Telekomunikasi Indonesia (TLKM ID) Strong data business to...

Page | 1 | PHILLIP SECURITIES INDONESIA

MCI (P) 019/11/2014 Ref. No.: INDO2015_0005

Telekomunikasi Indonesia (TLKM ID)

Strong data business to drive revenue growth

INDONESIA | TELECOMMUNICATION | INITIATION

23 March 2015

Company Overview

Telekomunikasi Indonesia (“Telkom”) is a state-owned enterprise and

currently the largest telecommunication services and network provider

in Indonesia with 25,011 employees.

Telkom’s shares are traded on the Indonesia Stock Exchange (“IDX”),

the New York Stock Exchange (“NYSE”), the London Stock Exchange

(“LSE”) and Publicly Offered Without Listing (“POWL”) in Japan.

Currently has 9 direct subsidiaries, 21 indirect subsidiaries, 3 affiliated

companies, and 2 joint venture companies with business portfolio

includes fixed wireline and fixed wireless, mobile, internet and data

communication, network, interconnection, and other services.

Initiate with “ACCUMULATE” rating with price target of IDR 3,350.

Investment Merits

One of the largest Indonesian companies. Telkom has market

capitalization close to IDR 300 trillion, one of the largest companies in

Indonesia.

Indonesia’s leading Telecommunication Company. Telkomsel is the

market leader in cellular with more than 139 million customers, capturing

42% market share.

The first big carrier to commercially launch 4G LTE. Telkomsel is the

first operator that succeeded the use of 4G LTE network in Bali and Jakarta

in FY14, and soon to be launched in six other big cities.

Our top picks stock in Indonesia’s Telco industry. Telkom is a highly

profitable company with double-digit ROA and ROE for the last 5 years with

a low net gearing of 0.27x.

Has the highest ARPU among peers. Telkom successfully increased its

ARPU to IDR 40,000 in FY14 following an improvement in its tariffs

structure, the highest as compared to its competitors such as Indosat and

XL.

Risk Factor

Fluctuations in Indonesian Rupiah. A depreciation of Rupiah could

result in an increase of Telkom’s capital expenditure as most of its capex

are priced in reference to foreign currencies, while a substantial amount of

its revenue is in Rupiah.

Intense competition within the sector. The competition against

Indosat and XL, potential cause further decrease in number of subscribers

to Telkomsel, especially in cellular and fixed line services.

Rapidly changing environment. The telecommunication industry is

characterized with rapid and significant changes in technology which

requires huge investment and significant capital in those areas.

ACCUMULATE CMP IDR 2,930

TARGET IDR 3,350 (+14.3%) COMPANY DATA

O/S SHARES (BN) : 100.80

MARKET CAP (IDR TN) : 294.34

MARKET CAP (USDBN) : 22.41

52 - WK HI/LO (IDR) : 2,985/2,160

3M AVG. VOLUME (MN SHARES): 78.53

PAR VALUE (IDR) : 500

MAJOR SHAREHOLDERS, %

GOVERNMENT : 52.6%

PUBLIC & OTHERS : 47.4%

PRICE VS. JCI

80

90

100

110

120

130

140

Feb-14 May-14 Aug-14 Nov-14 Feb-15

TLKM IJ JCI Rebased

Source: Phillip Securities Indonesia Research

KEY FINANCIALS

IDR bn FY14E FY15E FY16E FY17E

Revenue 89,696 95,369 102,252 109,692

EBIT 29,377 31,106 33,854 37,066

Net Profit 14,638 16,714 18,514 20,979

EPS, IDR 151 172 191 216

PER, x 19.00 19.46 17.57 15.50

P/BV, x 3.23 3.29 2.88 2.47

ROE, % 21.6 21.3 20.5 20.4

Debt/Equity (%) 27.2 28.1 24.8 23.0

Source: Phillip Securities Indonesia Research Est.

Valuation Method: Discounted Cash Flow (DCF)

Milka Mutiara (+62 57900800) [email protected]


TELEKOMUNIKASI INDONESIA INITIATING COVERAGE

Investment Action

We initiate coverage on Telkom with “Accumulate” rating. We favour the

stock for its (1) strong growth in data business following the launch of

its 4G LTE network, (2) strong and still-growing smart phone

penetration in Indonesia, and (3) aggressive investment and consistent

strategy. Based on our FY15F P/E of 19.46x and a P/B of 3.29x, we

derive our target price of IDR 3,350 with potential upside of 14.3%

(excluding DPS of IDR 69).

