Page 1 of 18 7 January 2016 HLIB Research PP 9484/12/2012 (031413) Telecommunications (Neutral ) INDUSTRY INSIGHT 7 January 2016 2016 Outlook Highlights Underperformed in 2015 with average return of -5.94% vs. KLCI’s +1.27% due to GST, price war and stronger USD. GST boost did not materialize due to confusions, delays and changes in requirements. Cellcos incurred higher expenses due to the 3-month reimbursements and network preparation costs. No clarity on source of funding for 2016 rebate and charging mechanism for 2017 and beyond. MSAP expired in 2015 without revision, a boon to the sector. But indications that fibre access pricing will be regulated in near future, a bane to fixed telcos. Weakening MYR led to falling foreign shareholding due to capital flight. Also led to inflated IDD-related costs along with higher finance cost for telcos with USD debt exposure. Competition subsided towards end of 2015 and expected to be more rational in 2016 considering the uncertainties ahead including GST, access pricing, FOREX and SMS erosion. TM-P1 is not expected to be overly value destructive to the overall market as it focuses on high value market. Wholesale DR rate for P1 may not be attractive. Weighted average smartphone penetration based on the big 3’s subscriber base exceeded expectation at 61.6%, bodes well for the telcos who are betting on data revenue to sustain organic growth. More spectra in the pipeline but untouchable in near term. Increasing indications that regulators may allocate spectrums based on auction. Overcrowded with 8 players in a small market and ripe for consolidation. M&A may be a way to grasp more spectra. Catalysts Cost savings from partnerships. Managed services / outsourcing. Increased demand for wholesale bandwidth. Risks Irrational competition, regulation of tariffs, FOREX. Forecasts Unchanged. Rating NEUTRAL () Positives – Low beta, defensive, strong cash-generation and dividends should underpin share prices. Negatives – Potential irrational competition, regulatory risks, unable to monetize data and dumb pipes. Top Picks Axiata (BUY, TP: RM7.59) – (1) Ncell will be an earning accretive acquisition; (2) Celcom’s recovery; (3) XL’s fruitful strategy transformation; (4) OpCos strong growth in other emerging markets; (5) Tower listing; and (6) Possible merger between Robi and Airtel Bangladesh. DiGi (BUY, TP: RM6.22) – (1) Return to growth in a rational market; (2) Lean operation with prudent management; (3) Under-leveraged balance sheet for possible M&A and spectrum auction. Tan J Young [email protected](603) 2168 1082 Axiata’s share price 1500 1600 1700 1800 1900 5.5 6.0 6.5 7.0 7.5 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Pts RM AXIATA (LHS) KLCI (RHS) DiGi’s share price 1500 1600 1700 1800 1900 4.5 5.0 5.5 6.0 6.5 Feb-15 Apr-15 Jun-15 Aug-15 Oct-15 Dec-15 Pts RM DIGI (LHS) KLCI (RHS) TdC’s share price 1500 1600 1700 1800 1900 3.50 4.50 5.50 6.50 7.50 8.50 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Pts RM TDC (LHS) KLCI (RHS) TM’s share price 1500 1600 1700 1800 1900 5.0 6.0 7.0 8.0 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Pts RM T (LHS) KLCI (RHS)
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Page 1 of 18
7 January 2016
HLIB Research
PP 9484/12/2012 (031413)
Telecommunications (Neutral )
INDUSTRY INSIGHT 7 January 2016 7 January 2016
2016 Outlook
Highlights
Underperformed in 2015 with average return of -5.94% vs.
KLCI’s +1.27% due to GST, price war and stronger USD.
GST boost did not materialize due to confusions, delays and
changes in requirements. Cellcos incurred higher expenses
due to the 3-month reimbursements and network preparation
costs. No clarity on source of funding for 2016 rebate and
charging mechanism for 2017 and beyond.
MSAP expired in 2015 without revision, a boon to the sector.
But indications that fibre access pricing will be regulated in
near future, a bane to fixed telcos.
Weakening MYR led to falling foreign shareholding due to
capital flight. Also led to inflated IDD-related costs along with
higher finance cost for telcos with USD debt exposure.
Competition subsided towards end of 2015 and expected to
be more rational in 2016 considering the uncertainties ahead
including GST, access pricing, FOREX and SMS erosion.
TM-P1 is not expected to be overly value destructive to the
overall market as it focuses on high value market. Wholesale
DR rate for P1 may not be attractive.
