Stock Name: AXIATA
Company Name: AXIATA GROUP BERHAD
Axiata Group Bhd
(July 28, RM5.12)
Maintain buy at RM5.14 with revised target price of RM5.80 (from RM5.60): With strong cash flow generating capabilities from its domestic and overseas operations, Axiata's balance sheet continues to strengthen. From 4.6 times at end-2008, we expect its gross debt/earnings before interest, tax, depreciation and amortisation (Ebitda) ratio to decline to 1.3 times by end-2012. We also expect Axiata to be net cash from next year onwards. With no major acquisitions apparent in the near horizon, prospects for positive surprises on the dividend front are high, in our view.
Our sum-of-parts-based target price is marginally raised to RM5.80 from RM5.60 as our cost of equity assumption is lowered to 11.1% from 11.5%, on rolling forward our valuation parameters.
Sustaining revenue growth remains a challenge in the face of declining voice revenue, but the management believes it has a strong chance of sustaining Celcom's margins through collaborative programmes, such as the ones with Digi.Com Bhd and Telekom Malaysia Bhd, and other cost saving schemes. We do expect this to be the case and our forecasts currently assume stable Ebitda margins of about 34% at Celcom, and at the group of about 45%.
Mobile penetration is already about 85% for Indonesia but data revenue has been expanding rapidly at more than 30% year-on-year to support growth. We project revenue growth of 11% in 2011 and expect XL's Ebitda margins to be sustainable at about 52% in 2011/12. Captial expenditure is estimated at US$550 million (RM1.6 billion) per year over the next two years against US$410 million in 2010.
Bangladesh-based Robi expects to grow revenue at above industry rate. The strategy may be to sacrifice some margins for faster growth. Revenue growth for 2011 is projected to be in the mid to high teens and we expect Ebitda margins to decline to about 29% from 32% in 2010.
The current penetration rate in Sri Lanka is about 75% and as the incumbent amid relatively benign competition, Dialog is expected to grow revenue at industry rate. We project mid single-digit revenue growth of about 4% in 2011 and expect Ebitda margins for the company to hold up at 36% to 37%. ' Maybank IB Research, July 28
This article appeared in The Edge Financial Daily, July 29, 2011.
Company Name: AXIATA GROUP BERHAD
| Research House: MAYBANK | Price Call: BUY | Target Price: 5.80 |
Axiata Group Bhd
(July 28, RM5.12)
Maintain buy at RM5.14 with revised target price of RM5.80 (from RM5.60): With strong cash flow generating capabilities from its domestic and overseas operations, Axiata's balance sheet continues to strengthen. From 4.6 times at end-2008, we expect its gross debt/earnings before interest, tax, depreciation and amortisation (Ebitda) ratio to decline to 1.3 times by end-2012. We also expect Axiata to be net cash from next year onwards. With no major acquisitions apparent in the near horizon, prospects for positive surprises on the dividend front are high, in our view.
Our sum-of-parts-based target price is marginally raised to RM5.80 from RM5.60 as our cost of equity assumption is lowered to 11.1% from 11.5%, on rolling forward our valuation parameters.
Sustaining revenue growth remains a challenge in the face of declining voice revenue, but the management believes it has a strong chance of sustaining Celcom's margins through collaborative programmes, such as the ones with Digi.Com Bhd and Telekom Malaysia Bhd, and other cost saving schemes. We do expect this to be the case and our forecasts currently assume stable Ebitda margins of about 34% at Celcom, and at the group of about 45%.
Mobile penetration is already about 85% for Indonesia but data revenue has been expanding rapidly at more than 30% year-on-year to support growth. We project revenue growth of 11% in 2011 and expect XL's Ebitda margins to be sustainable at about 52% in 2011/12. Captial expenditure is estimated at US$550 million (RM1.6 billion) per year over the next two years against US$410 million in 2010.
Bangladesh-based Robi expects to grow revenue at above industry rate. The strategy may be to sacrifice some margins for faster growth. Revenue growth for 2011 is projected to be in the mid to high teens and we expect Ebitda margins to decline to about 29% from 32% in 2010.
The current penetration rate in Sri Lanka is about 75% and as the incumbent amid relatively benign competition, Dialog is expected to grow revenue at industry rate. We project mid single-digit revenue growth of about 4% in 2011 and expect Ebitda margins for the company to hold up at 36% to 37%. ' Maybank IB Research, July 28
This article appeared in The Edge Financial Daily, July 29, 2011.
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