Axiata Rallies, Set to Be Malaysia’s Best Performer

By Chan Tien Hin

March 1 (Bloomberg) -- Axiata Group Bhd., Malaysia’s second-biggest mobile phone operator, rose to a 17-month high after Citigroup Inc. said the company is its “preferred pick” as it wrested market share from its rivals last year.

The stock advanced 4.8 percent to 3.91 ringgit at the midday break in Kuala Lumpur, set for the highest close since Sept. 26, 2008. It’s the best performer on the benchmark FTSE Bursa Malaysia KLCI Index today, and the 28 percent advance this year is also the most for the measure.

Its mobile unit “dominated through 2009” with the highest mobile-phone revenue among Malaysia’s three major operators, Citi said in the report dated Feb. 26. Rivals Maxis Communications Bhd. and Digi.Com Bhd. lost revenue and subscriber market share last year, it said.

Axiata, which also operates in nations such as India, Sri Lanka and Bangladesh, has benefited from growth in emerging markets amid a global economic recovery. In Malaysia, the company contained costs and improved its network to boost margins, Citi said in a separate report last week.

Malaysia emerged from its first recession in a decade last quarter. Gross domestic product increased 4.5 percent in the fourth quarter from a year earlier, after contracting 1.2 percent in the previous three months, the central bank said in a statement on Feb. 24.

Axiata’s users made up 33.9 percent of Malaysia’s mobile- phone subscribers in the fourth quarter, from 32.5 percent a year earlier, Citigroup said. Maxis, the biggest mobile-phone operator in Malaysia by customers, saw its market share fall to 40.2 percent from 41.2 percent, while Digi slid to 25.8 percent from 26.2 percent.

Axiata Chief Executive Officer Jamaludin Ibrahim couldn’t immediately be reached in his office for a comment.

Kuala Lumpur-based Axiata, controlled by Khazanah Nasional Bhd., Malaysia’s state investment company, reported a 558.8 million ringgit ($165 million) profit for the fourth quarter ended Dec. 31, compared with a 515.3 million ringgit loss a year earlier. Revenue jumped 52.7 percent to 3.7 billion ringgit.

--Editor: Linus Chua, Reinie Booysen

A 'spectacular' year for Axiata

Mobile operator Axiata Group Bhd has posted what it describes as "fairy tale" financial results for 2009, thanks to growth in most of its main operations and foreign exchange gains.

Although it expects customers to make more calls and surf the Internet from their handphones this year as the global economy recovers, Axiata also thinks that the competition will be intense.

The group, which operates in 10 Asian countries, including Indonesia and Sri Lanka, plans to become the top regional mobile operator group by 2015.

Axiata posted a net profit of RM558.28 million in the quarter to December 31 2009, clawing back its net loss of RM515.25 million in the previous corresponding period.

Full-year net profit more than tripled to RM1.65 billion.
It also exceeded all its targets, or key performance indicators, last year, and turned free cash flow positive for the first time.

"It's a spectacular year. It's like a fairy tale results for us. We worked very hard to achieve these. However, for us to live happily ever after, we need to harness the foundations that we have built," group chief executive officer and president Datuk Seri Jamaludin Ibrahim said at a media briefing in Kuala Lumpur yesterday.

Celcom Axiata Bhd and PT XL Axiata in Indonesia continued to be the group's biggest income generator, collectively making up more than 80 per cent of sales and operating profit.

This year, Axiata plans to spend RM4 billion to RM4.5 billion to expand its networks. Last year, it spent RM3.4 billion.

The funds will also be used to expand its mobile broadband coverage, a business seen as the future growth driver.

To grow its mobile broadband business, the group will try to apply the formula that has made Celcom a market leader to its other regional units.

In terms of mobile broadband market share, XL ranks third in Indonesia with some 100,000 customers, while Dialog leads in Sri Lanka with some 45,000 customers.

"We believe there's a lot to be learnt from Celcom in terms of how they market the product, how they build the network," said Jamaludin.

Meanwhile, Axiata hopes to sell some of its non-core assets by the end of the first quarter.

Jamaludin stressed that such a sale would not directly impact the group's earnings significantly.

"The numbers are small, rather insignificant. We may not even need to change our annual reports. However, it will allow us to focus better in our job," he said.