Weighted average smartphone penetration based on the big
3’s subscriber base exceeded expectation at 61.6%, bodes
well for the telcos who are betting on data revenue to sustain
organic growth.
More spectra in the pipeline but untouchable in near term.
Increasing indications that regulators may allocate spectrums
based on auction.
Overcrowded with 8 players in a small market and ripe for
consolidation. M&A may be a way to grasp more spectra.
Catalysts Cost savings from partnerships.
Managed services / outsourcing.
Increased demand for wholesale bandwidth.
Risks Irrational competition, regulation of tariffs, FOREX.
Forecasts Unchanged.
Rating NEUTRAL ()
Positives – Low beta, defensive, strong cash-generation and
Telcos lost its shine in 2015 after a magnificent 2014 as the sector was plagued by GST drama, price war and weakening MYR which led to capital outflows. The broader KLCI index ended the volatile 2015 with a late push by gaining a mere 1.27% (see Figure #1)
despite global crude oil price plunging to all-time low since 2009. Excluding TdC (non-index linked), telcos lost 5.94% on average with DiGi and Axiata being the leading laggards. Admittedly, our stock recommendations have yet to materialize although most of the
sectorial theme outcomes highlighted in our 2015 Outlook report did emerge.
Figure #1 Telcos’ Share Price Performance in 2014 and 2015
Year End Closing Price (RM) Change (%)
2013 2014 2015 2014 2015
KLCI 1,866.96 1,671.25 1,692.51 -10.48 1.27
Ax iata 6.90 7.05 6.41 2.17 -9.08
DiGi 4.96 6.17 5.40 24.40 -12.48
Maxis 7.27 6.85 6.80 -5.78 -0.73
TM 5.55 6.88 6.78 23.96 -1.45
TdC 3.55 4.88 7.60 37.46 55.74
Average
16.44 6.40
HLIB
Summary of telcos’ major corporate milestones in 2015 which would lead to sustainable business prospect:
Axiata – Celcom regaining subscriber market share, XL’s strategy revamp, exclusive merger discussion between Robi and Airtel Bangladesh, XL’s USD debt restructuring, edotco’s entry into Myanmar and acquisition of Nepal’s Ncell;
DiGi – Helmed by new local CEO, partnership with iflix and HyppTV; Maxis – Effective prepaid and postpaid product streamlining and rebranding yielded
positive signs of turnaround;
TM – P1 integration, HyppTV partnership with DiGi, sealed HSBB2 and SUBB pacts with government; and
and Thailand (KIRZ). While intense competition was the main headline for the sector, this pressure had subsided
towards end of 2015 and telcos remained profitable with stable margins, generating strong operating cash flows to self-fund CAPEX and consistently reward shareholders with above-market-rate yields. Having said that, we will evaluate how Malaysian telco industry would
fare in this new year from different perspectives including GST, access pricing, FOREX, price war, products and services as well as spectrum allocations and market consolidation over the longer term.
GST: Not Over Yet
Not only the much anticipated earnings boost did not realize, GST entailed with confusions, delays, changes in requirements in 2015 and the saga continues into 2016 and potentially
2017. When introduced in April 2015, the confusion surrounding GST charging mechanism had caused prepaid subscribers to cry foul and dealers refused to sell credit reloads. As a temporary solution, cellcos have agreed to a 3-month transitional measure to lighten GST
burden whereby all prepaid subscribers who reload RM5 and above a value which is higher than the GST addition will be given free airtime minutes and SMS. This was shortly followed by the announcement of usage-based GST by the ministry, a total remodel of the
initial implementation to be ready in November 2015. Usage-based GST was perceived to be the most challenging among the methodologies available involving reconfigurations of charging and billing to accommodate real-time tax calculations and balance notifications
besides major reversal of existing structure throughout whole supply chain.
Underperformed KLCI
in 2015.
Summary of 2015
corporate milestone.
GST gain was an illusion.
HLIB Research | Telecommunications
www.hlebroking.com
Page 3 of 18
7 January 2016
However, this had taken a turn again in 2016 Budget tabled in late October when Prime Minister proposed to give one-year GST waiver to all Malaysian prepaid users in the form
of rebates to be credited directly to their accounts. Again, the last-minute ditch on the fully prepared usage-based GST was a painful exercise for the cellcos despite it was something worth cheering by the rakyat.
