MALAYSIA

INVESTMENT RESEARCH REPORT

JF APEX SECURITIES BERHAD
(47680-X)

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Company Result 22 May 2020
Axiata Group Bhd BUY
Uncertainty
Bbdfssdfsd withinahead
expectation Maintained
Share Price RM3.77  Earnings tumbled – Axiata’s reported 1Q20 PATAMI plunged
Target Price RM4.15 74% YoY to RM188m due to one-off items namely Celcom
employee restructuring cost (RM77m) and XL’s gain from tower
Company Description sale (RM279m), as well as forex loss (RM123m). Normalised
One of the largest telecommunications companies PATAMI dropped 42% YoY to RM121m due to higher
in the region with extensive operations and depreciation & amortisation of RM160m, lower contribution from
businesses in 10 countries across Asia. Ncell and higher losses from digital business.
Stock Data  Steady revenue - Quarterly revenue climbed 1.5% YoY to
Bursa / Bloomberg code 6888/AXIATA MK RM6.04b due to higher contributions from all operating
Board / Sector Main / Telco companies (OpCos) except Celcom (-6% YoY) and Ncell (-10%
Syariah Compliant status Yes YoY).
Issued shares (m) 9169.04
Par Value RM1.00  Lower QoQ – 1Q20 underlying PATAMI tumbled 53% QoQ
Market cap. RM34.6bn mainly while revenue falling 3% QoQ due to lower contribution
52-week price Range RM3.01 – 5.27 from Celcom and Ncell.
Beta (against KLCI) 1.32
3-m Average Daily Volume 7.07m  COVID-19 impact – Apart from Indonesia and Cambodia, all
3-m Average Daily Value^ RM25.65m other markets were impacted by lockdowns from mid-March.
Price/NTA - OpCos were unable to conduct sales and service activities at
retail outlets. For instance, Celcom had to delay product
launches, which caused its revenue to drop 7% YoY. Meanwhile,
Share Performance Ncell saw revenue decline 10% YoY due to capacity constraint
1m 3m 12m after significant delay in spectrum assignment.
Absolute (%) 0.7 15.1 -14.0
 Higher gearing – Net debt/EBITDA inched up to 2.05x vs 2.02x
Relative (%-pts) -4.2 -6.3 -5.0
in 4Q19 following an early drawdown of US$300m to refinance a
bond due in April.
Major Shareholders %
Khazanah Nasional Bhd 36.77 Earnings Outlook/Revision
EPF 17.08
Skim Amanah Saham Bumiputera 13.45  Earnings below expectation – 1Q20 revenue and EBITDA
Historical Chart came within forecasts but PATAMI of RM121m achieved only
10% of our full year forecast.
5.20  Forecast slashed – We are reducing our FY20 EPS and
revenue forecasts by 10% and 45% respectively in anticipation
5.00 of higher COVID-19 impact in 2Q20 before recovery in 2H20.
4.80  2020 KPIs withdrawn – Following the uncertainties caused by
COVID-19, the management has withdrawn its KPIs for 2020
4.60 and shift its focus to conserving cash and liquidity to build a war
chest for opportunities. Management aims to reduce cost by
4.40 RM0.9b in 2020 by reducing opex and deferring 15% of its
capex.
4.20
Valuation & Recommendation
4.00
 Maintain BUY with a lower target price of RM4.15
3.80 (previously RM4.81) based on Sum-Of-Parts (SOP).
Feb-19 Apr-19 Jun-19 Aug-19 Oct-19 Dec-19 Feb-20

Source: Bloomberg
Lee Cherng Wee
03-87361118, ext. 759
leecw@jfapex.com.my

Please read carefully the important disclosures at end of this publication

22 May 2020 Company Result – Axiata JF APEX SECURITIES

Quarterly Performance (RM million)

Financial Summary

Year to 31 Dec 2015 2016 2017 2018 2019 2020F 2021F

(RM m)
Revenue 19883.5 21565.0 24402.4 25304.0 24446.0 23362.4 24321.7
EBITDA 7284.0 8013.0 9230.0 9411.0 9240.0 8644.1 8999.0
PATAMI 2554.0 504.0 1205.0 1190.0 1022.0 713.2 949.2
EPS (sen) 29.5 5.7 10.1 15.6 15.5 10.1 12.7
P/E (x) 12.8 66.1 23.0 24.2 24.3 37.4 29.8
Dividend per share (sen) 20.0 5.1 8.5 9.3 9.5 9.5 10.5
Dividend yield (%) 5.3 1.4 2.3 2.5 2.5 2.5 2.8
PATAMI margin 12.8% 2.3% 6.0% 4.7% 4.2% 3.1% 3.9%
EBITDA margin 37% 37% 38% 37% 38% 37% 37%

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22 May 2020 Company Result – Axiata JF APEX SECURITIES

JF APEX SECURITIES BERHAD – CONTACT LIST

JF APEX SECURITIES BHD DEALING TEAM RESEARCH TEAM

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JF APEX SECURITIES BERHAD - DISCLAIMER

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