Axiata stock up, is OSK top telecoms pick

Axiata Group Bhd, this year’s best-performing stock on Malaysia’s bechmark index, climbed to its highest level in more than a year after HwangDBS Vickers Sdn Bhd, Kenanga Investment Bank Bhd and OSK raised their stock ratings on quarterly profit.

The shares climbed 3.1 per cent to RM3.61 at 9:56 a.m. in Kuala Lumpur, set for their highest close since Oct. 14, 2008.

Axiata's solid FY09 results demonstrated the early success of the many group-wide initiatives crafted by management over the past 18 months to solidify its position as a leading regional mobile operator, said OSK Research.

As such, OSK has upped the target price on the stock at RM4.24 with a "buy" call.
The research outfit highlights the continued solid execution at Celcom/XL Axiata, its maiden positive "FCF" and no impairment to be undertaken on Idea.

OSK believes the stock remains under-appreciated with consensus forecast upgrades driving a further share price re-rating.

Axiata remains OSK's top Malaysian telecoms pick. - Reuters

Bought Axiata @ 3.57

Axiata Records Profit Of RM1.65 Billion For 2009
KUALA LUMPUR, Feb 24 (Bernama) -- Axiata Group Bhd reported a 232 per cent increase in profit after tax and minority interests (PATAMI) to RM1.65 billion for the year ended Dec 31, 2009 from RM498 million in 2008.

Group revenue grew 15 per cent to RM13.1 billion, driven by continuous improvement in performance from all operational companies.

Its President and Group Chief Executive Officer, Datuk Seri Jamaludin Ibrahim, said the continuous improvement could be seen across the board, particularly PT XL Axiata Tbk and Axiata (Bangladesh) Ltd, which returned to black compared to losses in 2008 on the back of relentless cost management.

The group also turned free cash flow positive for the first time, up 265 per cent to RM2.1 billion, he said during a media briefing on the group's 2009 financial results here Wednesday.

When asked on any dividend announcement, Jamaludin said the group was not planning to announce a dividend as it wanted to use the funds for further growth.

For the current financial year ending Dec 31, 2010, the group would be spending between RM4 billion and RM4.5 billion in capital expenditure (CAPEX) to boost its expansion programme.

"We plan to spend RM4 billion to RM4.5 billion on information technology to build a new model which can help reduce cost and synergise the five countries' operations," he said.

He said the group was expecting "good growth" on the back of improved macro economic condition.

"But we expect the competitive environment in some countries will be heating up. We have to balance the competition pressure from all countries," said Jamaludin.

To drive future profits, he said the group was looking at subscriber growth, mobile broadband as well as non-voice services from all the countries where it operates.

Jamaludin said the group expected to come out with the target for its current financial year by May this year.

Currently, the group, including its subsidiaries and associates, has over 120 million mobile subscribers in Asia and 511,000 mobile broadband subscribers.

Meanwhile, commenting on plans to dispose non-core assets, its Group Chief Financial Officer, Datuk Yusof Annuar Yaacob, said the disposal of some of these assets would be finalised by the first quarter of this year.

-- BERNAMA

Supermax set for another record year

IT WAS a record year for rubber glove maker Supermax Corp Bhd (7106) in 2009, and 2010 is likely to be the same.

Rubber glove makers are enjoying strong global demand for the health control product, helped in part by the influenza A (H1N1) pandemic.

"Demand for rubber gloves continues to outpace supply and Supermax will continue to register double-digit growth in 2010 and possibly 2011," Supermax executive chairman and group managing director Datuk Seri Stanley Thai told reporters during a briefing in Kuala Lumpur yesterday.

In the fiscal year to December 31 2009, Supermax's net profit jumped almost threefold to RM129.7 million, its highest ever since its establishment 23 years ago.
Revenue rose 7.4 per cent to RM196.4 million.

"Capacity will grow at least 30 per cent a year and we aim to increase our production to 17.7 billion pieces by year-end and 21.7 billion pieces by 2011," said Thai, who owns 20.6 per cent of the company.

Supermax, which exports to 145 countries, has the capacity to produce 14.4 billion pieces of rubber gloves, or around 15 per cent share of the world market.

Ongoing refurbishment works and construction of a plant in Meru, with additional capacity of 2.3 billion pieces of gloves a year, are expected to contribute to the group's future performance.

Supermax 4th quarter net surges 40-fold on strong global demand

SUPERMAX Corp Bhd (7106), the country's second largest rubber glove maker, said its fourth-quarter net profit rose almost 30-fold on strong global demand, increased output from refurbished lines and higher prices commanded for rubber gloves sold.

