Axiata’s FY17 core PATAMI below expectations
KUALA LUMPUR: Axiata Group Bhd’s (Axiata) financial year 2017 (FY17) core profit after tax and minority interest (PATAMI) came in below expectations, while earnings before interest, tax, depreciation and amortisation (EBITDA) accounted for 99.1 per cent of estimates.
According to Axiata, FY17 profit after tax (PAT) jumped by 76.9 per cent to hit RM1.2 billion, compared to RM657 million in financial year 2016 (FY16).
“Group also recorded a 15.2 per cent increase in EBITDA to reach RM9.2 billion compared to RM8 billion in FY16 while EBITDA margin improved by 0.6 percentage points to 37.8 per cent for the year on the back of higher revenue and cost optimisation initiatives,” Axiata said.
The group’s FY17 core PATAMI of RM1.2 billion came in below expectations at 85 per cent of the research arm of Kenanga Investment Bank Bhd (Kenanga Research) and 92 per cent of the street’s full-year forecasts.
Meanwhile, Axiata’s FY17 EBITDA accounted for 99.1 per cent and 101.8 per cent of the research arm of MIDF Amanah Investment Bank Bhd’s (MIDF Research) and consensus FY17 EBITDA estimates respectively.
Moving forward, MIDF Research fine-tuned the FY18 EBITDA contribution from Robi and Celcom.
As a result, the research arm’s FY18 EBITDA estimates have been revised slightly lower by 1.6 per cent.
“This is also in-line with the management guidance for FY18,” it said.
MIDF Research also imputed higher losses primarily for Robin and higher effective tax rate at the group level.
“This led to lower FY18 earnings of RM1,220.2 million.”
MIDF Research pointed out that the performance of the group’s main operating segments has been under pressure.
Nonetheless, the research arm’s primary concern lies with Celcom’s future prospects mainly due to pricing pressure in view of the competitive mobile landscape and tax and regulatory uncertainties.
“Meanwhile, Idea has performed much worse than expected due to the introduction of goods and services tax (GST) and unrelenting pressure on pricing.
“This is further impact by the sharp reduction in the interconnection usage charge rates,” it said.
With the active merger and acquisition activities the group is currently embarking on, the research arm opined that dividend payout could be capped.
As for Kenanga Research, the research arm highlighted that a significant technical impairment of circa RM1.2 billion to RM1.8 billion (which is a non-cash and purely accounting adjustment) is set to arise post the proposed merger of Idea and Vodafone, which is targeted to be completed by the first half of 2018 (1H18).
The research arm thus imputed a circa RM1.5 billion impairment loss into its FY18 model, resulting in a loss of RM142 million at the reported PATAMI level.
This led to Kenanga Research revising FY18E core PATAMI by 11 per cent to RM1.36 billion, after house-keeping adjustments and taking management’s latest guidance into consideration.