By Kenanga Research
Market perform (maintained)
Target price: RM6.55
PT XL Axiata Tbk’s (XL) first-half to June 30, normalised net profit of 84 billion rupiah (RM24.9mil) came in above expectations, according to Kenanga Research.
The street’s estimates as well as the research house were net profit of 210 billion rupiah and 151 billion rupiah for the full year, respectively.
The research house said positive signs were emerging from its transformation agenda after shifting its focus to value creation.
These, it added, included improving the subscriber mix, higher average revenue per user as well as recovering earnings before interest, tax, depreciation and amortisation (Ebitda) and the margin.
Having said that, XL believed the total transformation (which kicked off since the beginning of 2015) would need to take another six to 12 months to complete.
Year-on-year, XL’s first-half revenue was lower by 4% to 11.1 trillion rupiah, as the growth in the data and VAS segment was offset by the lower voice, SMS and cellular interconnection and international roaming service segment.
“The shift of focus to the higher-value customers has led its blended ARPU to rise 25% to 30,000 rupiah from 24,000 rupiah a year ago. Ebitda, however, declined 9% with lower margin of 35% due to the impact of the consolidation of Axis as well as higher tower leasing costs post tower sale in December 2014,” said the research house.
It said XL recognised 851 billion rupiah net loss in first half, mainly due to the weakening of the rupiah.
“Stripping off the unrealised forex loss of 1.2 billion rupiah and 312 million rupiah tax impact, the group’s first half bottomline stood at 84 million rupiah on a normalised basis,” said Kenanga Research.
It added that its Ebitda margin target, meanwhile, remained at mid-to-high 30s in FY15 with capex spend likely to come in at circa 6.5 billion rupiah.
Kenanga Research maintained Axiata’s target price at RM6.55 based on a targeted FY16 estimate EV/forward Ebitda of 9.2 times.
By BIMB Securities Research
Target price: RM4.90
IT was reported that SRS Consortium, a company formed by Gamuda Bhd and two local property firms, has received a letter of award (LOA) dated Aug 12 from the Penang state government, entailing its appointment as the project delivery partner (PDP) for the alternative transport master plan comprising the various public transport components on the island and Seberang Prai.
BIMB Securities said it was excited with the development as the project, which also included the provision of new reclamation sites, was now finally on the table pending finalisation.
It expects an agreement would be executed within six months from the LOA between the state government and the consortium, which consists of Gamuda (60%), Ideal Property Development Sdn Bhd (20%) and Loh Phoy Yen Holdings Sdn Bhd (20%).
Six consortiums tendered to be the PDP of the master plan comprising WCT, Gamuda and IJM, two foreign consortiums and one from Syarikat Prasarana Negara Bhd.
BIMB said the Penang Transport Master Plan (PTMP) which was valued at RM27bil was segregated into a few phases.
While there are no indications provided at this juncture, BIMB said it was “neutral” on the PDP appointment as it did not see any short-term financial impact from the PDP fees since the project would not start any time soon.
Assuming Phase 1 of the project was about RM10bil and the PDP fee is at 6% as on its base case scenario, the research house said the discounted future earnings could fetch as much as RM280mil or 12 sen per share in total spreading over three years, and will likely raise BIMB’s target price for Gamuda to RM5.02.
It maintained its target price of RM4.90 at this juncture and upgrade its call to “buy” following the weakening of its share price.
GUINNESS ANCHOR BHD
By Affin Hwang Capital Research
Price target: RM14.05
GUINESS Anchor Bhd’s (GAB) closed the financial year ended June 30, (FY15) with core earnings growing 8.1% year-on-year to RM214.1mil.
This was mostly underpinned by higher selling prices, better product mix and higher sales volume across its core beer brands.
Overall, Affin Hwang said the results met expectations.
Following the release of the group’s full-year results, Affin Hwang said it was tweaking its 2016-17 estimate forecast higher by about 1-3%.
Affin Hwang is retaining its “hold” call on GAB with a higher discounted cashflow-based target price of RM14.
“GAB currently trades at 2016 forward PE (price earnings) of 17.3 times. GAB’s positive operating cashflows and sturdy balance sheet should ensure healthy dividend yields of about 5% over the next three years (based on 90% payout ratio),” it added.
The research house believed that a steady dividend yielding stock like GAB should provide risk-averse investors some comfort in the current volatile market environment.
Affin Hwang said GAB’s key upside risks included stronger-than-expected sales volume growth, lower-than-expected raw material costs, particularly malt barley prices and a special dividend payout that could result in a share-price rally.
Downside risks, it said, included lower-than-expected sales volume growth and higher-than-expected operating expenditure.
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