Stock Name: TM
Company Name: TELEKOM MALAYSIA BHD
Research House: OSK
Telekom Malaysia Bhd
(May 23, RM4.15)
Maintain neutral with unchanged fair value of RM3.78: Telekom Malaysia Bhd (TM)'' is scheduled to announce its 1QFY11 ended March 31 results tomorrow.
We expect revenue to contract by 4% to 8% q-o-q, due to the high base in 4QFY10 and the shorter working quarter, but show an increase of 3% to 5% y-o-y, supported by improved traction from its high-speed broadband service and sustained fixed broadband (ADSL) additions, partially offsetting the weakness in its fixed line voice (40% of revenue).
TM's core Ebitda could come in weaker sequentially (4QFY10: 33.5% Ebitda margin) from higher Unifi operating expenditure as the company recruited more installers to meet demand and expanded its footprint to 800,000 homes.
TM's capital expenditure is also typically the lowest in 1Q. The continued drag from its fixed line business remains a concern despite some headway made over the past 18 months to compel more users to upgrade to its bundled Homeline package.
We expect TM to reaffirm its key performance indicators on revenue growth and Ebitda margin of 2.5% and 32% for FY11 and 3.5% and 4.5% and mid-30s for FY13.
At the EGM on May 10, TM's shareholders gave the nod for the RM1.03 billion capital distribution exercise (19 sen a share) which will be paid out alongside its final dividend of 13.1 sen a share on June 15. TM's net debt/Ebitda will rise slightly to 1.2 times from 0.7 times following the payout, while net gearing will remain manageable at 0.4 times.
We expect TM to throw more light on the preliminary MoU signed with Celcom Axiata Bhd for the joint development of converged solutions. This includes the launch of its own mobile virtual network operator brand, targeted for 4Q10/1Q12 and the fiberisation of Celcom's backhaul.
The MoU was inked on Feb 22, with both parties extending the time line for the signing of a formal accord to end-May.
We are likely to maintain our recently revised forecast post results. Our 'neutral' recommendation is based on unchanged fair value of RM3.78 which is tagged to 5.5 times FY12 EV/Ebitda.
TM's share price continues to be supported by the upcoming capital distribution, albeit at an adjusted 21.2 times FY12 earnings per share. The valuation is not undemanding and has priced in the upside from the capital repayment. ' OSK Research, May 23
This article appeared in The Edge Financial Daily, May 24, 2011.
Company Name: TELEKOM MALAYSIA BHD
Research House: OSK
Telekom Malaysia Bhd
(May 23, RM4.15)
Maintain neutral with unchanged fair value of RM3.78: Telekom Malaysia Bhd (TM)'' is scheduled to announce its 1QFY11 ended March 31 results tomorrow.
We expect revenue to contract by 4% to 8% q-o-q, due to the high base in 4QFY10 and the shorter working quarter, but show an increase of 3% to 5% y-o-y, supported by improved traction from its high-speed broadband service and sustained fixed broadband (ADSL) additions, partially offsetting the weakness in its fixed line voice (40% of revenue).
TM's core Ebitda could come in weaker sequentially (4QFY10: 33.5% Ebitda margin) from higher Unifi operating expenditure as the company recruited more installers to meet demand and expanded its footprint to 800,000 homes.
TM's capital expenditure is also typically the lowest in 1Q. The continued drag from its fixed line business remains a concern despite some headway made over the past 18 months to compel more users to upgrade to its bundled Homeline package.
We expect TM to reaffirm its key performance indicators on revenue growth and Ebitda margin of 2.5% and 32% for FY11 and 3.5% and 4.5% and mid-30s for FY13.
At the EGM on May 10, TM's shareholders gave the nod for the RM1.03 billion capital distribution exercise (19 sen a share) which will be paid out alongside its final dividend of 13.1 sen a share on June 15. TM's net debt/Ebitda will rise slightly to 1.2 times from 0.7 times following the payout, while net gearing will remain manageable at 0.4 times.
We expect TM to throw more light on the preliminary MoU signed with Celcom Axiata Bhd for the joint development of converged solutions. This includes the launch of its own mobile virtual network operator brand, targeted for 4Q10/1Q12 and the fiberisation of Celcom's backhaul.
The MoU was inked on Feb 22, with both parties extending the time line for the signing of a formal accord to end-May.
We are likely to maintain our recently revised forecast post results. Our 'neutral' recommendation is based on unchanged fair value of RM3.78 which is tagged to 5.5 times FY12 EV/Ebitda.
TM's share price continues to be supported by the upcoming capital distribution, albeit at an adjusted 21.2 times FY12 earnings per share. The valuation is not undemanding and has priced in the upside from the capital repayment. ' OSK Research, May 23
This article appeared in The Edge Financial Daily, May 24, 2011.
No comments:
Post a Comment