Due to all these unfortunate flip-flopping, cellcos incurred higher expenses as a result of the 3-month reimbursements and network preparation costs which in turn, weighed down
FY15 earnings. At this juncture, there is still no clarity on who will fund the GST rebates in 2016, whether by the USP, cellcos or shared. Moreover, we do not discount the possibility of another round of amendments towards the end of the one-year GST waiver if policy
becomes fluid again for 2017.
Access Pricing: No News is Good News
At the time of writing, there is still no update on MCMC’s Mandatory Standard on Access
Pricing (MSAP) which effectively expired on 31 December 2015. Following the 3-year review tradition, we were expecting fixed termination rate (FTR) and mobile termination rate (MTR) to be reduced by the same quantum as the last determination. Anyway, glad
that we were wrong and a good news to the sector, for now. Should this be revived, our updated simulation suggests that DiGi will be impacted the
most (see Figure #2), followed by Celcom and Maxis albeit overall insignificant impact to earnings forecasts even at the extreme case of 20% reduction in MTR. This impact is expected to be fully offset by the continuous growth of data business as voice to data
substitution proliferates. Nonetheless, this price fixing regulation will marginally enhance tier-2 telcos’ (U Mobile, Altel, TuneTalk, XOX, REDtone, etc ) competencies and potentially drive them to cut prices further in order to gain market share.
* Using 3Q15 operating data ex cept MOU which based on most recent av ailable. ** Using extrapolated 9M15 reported PAT as denominator. HLIB
Fibre access was exempted from 2013 price regulation after strong oppositions from fixed players. Pricing based on market forces was successfully preserved with the justification of high upfront CAPEX intensity leading to long payback period. Nevertheless, in MCMC’s
public consultation report on Review of Rates Rules published on 9 October 2015, there are clear indications that fibre access pricing will be regulated in near future, just as what we have predicted in our 2015 Outlook report:
“The MCMC notes the unanimous agreement of the respondents that wholesale regulation is more appropriate to ensure that there is broadband competition at the retail level ...has a
role to play in ensuring…affordability…To achieve that, MCMC would continue to play a dual role, to work together with the industry so that higher broadband speed services are available, and at the same time, to continue its regulatory role, to monitor the prices of
broadband services (for basic as well as higher speed) and take the necessary action to ensure compliance to the CMA.”
More flip-flops ahead?
Last MSAP expired
without any revision.
Fibre access may face
price regulation…
HLIB Research | Telecommunications
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Page 4 of 18
7 January 2016
On the surface, this is likely to impact fixed telcos negatively, especially TM who has near monopoly of the domestic fixed broadband market. If regulated fibre pricing is enforced at a
significantly lower rate, existing access seekers will be able to renegotiate for cost savings at the expense of TM. Furthermore, transparency of fibre access pricing will likely to attract new entrants into the market. Disruptive Singapore-based ISP, MyRepulic made no secret
of its desire to expand into Malaysia by early 2016 by undercutting incumbents. It plans to offer 100Mbps services at RM60-70 per month compared to TM’s entry-level Streamyx 1Mbps bundle and UniFi VIP5 5Mbps triple-play plan at RM117 and RM158 per month,
respectively. On the contrary, this is expected to be beneficial to cellcos who are in need of high speed transmission backhaul to support their LTE rollout.
MYR/USD Impacts
In 2015, expectations of rate normalization by FOMC and potentially more QE from ECB and BOJ have created greater divergence in global monetary policy leading to depreciation pressure on emerging market currencies. On average, MYR had depreciated by a
whopping 19.3% yoy from RM3.27/USD in 2014 to RM3.90/USD in 2015 (see Figure #3). This massive capital outflows had eventually led to the declining foreign shareholdings (see Figure #4-8) in telcos which partly explain their highly-correlated share price
Figure #9 Telcos’ Share Price Performance vs. Foreign Shareholding
Year End Closing Price (RM) Year End Foreign Shldg (% ) Change (% )
2014 2015 Dec-14 Nov-15 Price Foreign Shldg
Axiata 7.05 6.41 21.00 15.70 -9.08 -5.30
DiGi 6.17 5.40 15.60 10.60 -12.48 -5.00
Maxis 6.85 6.80 6.60 6.30 -0.73 -0.30
TM 6.88 6.78 16.70 12.40 -1.45 -4.30
TdC 4.88 7.60 7.46 6.46 55.74 -1.00
Bloomberg, Company Data, HLIB
Operationally, the weaker MYR had also resulted in inflated IDD traffic cost and FOREX losses in IDD settlements. In 3Q15 results, DiGi experienced a forex impact of RM50m and RM37m at EBITDA and PAT levels, respectively as USD appreciated by 10.8% qoq to a
quarterly average of RM4.05/USD. Besides, the unfavorable exchange rate also created great burden to telcos with substantial foreign currency debt in terms of higher finance costs and repayments. To mitigate the risk, XL had successfully addressed all its external
unhedged USD loans through early repayments and conversion to IDR. TM also has an unhedged USD300m debt, representing12% of its total debt portfolio at the end of 3Q15, but this is not a concern as it is long dated with maturity in 2025.