Net profit for the three months ended December 31 2009 rose to RM44.1 million, from RM1.5 million in the year-ago period.

Revenue increased 7.4 per cent to RM196.4 million. Earnings per share were 16.55 sen versus 0.56 sen.

It also proposed a tax-exempt final dividend of 8 per cent per share of 50 sen for the fiscal year 2009 amounting to RM10.8 million and special tax exempt dividend of 9 per cent amounting to RM12.2 million.
Supermax said the management had resolved to focus on certain key areas including receivables management, inventory management, productivity management and financial management at the beginning of 2009 and the concerted efforts put in have yielded strong results.

"In addition, the group has also been focusing on producing high margin products resulting in higher manufacturing profits in the current quarter," it told Bursa Malaysia yesterday.

Aside from higher manufacturing income, the group also benefited from improvements in its distribution income, as reflected in higher profit contributions from its associate companies.

It also benefited from the favourable foreign exchange translation as the currencies of the countries in which the associate companies operated had all appreciated against the US dollar.

For the 12-month period, Supermax net profit jumped almost three-fold to RM129.7 million from RM47 million in the previous year.

Supermax said the rubber glove industry continues to be on a strong growth path despite the current global financial challenges and global economic uncertainties.

Ongoing refurbishment works as well as the construction of its new Meru plant with added capacity of 2.3 billion pieces of gloves per year, is also expected to contribute to the group's performance going forward.

Supermax's 4Q earnings surge nearly 30 times to RM44m

KUALA LUMPUR: Supermax Corp Bhd reported a strong set of earnings in its fourth quarter ended Dec 31, 2009, with net profit surging nearly 30 times to RM44.11 million from only RM1.48 million a year ago as it benefit from higher margins for its rubber gloves and contributions from its associates.

It said on Friday, Feb 19 that revenue rose 7.4% to RM196.42 million from RM182.82 million a year ago. Earnings per share were 16.55 sen versus 0.56 sen. It proposed a tax exempt final dividend of 8% per share of 50 sen for FY09 and special tax exempt dividend of 9%.

Supermax said revenue benefited from strong global demand, increased output from refurbished lines and higher prices commanded for rubber gloves sold.

The group recorded a near 30 times increase in profit after tax from RM1.5 million to RM44.1 million. This is despite the fact that the group had to incur a one-time exceptional interest expense of RM5.4 million arising from having to immediately expense off the balance of the serial bond upfront fee following the full redemption of the bond in November 2009," it said.

Supermax said the management had resolved to focus on certain key areas including receivables management, inventory management, productivity management and financial management at the beginning of 2009 and the concerted efforts put in have yielded strong results.

"In addition, the group has also been focusing on producing high margin products resulting in higher manufacturing profits in the current quarter," it added.

Aside from higher manufacturing income, the group also benefited from improvements in its distribution income, as reflected in higher profit contributions from its associate companies. It also benefited from the favourable foreign exchange translation as the currencies of the countries in which the associate companies operated had all appreciated against the US dollar.

Its operational expenses in 4Q were lower at RM150.72 million versus RM163 million a year ago. Its associate companies contributed RM13.36 million compared with losses of RM10.32 million a year ago.

For FY09, net profit rose 176% to RM129.75 million from RM46.99 million while revenue was slightly higher at RM814.83 million versus RM811.82 million.

25 M'sian stocks that are expected to outperform the FBM KLCI

Standard & Poor’s recently issued a comprehensive report on Malaysia and the 25 top stocks it was looking to outperform the market in the Year of the Tiger. Below is an excerpt of that report.

AS we enter the Year of The Tiger, we can expect more volatility, especially with the current market valuations providing lesser room for disappointment.

Stock picking is likely to be more important this year, with fewer bargains available particularly as headwind builds.

Although share prices are not as cheap as in early 2009, forward price-to-earnings ratios (PERs) remain undemanding and we believe equities will remain favourable, given the limited alternatives.

We have selected 25 Malaysian stocks that we expect to outperform the FTSE Bursa Malaysia KL Composite Index (FBM KLCI) this year.

