EQUITY RESEARCH

EXCL - Results update - 02 February 2018

CIPTADANA SEKURITAS ASIA

BUY XL Axiata
Steering steady amid sim-registration
TP: Rp3,800 (+29.3%)

Sector Telco EXCL steady results in 4Q17 in top and bottom line; in line with our forecasts
EXCL FY17 revenues were are up by +7.2% YoY to Rp22.9 tn , forming 102% of our
Bloomberg Ticker EXCL IJ
forecast. This a positive sign of their expansionary approach and management is guiding
Share Price Performance
for sustained Ex-Java expansion effort through to FY18 despite declining data yields. OP
was lower by -1.7% YoY due to higher interconnection costs, as EXCL expands in areas
Last price (Rp) 2,940 where the incumbent is leading (expecting IC cost to come down as data dominate). We
Avg. daily T/O (Rpbn/USDmn) 20.7/1.5 also see higher personnel and G&A costs as a result of EXCL re-organization. EXCL has
lowered no. of personnel to #1,652 down 13%. EXCL reported FY17 operating profit Rp1.7
3m 6m 12m
tn (-1.7% YoY) and EBITDA of Rp8.3 tn (higher +3.3%YoY) but on normalized basis these are
Absolute (%) -17.2 -16.5 -4.5 seeing growth of +16% and +7% YoY respectively. EXCL bottom line was helped by tax
Relative to JCI (%) -26.2 -30.0 -27.4 refunds and came in flat to Rp375 bn , which is in-line with our target.
On QoQ basis EXCL revenue was flat at Rp5.97 tn on declining data yield. 4Q17 was
52w High/Low price (Rp) 4,060/2,780
significantly burdened by personnel costs +96.4% YoY on severance pay to retiring
employees. The new subs additions in 4Q17 of ~+1mn have come at a higher marketing
4,500 40% cost competing for subscribers before the deadline of the sim re-registration process. Net
4,000 30% profit resulted to Rp137 bn benefiting from the tax refunds.
3,500
20%
3,000
2,500 10% Offense is the best defense- Becoming 2nd best network in Indonesia
2,000 0%
EXCL controls the market with competitive GB offerings leading to lower data yields. That
1,500 way EXCL can deliver strong data traffic from a) new data users and b) from increasing GB
-10%
1,000 data consumption per user. Its subscriber base of 53.5 mn (+18.9% YoY) is getting
-20%
500 dominated by data users who are either new or upgrading from voice+SMS service
0 -30% increasing the data user penetration to 72% up by 10% YoY and 2%QoQ. We also see data
traffic posting very reassuring growth of 148% YoY and 12.9% QoQ which in relation to
Feb-17

Dec-17
Oct-17
Oct-17
Sep-17

Nov-17
Aug-17
Mar-17

Jul-17
May-17
Apr-17

Jan-18
Jun-17

total users, suggests higher usage per sub on quarterly and yearly basis. This is very
much driven by EXCL compelling network roll-out, having added #9,200 4G BTS more than
EXCL 1yr Rel. to JCI (RHS) doubling 4G capacity within a year to #17,428 4G BTS, and still adding 3G to reach #45,864
3G BTS (+18.4% YoY). EXCL has been executing its Ex-Java network roll-out, increasing
Outstanding shrs (mn) 10,688
coverage to as many as 360 cities across Indonesia. As we noted in the past the data
Mkt. Cap (Rpbn/USDmn) 31,423/2,341 market is up for grabs. EXCL has moved more aggressively to data than peers, and riding
Estimated free float (%) 45.0 the momentum in data. The OpenSignal network measurements puts EXCL on 2nd position
in terms of download speed and sharing 2nd place with Hutch3 for network latency. The
Major shareholders
new subscribers have a quality network to appreciate at high discount price vs the
Axiata Berhad 55.0% incumbent. Additionally OpenSignal shows that EXCL is in position to cater more traffic
Public 45.0% and subs in the future. The network expansion came at a higher capex FY17 (booked capex
+11%, paid +20% YoY). EXCL will maintain capex intensity in FY18 with capex Rp7 tn with
50:50 allocation between Java and other islands.
EPS Consensus
Maintain Buy on EXCL consistently improving its network and cost structure
Ciptadana Cons. % Diff EXCL seems stronger than ever with quality network in place to fight competition with
2017F 33.4 40.1 -16.5 more upsides in cost efficiencies guiding for high 30’s EBITDA margin in FY18. We
currently maintain Buy rating with TP: 3800/sh. implying EV/EBITDA-18F of 6.0x.
2018F 53.8 90.9 -40.8
2019F 66.3 153.4 -56.8 Exhibit 1 : Financial Highlights
Year to 31 Dec 2015A 2016A 2017F 2018F 2019F
Revenue (Rpbn) 22,876 21,341 22,504 23,103 23,500
Operating profit (Rpbn) 1,258 12 1,675 1,922 2,035
Net profit (Rpbn) -25 376 357 575 709
EPS (Rp) -3.0 35.1 33.4 53.8 66.3
EPS growth (%) n/m n/m -4.8 60.9 23.2