Going into 2016, we opine that several positive factors will support MYR, including GLC fund repatriations, abated foreign selling, resilient growth and BOP posi tion and easing
domestic issues (1MDB and political glitches). However, MYR appreciation is expected to be temporarily restrained in most of 1H16 until clarity on oil market dynamics and Zeti’s successor emerges. As such, we are forecasting MYR to trade at RM3.80-4.00 against
USD by end of CY16 with a full year average of RM4.10. With the expectation of a more stable MYR/USD in 2016, we see limited downside to share
price due to capital pullback given that telcos foreign shareholdings as of November 2015 have already recorded multiyear low, for instance Axiata’s 15.7% is lowest since October 2010 while DiGi’s 10.6% is dated back to July 2011. However, we believe that the
weakness in MYR will continue to haunt telcos in the form of higher IDD costs, at least for 1H16 before normalizing into 2H16.
TdC: 6.46%.
Inflated IDD-related
costs.
CY16 average of
RM4.10/USD.
HLIB Research | Telecommunications
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Page 7 of 18
7 January 2016
Competition: Tamer in 2016
Singularly, cellcos was the only commercial sector to start off 2015 with high expectation of GST windfall. The expected cost savings, which cannot be attributed to managements’ KPI achievements, were eventually transformed into bullets for cellcos to engage in price war,
fighting for subscriber market share instead. Rivalry became fiercer when Celcom made a grand comeback to the market with new blockbuster postpaid and prepaid products amidst anemic market sentiment due to the nationwide GST execution. Price sensitive prepaid
subscribers were tightening their belts by reducing usage and some even discarded their secondary SIMs. Although this situation was predicted in our 2015 Outlook report, we underestimated the hostility of the rivalry.
While still feeling the residual pain, the industry will be begin the new year filled with major uncertainties, a total opposite situation of 2015:
The clarity on 2016 GST rebates funding while the charging mechanism and policy for
2017 and beyond remains fluid. Telcos may incur more outlays sponsoring the rebates,
network reconfigurations and supply chain preparations. While the new access pricing policy is not forthcoming, there is still a poss ibility that it
may be introduced in the near term. Risk remains with higher-than-expected cut in FTR
and MTR. With MYR/USD remains elevated, telcos is currently facing exaggerated cost for IDD
products which usually are the sparks of price competition.
High margin SMS products continue to be eroded (see Figure #10) by OTT as usage migrates to data and cellcos are under great pressure to find avenues to compensate that forgone earnings.
The ultimate risk for market aggressiveness in 2016 boils down to TM’s P1 service launch. Nevertheless, we do not expect TM-P1 to be overly value destructive to the overall market
assuming that P1 is intended to complement TM’s existing triple-play service with mobility for quad-play enablement, thus focusing on high value market or in other word, postpaid segment. While prepaid products are expected to hit the market to complete the offering
portfolio, they may not be pushed considering their low ARPU and margin in nature and higher cost in delivering the service involving more infrastructure requirements, domestic roaming (DR) fees and possible GST rebate in 2016. Inconclusive DR pact after one-year
negotiation with market incumbents exhibits the challenges and the big-3’s prudence towards DR’s cannibalization. Hence, we perceive that the wholesale DR rate may not be attractive.
In conclusion, we have a rather contrarian view that rational competition will return in 2016 and telcos will be extra cautious in their marketing strategy bearing in mind that heavy
CAPEX investment ahead, catching up with regional peers as well as device capability.
GST savings turned in
price war ammo.
Totally different situation
in 2016.
TM may not be
aggressive.
Rational competition in
2016.
