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BIMBSec - TM 1QFY12 Results Review - 20120531

BIMBSec - TM 1QFY12 Results Review - 20120531

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Published by: Bimb Sec on May 31, 2012
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BIMB SECURITIES RESEARCH
MARKET INSIGHT
Thursday, 31 May, 2012
Results Review
PP16795/03/2013(031743)
 
| 1
Telekom Malaysia 
Neutral 
InlineProgressing steadily 
Price: RM5.37Target Price: (-5% upside) RM5.10
Stock Data 
Bloomberg Ticker T MK Altman Z-score 1.7Market Cap 19,210.6 YTD price chg 8.3%Issued shares 3,577.4 YTD KLCI chg 2.9%52-week range (H) 5.53 Beta 0.752-week range (L) 3.75
Major Shareholders
3-mth avg daily volume 7,019,67 Khazanah Nasional 28.7%Free Float 50.1% EPF 11.9%Shariah Compliant Y S. Amanah Saham 9.3%Financial Derivatives n.a.
Share Performance (%)
 
1mth 3mth 12mth
Absolute 1.5 5.4 43.8vs. KLCI 36.6 3.1 36.6
Financial Highlights FY 31 Dec (RMm) 2009 2010 2011 2012E 2013E
Turnover 8,608.0 8,791.0 9,150.7 9,617.2 10,106.9EBIT 708.3 852.0 855.1 985.4 1,052.1Pretax profit 921.6 1,360.2 1,001.2 1,275.2 1,349.0
Core Net Profit 482.0 444.9 891.5 885.5 945.7
Core EPS (sen) 13.5 12.4 24.9 24.8 26.4PER (x) 29.8 15.9 16.1 18.6 17.5DPS (sen) 119.9 55.0 49.6 20.0 20.0Div. Yield (%) 22.3% 10.2% 9.2% 3.7% 3.7%NTA/share (RM) 1.87 2.07 1.86 2.00 2.15EBIT margin 30.5% 28.1% 29.5% 32.9% 32.6%Pretax margin 10.7% 15.5% 10.9% 13.3% 13.3%Effective tax rate 26.9% 9.0% -25.4% 15.0% 15.0%ROE 7.5% 16.4% 16.2% 14.3% 14.1%ROA 3.0% 5.9% 5.7% 4.9% 5.3%Net Gearing (x) 0.5 0.3 0.3 0.4 0.1
Growth ratios 
Turnover -0.8% 2.1% 4.1% 5.1% 5.1%EBIT -22.3% 20.3% 0.4% 15.2% 6.8%Pretax profit -5.8% 47.6% -26.4% 27.4% 5.8%Core Net profit -54.1% -7.7% 100.4% -0.7% 6.8%Core EPS -54.1% -7.7% 100.4% -0.7% 6.8%
Share Price Chart
 
Thong Pak Leng
 
03-26918887 ext 186
TM
’s
1QFY12 core net earnings of RM181.3m is withinour expectation. YoY revenue and core net earningsincreased by 11% and 46% respectively due mainly tohigher revenue from all key products i.e. internet andmultimedia, data, voice and other telecommunicationsrelated services with the take up rate of Unifiexceeded expectations. We maintain our FY12 andFY13 earnings forecast and target price unchanged atRM5.10. Maintain our NEUTRAL stance on TM.Higher earnings
. YoY net profit rose 53.5% toRM250.6m due to higher revenue and higher unrealisedforex gain from USD-denominated debt. Meanwhilecore net earnings improved by 46% attributable topositive contributions from internet and multimedia,data, voice and other telecommunications relatedservices.
Positive growth in all division.
Revenue from internetand multimedia services improved by 24.3% QoQ toRM563.4m, mainly arising from increased UniFicustomers. Meanwhile other telecommunicationsrelated services revenue improved by 22.9% toRM300.1m QoQ primarily due to higher revenue fromcustomer projects.
UniFi has high take up rate
. Total broadband customerbase grew to 1.97m from 1.77m in the previous year.UniFi subscribers have reached 365,000 customers onthe back of 1.22m premises passed over 81 exchangeareas. This translates into a take-up rate of 30% against
premises passed. With such take up rate, TM’s target of 
400,000 subscribers by end of 2012 will be easilyachieved.
Maintaining our forecasts
. We maintain our FY12 andFY13 earnings forecasts at RM885.5m and RM945.7mrespectively.
View & Valuation.
Our target price of RM5.10 isunchanged based on DCF methodology with WACCassumption of 9.7%. We are maintaining our
NEUTRAL
 stance on TM.
 