Niko Margaronis EV/EBITDA (x) 7.4 6.8 5.4 5.0 4.6

+62 21 2557 4800 ext. 734 PER (x) -991.1 83.7 87.9 54.6 44.3

margaronisniko@ciptadana.com PBV (x) 1.8 1.5 1.5 1.4 1.4

Dividend yield (%) 2.1 0.0 0.0 0.0 0.3
ROE (%) -0.2 1.8 1.7 2.6 3.1
http://www.ciptadana.com
Source : EXCL, Ciptadana Estimates

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 EQUITY RESEARCH
EXCL - Results update - 02 February 2018
CIPTADANA SEKURITAS ASIA

Exhibit 2: EXCL's 4Q & FY17 results

Rp bn FY17 FY16 YoY 4Q17 3Q17 QoQ FY17F Achiev.
Data Revenues 13,088 8,127 61.0% 3,758 3,517 6.8% 8,863
Non-data (legacy) Revenues 7,172 10,461 -31.4% 1,597 1,763 -9.4% 11,841
Service Revenues 20,260 18,588 9.0% 5,355 5,280 1.4% 20,705
Interconnect & Roaming 1,661 1,744 -4.7% 392 409 -4.1% 1,473
Other telco services 980 1,078 -9.1% 228 287 -20.5% 372
Net Revenues 22,876 21,341 7.2% 5,972 5,970 0.0% 22,504 102%

Infrastructure expenses -8,576 -8,269 3.7% -2,128 -2,221 -4.2% -8,668

Depreciation & amortization -6,951 -8,046 -13.6% -1,865 -1,705 9.4% -7,158
Personnel -1,351 -1,156 16.9% -552 -281 96.4% -1,310
Interconnection expenses -2,459 -1,926 27.7% -547 -623 -12.2% -1,444
Marketing and selling sxpenses -1,616 -1,433 12.8% -509 -413 23.4% -1,575
General & Admin. Expenses -552 -498 10.7% -117 -151 -23.0% -675
Other 288 1,675 -82.8% 80 -25 n.a. 0
Total operating expense -21,217 -19,655 8.0% -5,638 -5,419 4.0% -20,830

Operating profit 1,658 1,687 -1.7% 334 550 -39.3% 1,675 99%
EBIT margin (%) 7.2% 7.9% -0.7 5.6% 9.2% -3.6 7.4%

EBITDA 8,321 8,058 3.3% 2,120 2,280 -7.0% 8,832 94%

EBITDA margin (%) 36.4% 37.8% -1.4 35.5% 38.2% -2.7 39.2%

Interest expense -1,539 -1,794 -14.2% -367 -376 -3%

Interest income 244 261 -6.3% 81 62 30%
Net finance inc. (exp.) -1,295 -1,533 -15.5% -286 -314 -9% -1,198
Financing Forex gain (loss) -39 286 n.a. -20 -61 -68% 0
Share of result from JV -103 -255 -59.6% 0 -9 -100% 0
Total other inc. (exp.) -1,437 -1,501 -4.3% -305 -384 -20% -1,198

Pre-tax profit 221 186 19.2% 29 167 -83% 477

Tax 154 190 -18.9% 108 -72 n.a. -119

Net profit 375 376 -0.1% 137 95 45% 357 105%

Net margin 1.6% 1.8% -0.1 2.3% 1.6% 0.7 1.6%

Operational Data 12M17 12M16 YoY 4Q17 3Q17 YoY

No. of Subscriber (million unit) 53.5 45.0 18.9% 53.5 52.5 1.9%
Prepaid 52.8 44.5 18.7% 52.8 51.9 1.7%
Postpaid 0.7 0.5 37.6% 0.7 0.6 11.4%
Smartphone Users 38.5 28.0 37.7% 38.5 36.7 5.0%

