FW: AmBank Research - Telecommunication : Improved results, sector consolidation still needed NEUTRAL, 4 Dec 2017

 

 

SECTOR FOCUS OF THE DAY       

Telecommunication : Improved results, sector consolidation still needed              NEUTRAL

 

3Q2017 largely in line despite lower revenue. The telco sector’s 3Q2017 results were largely in line except for Maxis’ outperformance due to the delayed impact of the termination of Maxis' 3G radio access network arrangement with U Mobile in FY18F, instead of earlier expectations of a progressive revenue decline beginning in June this year.

 

Prepaid decline continues unabated, given the tight competition amid a shrinking subscriber base. Competition in the mobile segment remains intense, as total subscribers has fallen by 3.5mil or 12% since 1Q2014, almost wholly from the prepaid segment. 73% of the loss came from Celcom and the balance from Maxis as Digi managed to recover some lost ground. Average revenue per user (ARPU) was relatively resilient since 1Q2016 but upside growth is restricted by the price-sensitive market.

 

Maintain NEUTRAL call given the continued intense competition in the cellular telecommunications segment while the fixed broadband segment could face rising pressure from the government to cut tariffs to drive a knowledge and IT-driven economy. Our Top BUYs remain Axiata and TM due to the game-changing merger prospect which will significantly enhance their earnings and market share trajectory while Maxis and Digi are HOLDs due to the resistance in gaining traction in revenue growth amid potential loss in competitive advantage under a re-energised Axiata-TM brand.

 

Others :

OldTown : Renewed FMCG thrust to offset weaker margins                                        BUY

Titijaya Land : Flattish 1QFY18 YoY, but stronger earnings ahead                                 BUY

Carlsberg Brewery : Lumpy trade provision steers earnings in line                             HOLD

DRB-HICOM : First half profit amid slipping Proton sales                                                 HOLD

Lafarge Malaysia : Still in the red in 3QFY17                                                                           HOLD

 

 

 

QUICK TAKE

Plantation Sector  : News flow for week 27 – 30 November                                          NEUTRAL

 

 

STOCKS ON RADAR

Gabungan AQRS, Kelington Group, Supercomnet Technologies, Econpile

 

 

ECONOMIC HIGHLIGHT

Malaysia : Cost of doing business remains fairly contained

 

 

NEWS HIGHLIGHTS

Axis REIT: More build-to-suit projects to come

SCB: Powers up cable sales

Matrix Concepts : Still undervalued, says chairman

Chin Well : Banks on wire mesh business to lift FY2018 results

 

 

 

 

DISCLAIMER:

The information and opinions in this report were prepared by AmInvestment Bank Bhd. The investments discussed or recommended in this report may not be suitable for all investors. This report has been prepared for information purposes only and is not an offer to sell or a solicitation to buy any securities. The directors and employees of AmInvestment Bank Bhd. Bhd may from time to time have a position in or with the securities mentioned herein. Members of the AmBank Group Bhd and their affiliates may provide services to any company and affiliates of such companies whose securities are mentioned herein. The information herein was obtained or derived from sources that we believe are reliable, but while all reasonable care has been taken to ensure that stated facts are accurate and opinions fair and reasonable, we do not represent that it is accurate or complete and it should not be relied upon as such. No liability can be accepted for any loss that may arise from the use of this report. All opinions and estimates included in this report constitute our judgment as of this date and are subject to change without notice.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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