Telkom’s revenue and expense breakdown

Revenue Breakdown Expense Breakdown

Cellular38%

Fixed Line10%

Intercon-nection

5%

Data42%

Network2%

Others3%

Operations, maintenance, telco services

37%

Depreciation and

amortization28%

Personnel16%

Intercon-nection

8%

G&A5%

Others6%

Source: Company, PSI Research

Telecommunication Industry in Indonesia

Rapid growth industry in Indonesia

Indonesia’s telecommunication industry has undergone fast-paced

development since 1993 following the introduction of a scheme by the

government in cooperation with state owned enterprise, Telkom, to

install millions of fixed telephone lines from 1993-1997. The rise of

mobile telephony later transformed the communication landscape across

the archipelago by connecting friends, relatives and business users in

both major islands and far flung areas of the country.

In 1997 the country only had 1 million cellular phone subscribers and it

grew dramatically to reach 11.3 million subscribers by 2002 surpassing

the number of fixed line users driven by more affordable mobile phone

tariffs resulting from an increased price competition in the mobile sector

due to the deregulation in 1999. The cellular phone sector continued to

grow at a dramatic pace with the number of users tripling for five years

from 2005 – 2010, reaching 211 million customers in 2011 (Directorate

General of Post and Telecommunications) with the average Indonesian

owning 1.68 sim cards per person.

Indonesia is the fourth largest mobile market in the world and also the

world’s top ten 3G markets, with broadband users skipping fixed

connections and going straight to mobile phone. The rapid move in

smart phones means the mobile operators play a major part in providing

With the fourth largest mobile market in the world and a fast growing middle class segment as well as Indonesia’s economy, are expected to drive further demands for telecommunication.



internet services. Fast growing middle class segment as well as

Indonesia’s economy that has shown stable and respectable growth in

recent years are expected to drive further demands for

telecommunication and data services.

Tight competition among Telco operators

Telecommunication companies and mobile phone manufacturers now

face a stiff competition in attracting and retaining users where majority

of them are youngsters being aged between 10-39 years and therefore

very price sensitive and could easily switch from one provider to

another. These youngsters have grown up being accustomed to using

mobile telephones as their main communication device which made the

market highly receptive to the latest trends in netbooks and tablets

computers thereby creating a new realm of competition for devices, data

and roaming packages.

The Indonesian mobile telecommunication industry is dominated by

three main players namely Telkomsel, a subsidiary of Telkom, Indosat

which is also partly state owned and XL Axiata which is a private sector

company. Other competitors include Hutchinson Telcom’s 3 network,

Axis Telecom Indonesia and other smaller players are in the code

division multiple access technology market (CDMA).

Downtrend of fixed line business

Compared to the growth in fixed wired-line telephony for decades that

eventually stagnated at only around 9.4 million lines, the

telecommunication tele-density in Indonesia, however, experienced a

very significant jump in less than 20 years to more than 310 million

lines, driven primarily by the growth of cellular phones, as well as fixed

wireless telephone. The cellular telephony business continues to grow

through innovations as well as constant adaptation to changes in market

demands and consumer preferences. While the growth in voice and

Short Messaging Service (“SMS”) has shown signs of declining in recent

years, at the same time, it marks a strengthening in the growth of data

communication and mobile internet access services.

Strong growth of data telecommunication services

Despite the low internet penetration in the country as compared to

peers in the region, people in Indonesia are becoming increasingly

adoptive to global trends in digital lifestyle, as shown especially in the

increase of number of smartphone usage with more affordable prices as

well as higher levels of social networking activities. We expect that the

growth of mobile internet services will continue to be fueled on the back

of the increasing popularity for smartphone, tablets, and other internet-

enabled mobile devices in Indonesia. Faster data transmission for

wireless networks, and increasingly affordable smart devices and mobile

internet services, all are also contributing to the strong growth.



Company Profile

History

Telkom Milestones

Source: Company

Company Overview

Telkom is a State-Owned Enterprise and currently the largest

telecommunication services and network provider in Indonesia. Telkom

serves millions of customers throughout Indonesia with a complete

range of telecommunications services that include fixed wireline and

fixed wireless telephone connections, cellular services, network and

interconnection services, as well as internet and data communication

services. Telkom also provides services in information, media and

edutainment, including cloud-based and server-based managed

services, e-Payment and IT enabler services, Pay-TV, as well as e-

Commerce and other portal services.

Business Model and Business Segment

Purposes: Telkom’s vision is to become a leading Telecommunication,

Information, Media, Edutainment and Services (“TIMES”) player in the

region. Telkom is also dedicated to provide “more for less” TIMES

services and to be the role model as the best managed corporation in

Indonesia.

