TM - 4Q11 Results
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TM - 4Q11 Results
Result
Comment
Earnings Outlook/Revision
Valuation & Recommendation
- Above expectation
- 4Q11 net profit came above expectation and consensus after rising
49.3% YoY to RM598.3m due to deferred tax income on broadband tax
incentives of RM382.6m.
- 2011
revenue was in line with our forecast after growing 4.1% YoY to RM9.15b
being led by internet and multimedia. Normalised net profit grew 0.7%
YoY to RM240.1m in 4Q11 and 12.6% YoY to RM634.8m in 2011.
Comment
- Broadband leader
– TM retained its broadband leadership with total customers of 1.92m as
of end-4Q11 (up 2.8% QoQ and 12.3% YoY). Streamyx subscribers fell by
19,000 mainly due to migration to UniFi.
- UniFi growing fast
– UniFi subscribers increased by 43.9% QoQ to 236,501. The segment is
expected to show continuous strong growth as it expands its services
nationwide. So far, 1.16 million premises have been passed with HSBB.
- Decline in fixed line customers
– TM’s number of fixed line customers were slightly lower at 4.349m in
4Q11 (vs 3Q11: 4.365m). In our view, the trend seems to continue and we
expect lower fixed line customers around 4.3m.
- Stable ARPU–
TM’s Average Revenue Per User (ARPU) for Streamyx broadband segment was
steady at RM78. Meanwhile, ARPU for fixed line was unchanged at RM34.
As at 4Q11, ARPU for HSBB stands at RM184.
- 2012 capex budget is expected to remain the same at RM2.6bn (RM1.3bn for existing businesses and RM1.3bn for HSBB).
- Achieved 2011 KPIs
– TM surpassed targets of 2.5% revenue growth and 32% normalised EBITDA
margin after achieving 4.1% and 33.5% respectively. Management
introduced new KPIs of 5% revenue growth and 32% EBITDA margin.
Earnings Outlook/Revision
- 2012 earnings revised upward
- Following the higher-than- expected performance in 2011, we are
raising our revenue and earnings forecast for 2012 by 3% and 15%
respectively.
- TM proposed a final dividend of 9.8 sen as well as 30 sen capital repayment
(equivalent to dividend yield of 7.9%), totalling RM1.42bn to be paid
by July 2012. TM is in a healthy cash position of RM4.2bn up from
RM3.5bn last year.
Valuation & Recommendation
- Our recommendation is raised to BUY from HOLD.
We like the stock as being a leader in broadband with earnings growth
coming from UniFi. In line with our earnings upgrade, we lifted our
target price to RM5.58 based on our dividend discount model.
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