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Results Note – Axiata (REDUCE, maintain) - Slight disappointment




Affin Hwang Investment Bank Bhd


23 May 2013





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1Q13 core net profit down 13% yoy – below expectations Axiata’s 1Q13 core net profit of RM596.6m (-13% yoy) was slightly below expectations accounting for 21% of our and street FY13 estimates. On our part, the shortfall was due largely to the weak 1Q13 results at XL where 1Q13 net profit only accounted for 10% of our FY13 estimate. Yoy, the weaker 1Q13 core net profit was due primarily to a sharp contraction in EBITDA margins to 39.7% vs 42.9% in 1Q12 as revenue continued to grow, up 5.5% yoy. The weaker EBITDA margins was largely due to the poor showing at XL, a result of higher SMS interconnect charges and higher operating expenditure due to an expansion of its data network. The weaker earnings yoy was also largely underpinned by higher depreciation charges (+10.7% yoy) partially lifted by accelerated depreciation charges at Celcom (RM35m in 1Q13 vs RM24m in 1Q12). Note also that Celcom’s revenue would have been stronger than its headline +3.7% yoy growth if not for the loss of its U-mobile roaming agreement to Maxis, which was worth RM50m for the quarter. Axiata did not announce any DPS for the quarter.

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