge Financial Daily, on February 10, 2014.