Axiata (BUY)
Celcom Breaking Up with U Mobile
§ U Mobile has entered into Malaysia's first active 3G radio access network sharing agreement with Maxis.
§ In a separate announcement, Celcom and TM jointly update that they have yet to conclude and finalize on the strategy in providing the fixed mobile convergence (FMC) solution.
§ Comments: We think that this announcement marks the end of Celcom's 4-year relationship with U Mobile.
§ As a result, Celcom will lose a long term revenue stream from U Mobile but we opined the impact to Axiata is negligible.
§ In response to competition, we also foresee a high probability that Celcom would expand the current scope of collaboration with DiGi to include active 3G and LTE network sharing the near future.
§ We update our estimates by tuning down Celcom's revenue very marginally starting from 3Q12 assuming U Mobile fully cutover to Maxis by then. Hence, our FY12 and FY13 EPS are revised by -1% respectively. Also, we updated Idea's market price used in SOP whereby it has decreased about 7% since our last report.
§ SOP-based target price is lowered from RM5.48 to RM5.41 mainly due to lower market price for Idea.
Maxis (HOLD)
Maxis & U Mobile: "Yes, I do!"
§ Maxis and U Mobile entered into a landmark multi-billion ringgit agreement to share Maxis' 3G radio access network (RAN) making the partnership the first active 3G RAN agreement to be deployed in Malaysia.
§ The agreement also encompasses LTE sharing when the spectrum becomes available and rolled out.
§ The agreement will be for a period of 10 years with an option to extend for up to another 2 years.
§ Comments: Maxis has successfully wooed U Mobile by offering 3G domestic roaming (DR) on top of 2G DR which U Mobile is currently enjoying through tie-up with Celcom Axiata since June 2007.
§ Win-win strategy: Maxis to enjoy long term revenue stream and increase asset utilization and productivity; U Mobile to avoid CAPEX at locations with low business viability (Sabah and Sarawak) while able to offer nationwide coverage.
§ We update our estimates to reflect contribution from this collaboration assuming U Mobile fully cutover to Maxis from Celcom by 3Q12. As a result, our FY12 and FY13 EPS estimates are revised by +1.2% and +2.6% respectively.
§ Our DDM-derived TP of RM5.39 remains unchanged.
September Inflation Report
§ CPI growth inched up marginally to 3.4% yoy in Sep 2011 (Aug: +3.3% yoy), higher than the consensus estimate of 3.3% on account of faster annual increase in food prices (+5.0% yoy; Aug: +4.6% yoy).
§ The uptick in inflation rate was due entirely to base effect. Mom basis, the CPI growth had remained stable at 0.2% for the third consecutive month. However, the ongoing flood in Thailand and the upward revision in Thai rice may cause food prices to remain high in 4Q.
§ As in the past, we expect the next round of subsidy rationalisation to be implemented in December. All-in-all, we retain our forecast that the CPI growth will average 3.2% in 2011.
§ We expect inflation to ease marginally to 3% in 2012 driven by government's subsidy removal exercises and the new salary scheme for civil servants and pensioners.
§ We expect BNM to hold the OPR at 3.00% until end-2012 as it focuses on growth agenda given the recent external developments while inflation is on moderation trend.
More profit taking near 1470 levels
§ Asian markets and Bursa Malaysia are likely to open higher today, driven by Dow's strong gains last Friday amid optimism of a euro debt-crisis solution and a possible QE3 by the Fed.
§ We continue to advocate risk-averse investors to sell into rally or trim positions when KLCI reaches our envisaged stiff resistance targets near 1470 (15-w SMA) and 1495 (20-w SMA). Immediate base building supports for pullbacks are 1411 (30-d SMA), 1405 (mid Bollinger band) and the 1400 psychological levels.
QL: Medium term upside targets at RM3.15-3.30
§ As weekly technical readings are on the mend, QL's medium term resistance targets are at RM3.15 (38.2% FR) and RM3.30 (23.6% FR). Support levels are RM2.75 (mid Bollinger band-daily) and RM2.63 (lower Bollinger band-weekly). Accumulate now but stop loss below RM2.63.
No comments:
Post a Comment