3.003.504.004.505.005.50May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12
 
 
31 May 2012 Results Review: Telekom Malaysia 1QFY12
 
www.bimbsec.com.my
 |
2
 
Quarterly figures 
FY 31 Dec (RMm) 1QFY11 2QFY11 3QFY11 4QFY11 1QFY12 QoQ YoY Chg 1QFY11 1QFY12 YTD Chg
Revenue 2,148.2 2,233.6 2,321.7 2,447.2 2,383.8 -2.6% 11.0% 2,148.2 2,383.8 11.0%EBIT 192.5 224.4 354.3 115.6 204.1 76.6% 6.0% 192.5 204.1 6.0%
Pretax profit 227.3 207.1 337.2 229.6 299.3 30.4% 31.7% 227.3 299.3 31.7%
Taxation (52.6) (70.1) (21.3) 379.9 (40.7) -110.7% -22.6% (52.6) (40.7) -22.6%Minority Interest (11.4) (9.8) (13.7) (11.2) (8.0) -28.6% -29.8% (11.4) (8.0) -29.8%Net Profit 163.3 127.2 302.2 598.3 250.6 -58.1% 53.5% 163.3 250.6 53.5%Core Net Profit 124.2 114.1 146.4 506.8 181.3 -64.2% 46.0% 124.2 181.3 46.0%
Core EPS (sen) 3.5 3.2 4.1 14.2 5.1 -64.2% 46.0% 3.5 5.1 46.0%
Net gearing (x) 0.2 0.5 0.9 0.3 0.3 -1.5% 29.3% 0.2 0.3 29.3%EBIT margin (%) 9.0% 10.0% 15.3% 4.7% 8.6% 81.3% -4.5% 9.0% 8.6% -4.5%PBT margin (%) 10.6% 9.3% 14.5% 9.4% 12.6% 33.8% 18.7% 10.6% 12.6% 18.7%Core Net margin (%) 5.8% 5.1% 6.3% 20.7% 7.6% -63.3% 31.5% 5.8% 7.6% 31.5%Effective tax rate (%) 23.1% 33.8% 6.3% -165.5% 13.6% -108.2% -41.2% 23.1% 13.6% -41.2%
Source: BIMB Securities
 
Income Statement
 
FY 31 Dec (RMm) 2009 2010 2011 2012E 2013E
Revenue 8,608.0 8,791.0 9,150.7 9,617.2 10,106.9EBITDA 2,627.3 2,474.5 2,696.6 3,159.4 3,293.3
Pretax profit 921.6 1,360.2 1,001.2 1,275.2 1,349.0
Tax(248.3) (115.2)235.9(191.3) (202.3)  MI(30.3) (38.5) (46.1) (48.5) (50.9) 
Net profit 643.0 1,206.5 1,191.0 1,035.5 1,095.7Core Net Profit 482.0 444.9 891.5 885.5 945.7
Core EPS (sen) 13.5 12.4 24.9 24.8 26.4Core EPS growth (%) -54.1% -7.7% 100.4% -0.7% 6.8%DPS (sen) 119.9 55.0 49.6 20.0 20.0NTA/ share (RM) 1.87 2.07 1.86 2.00 2.15Net gearing (x) 0.5 0.3 0.3 0.4 0.1PER (x) 29.8 15.9 16.1 18.6 17.5Div. yield (%) 22.3% 10.2% 9.2% 3.7% 3.7%P/ NTA (x) 2.9 2.6 2.9 2.7 2.5ROE (%) 7.5% 16.4% 16.2% 14.3% 14.1%ROA (%) 3.0% 5.9% 5.7% 4.9% 5.3%
Source: BIMB Securities
 
Balance Sheet
 
FY 31 Dec (RMm) 2009 2010 2011 2012E 2013E
Non Current Assets 13,762.5 13,841.5 14,446.2 13,916.3 12,462.5Current Assets 6,180.0 6,938.5 6,925.6 6,549.3 8,691.9
Total Assets 19,942.5 20,780.0 21,371.8 20,465.6 21,154.4
Current Liabilities 4,441.0 4,289.5 4,186.2 2,792.0 2,918.5Non Current Liabilities 8,371.5 8,630.3 10,053.9 10,053.9 10,053.9Shareholders' Fund 6,987.5 7,709.4 6,968.8 7,467.7 8,026.8Minority Interests 142.5 150.8 162.9 152.1 155.3
Equity & Liabilities 19,942.5 20,780.0 21,371.8 20,465.6 21,154.4
Source: BIMB Securities
 

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