Blended ARPU (Rp. '000) 34 35 -2.9% - - -

Data & Internet Segment

Data Traffic (Petabytes) 1,279.5 515.3 148.3% 397.0 351.6 12.9%
Effective Data Tariff (Rp '000/Mb) 10.2 15.8 -35.1% 9.5 10.0 -5.4%

Network BTS (# '000) 101.1 84.5 19.7% 101.1 98.0 3.2%

2G 37.8 37.5 0.7% 37.8 37.8 -0.1%
3G 45.9 38.7 18.4% 45.9 44.5 3.2%
4G 17.4 8.2 112.4% 17.4 15.7 10.9%
Source : Bloomberg and Ciptadana Sekuritas

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 EQUITY RESEARCH
EXCL - Results update - 02 February 2018
CIPTADANA SEKURITAS ASIA

Exhibit 3 - Income Statement

Year to 31 Dec (Rpbn) 2015A 2016A 2017F 2018F 2019F
Revenue 22,876 21,341 22,504 23,103 23,500
COGS 0 0 0 0 0
Gross profit 22,876 21,341 22,504 23,103 23,500
Oper. expenses -21,618 -21,329 -20,830 -21,181 -21,465
Oper. profit 1,258 12 1,675 1,922 2,035
EBITDA 6,936 7,077 8,832 9,619 10,304
Interest income 728 261 96 131 141
Interest expense -1,808 -1,794 -1,294 -1,286 -1,231
Other income (exp.) 1,713 1,355 0 0 0
Pre-tax profit -631 186 477 767 945
Income tax 605 190 -119 -192 -236
Minority interest 0 0 0 0 0
Net profit -25 376 357 575 709

Exhibit 4 - Balance Sheet

Year to 31 Dec (Rpbn) 2015A 2016A 2017F 2018F 2019F
Cash & cash equivalent 3,312 1,400 1,557 1,704 952
Acct, receivables 898 637 737 777 818
Inventory 79 161 134 141 149
Other curr, asset 5,863 4,609 5,519 5,667 5,765
Total current asset 10,152 6,807 7,947 8,289 7,683
Fixed assets - net 33,427 33,183 32,425 31,301 29,996
Other non-curr.asset 15,266 14,907 15,095 15,001 15,048
Total asset 58,844 54,896 55,468 54,591 52,727

ST debt + curr. maturity 4,290 3,973 3,827 4,003 3,934

Acct, payable 5,283 6,503 6,214 6,379 6,489
Advances received 0 0 0 0 0
Other curr. liab 6,175 4,002 4,358 3,107 1,298
Long term debt 25,054 14,394 14,394 14,106 13,401
Other non-curr, liab, 3,950 4,816 5,108 4,962 5,035
Total liabilities 44,753 33,687 33,901 32,557 30,157
Shareholder equity 14,092 21,209 21,567 22,035 22,571
Minority interest 0 0 0 0 0
Total liab + SHE 58,844 54,896 55,468 54,591 52,727

Exhibit 5 - Per Share Data

(Rp) 2015A 2016A 2017F 2018F 2019F
EPS -3.0 35.1 33.4 53.8 66.3
BVPS 1,649.8 1,984.4 2,017.9 2,061.6 2,111.8
DPS 63.2 0.0 0.0 0.0 10.0
FCF per share 129.2 139.0 1.1 47.9 11.3

Source : EXCL, Ciptadana Estimates

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 EQUITY RESEARCH
EXCL - Results update - 02 February 2018
CIPTADANA SEKURITAS ASIA

Exhibit 6 - Cash Flow

Year to 31 Dec (Rpbn) 2015A 2016A 2017F 2018F 2019F
Net income -25 376 357 575 709
Depreciation 5,678 7,064 7,158 7,697 8,268
Chg in working cap. -500 479 -915 -1,281 -1,845
Other 0 0 0 0 0
CF-Oper activities 5,153 7,919 6,600 6,991 7,131