SUPERMX

Friday, February 19, 2010
Supermax - Distributing more angpows?
Potential profit jump; maintain BUY. Yesterday, Business Times penned an article on its interview with Supermax’s managing director, Dato’ Seri Stanley Thai. His comments were very much in line with our view but his forecasts of industry demand and supply differ from our estimates which are based on information gathered from our industry contacts. Also noteworthy was management’s confirmation of a special dividend if it exceeded its net profit target for FY09. We retain our earnings forecasts pending Supermax’s release of its 4Q results next week. We expect its core net profit to be stronger on both qoq and yoy basis. As industry prospects remain favourable, we maintain our BUY call on Supermax. Our target price remains intact at RM7.96, still pegged to a 20% discount to Top Glove’s target P/E of 16.5x. Potential re-rating catalysts include the anticipated strong 4Q results, continuing uptick in glove demand and upcoming capacity expansion. Supermax remains one of our top picks for the rubber glove sector.


STOCK analysts are staying bullish on the prospect of rubber glove makers this year after a sterling 2009, convinced that the strong demand seen last year can be sustained.

Rubber glove companies including Supermax Corp Bhd (7106) have far outperformed the FTSE Kuala Lumpur Composite Index last year, having soared between 94 per cent and 540 per cent compared to a 45 per cent gain in the local benchmark.

"Despite the strong performance, their price earnings multiples remain at a discount to the market instead of the premium that they historically traded at," CIMB Research wrote in a note on January 6.

The sector stands at an average financial year 2010 price earnings multiples of 9.4 times, or just half the valuations during their peak at the end of 2006 and early 2007, it noted.
"We believe that the rubber glove companies are still undervalued and offer tremendous earnings upside due to their expansion programmes," CIMB said.

The stockbroker kept its overweight stance on the sector, with Adventa and Supermax remaining its top picks in the industry.

Its target price for Supermax was pegged at RM7.96, representing a 56 per cent potential upside from its last traded price of RM5.12. Adventa's target price was put at RM5.44.

"Many of the companies under our coverage are undertaking major capacity expansion, which will ensure earnings growth that is superior to the market," CIMB said, adding that factors that could extend the re-rating for the sector include the continued rising demand from the healthcare industry, ongoing capacity expansion and strong earnings growth.

Capital gains aside, Affin Investment Bank believes that shareholders may potentially be rewarded by another round of bonus issue or special dividends.

"Judging from past track record, glove manufacturers have been generous in rewarding shareholders via at least two to three rounds of bonus issues since their initial public offerings, backed by continued profitability and swelling retained earnings," Affin pointed out in a January 11 report.

Affin estimates that companies under its coverage, namely Kossan Rubber, Supermax and Top Glove, have enough share reserves to give out bonus shares.

"While this will not have any fundamental impact, any bonus issue exercise is positive to sentiment and share price," Affin said.

4 New CIMB Warrants

4 new call warrants from CIMB will be listed on 11 Feb 2010:
New Warrants Expiration Type Ex Price Ratio
IJMLAND-CB 30/12/2010 Call MYR 2.0000 3 : 1
UMW-CC 30/12/2010 Call MYR 6.0000 6 : 1
TCHONG-CB 30/12/2010 Call MYR 3.0000 3 : 1
HARTA-CA 30/12/2010 Call MYR 7.0000 8 : 1

Top Glove falls after shares trade ex-div

TOP Glove Corp, the world’s largest rubber-glove maker, fell to the lowest level in almost five weeks in Kuala Lumpur trading after the shares traded ex-dividend.

The stock dropped 1.7 per cent to RM10.82 as of the 12.30 pm local time break, set for the lowest close since January 11.

The shares went ex-dividend, meaning that investors buying the stock from today won’t be entitled to the company’s dividends. - Bloomberg

DJ MARKET TALK: Latexx 4Q Net Profit Likely +20% Vs 3Q - CIMB

0723 GMT [Dow Jones]Glove maker Latexx (7064.KU) likely to report 4Q net profit of MYR17 million, up 20% on quarter, up 1.4X on year, says CIMB Research's analyst Terence Wong; attributes increase to additional annual production capacity of 800 million pieces of gloves in 4Q, higher nitrile products; estimates FY09 net profit at MYR51.9 million vs MYR15.2 million year ago. Keeps Outperform call with unchanged MYR5.44 target. "Potential share price triggers include the upcoming strong results and improving earnings ability, driven by its major expansion plans and move towards premium products," says Wong; adds Latexx's 3-year EPS CAGR of 104.4% is highest in industry. Company expected to release 4Q earnings after 0900 GMT Friday. Stock last down 1.3% at MYR3.69. (ECH)