It said on Thursday that TM’s FY17F enterprise value/operating free cashflow (EV/OpFCF) of 22.6 times was at a 35% premium over the Asean telco average but it was supported by decent dividend yields of 3.4-3.7% per annum in FY17F-19F.
“Upside risk: webe turns profitable earlier. Downside risk: 50% cut is applied to headline broadband prices,” it said.
CIMB Research said it largely maintained its FY17-18F core EPS. It believes the free UniFi speed upgrades in 2017 are unlikely to negatively hit TM’s FY17-18F revenue, although they would limit an uplift in the average revenue per user (ARPU).
Hence, it forecasts FY17F/18F core EPS growth of 3.6%/8.2%. The projections were based on revenue growth of 3.3%/4.2%, driven by fixed broadband and managed accounts businesses; and b) lower webe losses from impairment.
“For FY19F, we forecast core EPS to fall 5.6% as we have factored in an effective 20% UniFi Home price cut,” it said.
Commenting on the FY16 results, it said FY16 core EPS fell 6.7% on-year, largely in line.
The 4Q16 EBITDA grew 1.5% on-year (+4.3% on-quarter), in line with revenue growth.
Despite higher depreciation, core EPS rose 2.9% on-year (+30.1% on-quarter), boosted by tax incentives. FY16 core EPS (-6.7% on-year) was 4% higher than forecast but 4% lower vs. Bloomberg consensus.
The 4Q16 dividend per share (DPS) of 12.2 sen took FY16 DPS to 21.5 sen (FY15: 21.4). The 95% payout is higher than expected as TM’s policy is the higher of 90% payout or RM700mil.
“TM’s FY17 KPI targets are 3.5-4.0% revenue growth, flat EBIT and 30% capex/sales,” it said.
CIMB Research said TM’s 4Q16 revenue rose 1.7% on-year. This was driven solely by growth in internet & multimedia (+10.3% on-year), which more than offset the drop in voice (-2.6% on-year), data (-1.2% on-year) and other (-0.6% on-year) revenues.
On-quarter, revenue rose 10.7%, mainly due to spikes in voice, data and other revenue on the back of stronger seasonality.
UniFi and Streamyx ARPUs continued to rise in 4Q16.
Internet & multimedia revenue sustained healthy growth of 10.3% on-year (+3.5% on-quarter).
On-quarter UniFi net adds were slightly higher at 28,000 (3Q16: +21,000) as installations picked up after Ramadan.
UniFi ARPU grew 2% on-quarter (+6% on-year) to a new high of RM201 in 4Q16 on upselling initiatives, with 79% of subs on 10Mbps and above (3Q16: 75%) and higher subscription to premium TV channels.
Streamyx users fell a further 1.9% on-quarter (net loss: 27,000) due to migration to UniFi, while ARPU grew a stronger 2% on-quarter (+3% on-year) to RM92.
EBITDA margin was largely flat on-year (-1.8% pts on-quarter) at 30.4% in 4Q16. As a percentage of sales, staff cost (+0.8%) and bad debts (+0.3%) were higher but offset by the decline in other costs.
“We project margin to ease 0.6% pts on-year to 31.1% in FY17 due to increased marketing and opex related to the full year operation of webe, as well as higher customer project cost,” it said.