HLIB Research | Telecommunications
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Page 8 of 18
7 January 2016
Products and Services: Insatiable Data Demand
Smartphone penetration continued to climb in 2015 led by Maxis with 67.0% followed by Celcom and DiGi with 59.0% and 58.4%, respectively (see Figure #11). As of 3Q15, Malaysia’s weighted average smartphone penetration based on the big 3’s subscriber base
stood at 61.6%, once again exceeded our forecast of 54.3% by end of 2015. This can be explained by of more affordable smart devices (see Figure #12) such as from XiaoMi, Huawei, Lenovo and ZTE flooding the market.
Average price per device (RM) 401 1,733 1,608 543 380 860 1,128 477 679
* Due to new iPhone launches
Company Data, HLIB
The proliferation of smartphones bodes well for the telcos who are betting on data revenue
to sustain organic growth on the back of voice to data substitution trend in subscriber usage behavior. According to Ericsson Mobility Report dated November 2015, global data traffic grew about 14% qoq and 65% yoy in 3Q15, while voice traffic remained uneventful
(see Figure #13). Going beyond, Ericsson foresees that 2015-21 mobile data traffic to grow at a CAGR of around 45% (see Figure #14). The growth in mobile data traffic is due to both the rising number of smartphone subscriptions, particularly LTE smartphones, and increasing data consumption per subscriber. Regionally, Asia Pacific will have the highest
share of the total mobile traffic both in 2015 and 2021 as it is expected to expand 10 fold (see Figure #14).
Also, riding on the smartphone wave, over-the-top (OTT) players such as Facebook, Viber, Whatsapp, Skype, YouTube and more are gaining popularity among subscribers. Telcos are constantly under the increasing threat of OTT players substituting their high margin
voice and messaging products. Recognizing this threat, telcos are expected to actively explore partnership opportunities with OTT players harnessing a win-win business model rather than being a dumb pipe. This approach will ensure that telco’s brand value is not
diluted and maintain their relevance to their subscribers. Further cooperation will allow them to monetize their data capacity, either through subscription plans or billing.
Smartphone growth
continues to surprise.
3Q15: 61.6%.
Insatiable data demand.
HLIB Research | Telecommunications
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Page 9 of 18
7 January 2016
Figure #13 Global Mobile Traffic*
* Traffic does not include DVB-H, Wi-Fi or Mobile WiMAX, VoIP is included in data traffic. Ericsson
Figure #14 Global mobile traffic and Regional breakdown (ExaBytes)
Ericsson
Long Term Factors: Spectrum and Consolidation
Spectrum is scarce and the industry will likely to face a shortage should mobile data traffic continues to surge exponentially as projected. Though there are more spectra in the
pipeline to be refarmed or allocated for mobile broadband (MBB), they may not be released to cellcos in the near term:
900MHz refarming. MCMC aims to rebalance all cellcos’ spectrum by narrowing the gap of spectrum awarded to the big and small players as well as to strengthen service quality. It is looking at a variety of options, including auction or “beauty contest” for the
reallocation exercise. However, decision will only be made after consulting all players;
More spectra for MBB but
untouchable.
HLIB Research | Telecommunications
www.hlebroking.com
Page 10 of 18
7 January 2016
700MHz from TV broadcasting. Viewed as a long term sectorial catalyst, low frequency spectrum is crucial due to its superior propagation characteristics (see Figure #15)
which would entail technical advantages including wider coverage, improved indoor quality, as a global universal 4G spectrum enhancing services roaming and device availability. In turn, these benefits would help telcos to reduce CAPEX and OPEX
significantly (see Figure #16). According to Boston Consulting Group, Malaysia would benefit from an estimated USD17.5bn addition to GDP along with 23,000 new business activities by 2020 through allotting the 700MHz band to MBB. Currently, the entire TV
space is occupying frequencies ranging from 470MHz to 742MHz and with the introduction of digital terrestrial television broadcasting (DTTB), the range will be reduced to 470MHz to 698MHz. This will free up spectrum ranging from 698MHz to
742MHz for LTE once analogue TV broadcasting is fully migrated; and
Figure #15 Propagation Characteristics of Spectrums
BBC R&D
Figure #16 Relative CAPEX Required based on Spectrums
BBC R&D
L-band (1427-1518MHz) and lower part of C-band (3.4-3.6GHz) which recently being
reallocated by World Radiocommunication Conference 2015 in Geneva from satellite
communication to MBB as globally harmonized bands on top of 700MHz. These bands may only be distributed when telco equipment and devices achieve certain level of maturity while Malaysian spectrum plan may require reassignment by the regulators.