Capital expenditure -3,897 -6,821 -6,400 -6,573 -6,963

Others -152 387 -189 94 -47
CF-Investing activities -4,049 -6,433 -6,589 -6,478 -7,010

Net change in debt -2,205 -10,978 -145 -112 -774

Net change in equity 36 6,721 0 0 0
Dividend payment 0 0 0 -107 -173
Other financing -2,573 859 292 -146 73
CF-Financing activities -4,743 -3,398 146 -365 -874

Net cash flow -3,639 -1,912 158 147 -752

Cash - begin of the year 6,951 3,312 1,400 1,557 1,704
Cash - end of the year 3,312 1,400 1,557 1,704 952

Exhibit 7 - Key Ratios

Year to 31 Dec 2015A 2016A 2017F 2018F 2019F
Growth
Revenue (%) -2.5 -6.7 5.4 2.7 1.7
Operating profit (%) -29.4 -99.0 13,603.0 14.8 5.9
Net profit (%) n/m n/m -4.8 60.9 23.2
Profitability Ratios
Gross margin (%) 100.0 100.0 100.0 100.0 100.0
Operating margin (%) 5.5 0.1 7.4 8.3 8.7
EBITDA margin (%) 30.3 33.2 39.2 41.6 43.8
Net margin (%) -0.1 1.8 1.6 2.5 3.0
ROA (%) 0.0 0.7 0.6 1.1 1.3
ROE (%) -0.2 1.8 1.7 2.6 3.1
Liquidity Ratios
Current ratio (x) 0.6 0.5 0.6 0.6 0.7
Quick ratio (x) 0.6 0.5 0.5 0.6 0.6
Cash conversion cycle (days) 0.0 0.0 0.0 0.0 0.0
Activity Ratio
Inventory turnover (days) 0.0 0.0 0.0 0.0 0.0
Receivable turnover (days) 16.2 13.1 11.1 12.0 12.4
Payable turnover (days) 77.6 100.8 103.1 99.5 99.9
Solvency Ratio
Interest cover (x) 3.8 3.9 6.8 7.5 8.4
Debt to equity ratio (x) 2.1 0.9 0.8 0.8 0.8
Net debt to equity (x) 1.8 0.8 0.8 0.7 0.7

Source : EXCL, Ciptadana Estimates

Please see analyst certification and other important disclosures at the back of this report 5
 EQUITY RESEARCH
EXCL - Results update - 02 February 2018
CIPTADANA SEKURITAS ASIA

EQUITY RESEARCH

HEAD OF RESEARCH ANALYST ANALYST

Arief Budiman Erni Marsella Siahaan, CFA Yasmin Soulisa
Strategy, Automotive, Heavy Equipment, Banking Property, Plantations
Construction, Shipping T +62 21 2557 4800 ext 919 T +62 21 2557 4800 ext 799
T +62 21 2557 4800 ext 819 E siahaanerni@ciptadana.com E soulisayasmin@ciptadana.com
E budimanarief@ciptadana.com

JUNIOR ECONOMIST ANALYST ANALYST

Imanuel Reinaldo Niko Margaronis Fahressi Fahalmesta
T +62 21 2557 4800 ext 820 Telecommunication, Tower, Healthcare Cement, Toll Road, Poultry
E reinaldoimanuel@ciptadana.com T +62 21 2557 4800 ext 734 T +62 21 2557 4800 ext 735
E margaronisniko@ciptadana.com E fahalmestafahressi@ciptadana.com

ANALYST ANALYST TECHNICAL ANALYST

Stella Amelinda Fransisca Maharani Putri Trevor Gasman
Consumer Media, Retail T +62 21 2557 4800 ext 934
T +62 21 2557 4800 ext 740 T +62 21 2557 4800 ext 760 E gasmantrevor@ciptadana.com
E amelindastella@ciptadana.com E putrifransisca@ciptadana.com

RESEARCH ASSISTANT
Sumarni
T +62 21 2557 4800 ext 920
E sumarni@ciptadana.com

EQUITY SALES

Co HEAD OF INSTITUTIONAL SALES Co HEAD OF INSTITUTIONAL SALES

Dadang Mulyana The Fei Ming
Plaza ASIA Office Park unit 2 Plaza ASIA Office Park unit 2
Jl. Jend. Sudirman Kav. 59 Jl. Jend. Sudirman Kav. 59
Jakarta - 12190 Jakarta - 12190
T +62 21 2557 4800 ext 838 T +62 21 2557 4800 ext 807
F +62 21 2557 4900 F +62 21 2557 4900
E mulyanadadang@ciptadana.com E thefeiming@ciptadana.com

