Turned the corner
A strong finish
Axiata’s 4Q21 results were ahead of our/market expectations as Celcom outperformed. This marks the third consecutive quarter of sequential net profit growth. Reiterate BUY with a higher MYR4.70 (+4%) TP (based on a SOP). Axiata remains on track for a multi-year earnings recovery as management strives to deliver a 20sen DPS in 2024.
Earnings ahead of expectations
Axiata’s 4Q21 core net profit of MYR411m (+29% YoY, +4% QoQ) brings FY21 core net profit to MYR1,325m (+53% YoY), 15%/9% above our/ consensus full-year forecasts. Relative to our forecasts, the net profit beat was mainly attributable to Celcom’s outperformance. A 5.5sen DPS was declared, bringing full-year DPS to 9.5sen (+36% YoY), representing a 66% payout ratio.
Celcom outperforms
EBITDA trends by op-cos were mixed in 4Q21, with Celcom and edotco delivering QoQ growth. At the net profit line, Celcom outperformed relative to our expectation, while Robi underperformed. Celcom’s 4Q21
service revenue was up a commendable 2.7% QoQ again on further subscriber gains at both prepaid and postpaid. Opex trended lower across most line items, culminating in a 1.9 ppt QoQ expansion of EBITDA margin to 45.8%. For the full-year, only Ncell failed to grow revenue due to lockdown and competition, but this was offset by improved cost control, resulting in slight EBITDA growth.
Reiterate BUY
For FY22 on a constant currency basis, management is guiding for 1) mid single-digit revenue growth, and 2) high single-digit EBIT growth. We revise our FY22/23 net profit forecasts by -5%/+3% to reflect latest run rates. Our TP (derived from a sum-of-parts with each op-co valued on DCF) is raised to MYR4.70 (+4%). The various ongoing corporate exercises are on track, with management prioritising integration post completion.