HLIB Research | Telecommunications
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Page 11 of 18
7 January 2016
Increasingly, there are indications that regulators may allocate spectrums based on auction going forward in order to adhere to the global industry practice. Firstly, the prolonged
deliberation and unconcluded decision on the 900MHz refarming may eventually lead to open tender. Secondly, based on the released TPPA text, Malaysia shall endeavor to rely on an open and transparent process that considers the public interest, including the
promotion of competition when making a spectrum allocation for commercial telco services and auction is a suggested option. Airwave tender, which may easily raise billions, is a popular avenues for governments to overcome any budget deficit but this will result in more
CAPEX outlay, subsequently put pressure on cellcos’ generous dividend payout and gearing ratio.
We continue to opine that 8 cellcos (2.6GHz spectrum licensed holders) operating in a 30m-populated market is extremely overcrowded, not to mention that it is oversaturated with about 145% mobile penetration rate as reported in 2Q15. As a result, there are some
nonperforming cellcos holding on to their spectrum allocat ions idly. Hence, the sector may be ripe for M&A in order to promote healthy and sustainable growth ahead. Furthermore, with additional spectrum hard to come by to meet the growing data demand and the risk of
auction substituting “beauty contest”, cellcos may eventually resort to M&A as alternative.
Recommendations
For 2016, we advocate a contrarian view that industry competition will be rather rational
and possibly see a gradual recovery, albeit service revenue is only expected to grow at a marginal rate of less than 5%, supported purely by data products. Fundamentally, telcos continue to enjoy stable recurring revenues strongly supported by resilient domestic
demand which is largely perceived to be recession-proof. This would also translate into dependable dividend yield, an attractive plus point should the market becomes volatile.
At this juncture, we reiterate NEUTRAL rating for the sector with the following top picks: Axiata (BUY, TP: RM7.59) – (1) Ncell will be an earning accretive acquisition; (2)
Celcom’s recovery; (3) XL’s fruitful strategy transformation; (4) OpCos strong growths in other emerging markets; (5) Tower listing; and (6) Possible merger between Robi and Airtel Bangladesh.
DiGi (BUY, TP: RM6.22) – (1) Return to growth in a rational market; (2) Lean operation with prudent management; (3) Under-leveraged balance sheet for possible M&A and spectrum auction.
A summary of our calls and target prices are shown in Figure #17 while comparable peer valuations are shown in Figure #18.
Figure #17 HLIB Calls and Target Prices
Company Price (RM) Target (RM) Return +/-(%) DY (%) Total Return (%) Current Rec
Axiata 6.27 7.52 19.9 4.0 23.9 BUY
DiGi 5.20 6.22 19.6 4.7 24.3 BUY
Maxis 6.67 6.87 3.0 4.0 7.0 HOLD
TM 6.67 6.90 3.4 3.2 6.6 HOLD
TdC 7.49 6.53 12.8 10.5 -2.3 HOLD
HLIB
Spectrum auction?
Overcrowded market.
NEUTRAL with Axiata
and DiGi as top picks.
HLIB Research | Telecommunications
www.hlebroking.com
Page 12 of 18
7 January 2016
Figure #18 Regional Peers Comparison
Company FYE Price Market Cap (m) P/E (x) P/B (x) ROE (%) Gross DY (%)
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BUY Positiv e recommendation of stock under coverage. Expected absolute return of more than +10% ov er 12-months, with low risk of sustained downside.
TRADING BUY Positiv e recommendation of stock not under coverage. Expected absolute return of more than +10% ov er 6-months. Situational or arbitrage trading opportunity . HOLD Neutral recommendation of stock under coverage. Expected absolute return betw een -10% and +10% over 12-months, with low risk of sustained downside. TRADING SELL Negativ e recommendation of stock not under coverage. Expected absolute return of less than -10% ov er 6-months. Situational or arbitrage trading opportunity. SELL Negativ e recommendation of stock under coverage. High risk of negative absolute return of more than -10% ov er 12-months. NOT RATED No research coverage, and report is intended purely for informational purposes.
Industry rating definitions
OVERWEIGHT The sector, based on weighted market capitalization, is expected to have absolute return of more than +5% ov er 12-months.
NEUTRAL The sector, based on weighted market capitalization, is expected to have absolute return betw een –5% and +5% over 12-months. UNDERWEIGHT The sector, based on weighted market capitalization, is expected to have absolute return of less than –5% ov er 12-months.