SURABAYA
BRANCH OFFICES

JAKARTA - MANGGA DUA JAKARTA - PURI KENCANA SURABAYA

Komplek Harco Mangga Dua Perkantoran Puri Niaga III Intiland Tower Surabaya
Rukan Blok C No.10 Jl. Puri Kencana Blok M8 No.2E Ground Floor Suite 5 & 6
Jl. Mangga Dua Raya Kembangan Jl. Panglima Sudirman 101-103
Jakarta - 10730 Jakarta - 11610 Surabaya - 60271
T +62 21 600 2850 T +62 21 5830 3450 T +62 31 534 3938
F +62 21 612 1049 F +62 21 5830 3449 F +62 31 534 3886

SEMARANG
Gedung Menara Suara Merdeka
6th Floor Unit 02
Jl. Pandanaran No.30
Semarang - 50134
T +62 24 7692 8777
F +62 24 7692 8778

Please see analyst certification and other important disclosures at the back of this report 6
 EQUITY RESEARCH
EXCL - Results update - 02 February 2018
CIPTADANA SEKURITAS ASIA

Analyst Certification

Each contributor to this report hereby certifies that all the views expressed accurately reflect his or her personal views about the
companies, securities and all pertinent variables. It is also certified that the views and recommendations contained in this report are not
and will not be influenced by any part or all of his or her compensation.

Disclaimer

This report does not constitute an offer to buy or sell any security/instrument, invitation to offer or recommendation to enter into any
transaction. Nor are we acting in any other capacity as a fiduciary to you. When making and investment decision, you should determine,
without reliance upon us or our affiliates, the economic risks and merits (and independently determine that you are able to assume these
risks) as well as the legal, tax and accounting characterizations and consequences of any such transaction. In this regard, by accepting this
report, you acknowledge that (a) we are not in the business of providing (and you are not relying on us for) legal, tax or accounting advice,
(b) there may be legal, tax or accounting risks associated with any transaction, (c) you should receive (and rely on) separate and qualified
legal, tax and accounting advice and (d) you should apprise senior management in your organization as to such legal, tax and accounting
advice (and any risks associated with any transaction and our disclaimer as to these matters.

The information contained in this report is based on material we believe to be reliable; however, we do not represent that it is accurate,
current, complete, or error free. Assumptions, estimates and opinions contained in this report constitute our judgment as of the date of the
document and are subject to change without notice. Any projections are based on a number of assumptions as to market conditions and
there can be no guarantee that any projected results will be achieved. Past performance is not a guarantee of future results. PT
CIPTADANA SECURITIES AND ITS AFFILIATES SPECIFICALLY DISCLAIMS ALL LIABILITY FOR ANY DIRECT, INDIRECT, CONSEQUENTIAL OR
OTHER LOSSES OR DAMAGES INCLUDING LOSS OF PROFITS INCURRED BY YOU OR ANY THIRD PARTY THAT MAY ARISE FROM ANY
RELIANCE ON THIS REPORT OR FOR THE RELIABILITY, ACCURACY, COMPLETENESS OR TIMELINESS THEREOF.

Disclaimer: This document is not intended to be an offer, or a solicitation of an offer, to buy or sell relevant securities (i.e. securities
mentioned herein or of the same issuer and options, warrants or rights to or interest in any such securities). The information and opinions
contained in this document have been compiled from or arrived at in good faith from sources believed to be reliable. No representation or
warranty, expressed or implied, is made by PT CIPTADANA SECURITIES or any other member of the Ciptadana Capital, including any other
member of the Ciptadana Group of Companies from whom this document may be received, as to the accuracy or completeness of the
information contained herein. All opinions and estimates in this report constitute our judgment as of this date and there can be no
assurance that future results or events will be consistent with any such opinions, forecasts or estimates. The information in this document
is subject to change without notice; its accuracy is not guaranteed; and it may be incomplete or condensed.

Please see analyst certification and other important disclosures at the back of this report 7