Business Segments: Telkom Indonesia is involved in 7 business

segments: 1) Cellular, 2) Fixed line, 3) Interconnection, 4) Internet and

data communication, 5) Network, 6) Ancillary and others. The following

diagram provides segmental information by revenue.



Business segment by revenue

Source: Company, PSI Research

1) Cellular services

Telkom provides cellular communications services using GSM technology

through its subsidiary, Telkomsel. Telkom has two primary types of

cellular products and services, postpaid services represented by

“kartuHalo” and prepaid services represented by simPATI (can be

purchased at any cellular shop and top up vouchers) and Kartu As (bills

customers based on seconds of talk time).

2) Fixed line services

Fixed line services include: (1) fixed wireline and (2) fixed wireless

services. Fixed wireline include local, direct long distance (“DLD”), and

international services, as well as other telecommunications and

supporting services. Fixed wireless services include local and direct long-

distance CDMA-based telephone services.

3) Interconnection services

Telkom also earns revenue from other telecommunications operators

that utilize its extensive network infrastructure in Indonesia, both for

calls that end at or transit via its network.

4) Internet and data services

Currently, data services is the largest contributor to Telkom’s revenue at

42%. Telkom provides a wide range of products and services in data

telecommunication and internet services such as: broadband internet

(under the commercial name “Speedy” and “Speedy Instan”), cellular

data communication (with the commercial name “Flash”, blackberry

package and non package data services), SMS services, internet access

services, Wi-Fi/hotspot, etc.

5) Network services

Telkom directly manages the provision of network services to customers

including Telkom’s business partners, commercial businesses and OLOs.

Telkom’s network services include satellite transponder leasing, satellite

broadcasting, VSAT, audio distribution, as well as satellite-based and

terrestrial-based leased lines.



6) Ancillary and others

Telkom has exclusive agreements with some investors under revenue

sharing agreements to expand fixed line phone services, public card

phones (including their maintenance), data and internet networks, and

ancillary facilities related to telecommunications.

Telkom’s business and portfolio

Source: Company

Subsidiaries

Until FY14, Telkom has 9 direct subsidiaries, 21 indirect subsidiaries, 3

associated companies, and 2 joint venture companies.

Telkom’s corporate structure

Source: Company



Investment Thesis

One of the largest Indonesian companies

Currently, Telkom has market capitalization close to IDR 300 trillion,

surely one of the largest companies in Indonesia. Telkom’s market cap

grew rapidly from mid-October last year where the market cap was only

around IDR 280 trillion. Currently, in telecommunications sector, Telkom

has the biggest market capitalization, while its competitors, Indosat only

has IDR 23.2 trillion and XL with IDR 33.7 trillion market capitalization.

Market leader in Indonesia telecommunication industry

Telkomsel is the market leader in cellular with more than 139 million

users. Together with Indosat and XL, they control up to 80.4% of the

total market share. As of FY13, Telkomsel controlled 42.4% of cellular

market, while Indosat and XL controlled 19.2% and 18.7%, respectively.

Going forward, Telkomsel continues to maintain its mobile subscribers

base at 42% market share. Moreover, being the eldest player in Telco

services, Telkom also has the largest telephone line capacity. The

number of lines with Telkom’s service amounting to 10.65 million units

in FY13 or 99% of the total number of lines in service.

The first big carrier to commercially launch 4G-LTE

Telkomsel has been granted the license to commercialize the new 4G-

LTE services by The Ministry of Communications and Information.

Telkomsel is the first operator that succeeded the use of 4G LTE network

in Bali and Jakarta in FY14, and soon to be launched in six other big

cities. The 4G-LTE improves the quality of Telkomsel services for its

customers who require fast access and data processing, which will

increase its value-added in terms of speed.

Our top picks stock in Indonesia’s Telco industry

Telkom is a highly profitable company with double-digit ROA and ROE

for the last 5 years with a low net gearing of 0.27x. Telkom capitilizes

on strong growth from its subsidiary, particularly Telkomsel, due to

extensive usage of mobile data and customer-based services. Telkomsel

has strong competitive advantage which related to its network coverage

and product innovation. We expect strong gains from Telkom’s data

business to help offset slowing mobile subscribers growth in Indonesian

market.

Has the highest ARPU among peers

As of 3Q14, Telkom has the highest average revenue per user (ARPU) of

IDR 39,000 as compared to XL with only IDR 36,000 and Indosat with

IDR 37,000. Telkom continued to successfully increase its ARPU to IDR

40,000 in FY14 following an improvement in its tariffs structure which

contributed to 8.1% increase in revenue to IDR 89.7 trillion for the year.

We believe Telkom can maintain its high ARPU along with its quality

improvement following the commercialization of 4G LTE.



Risk Factor

Fluctuations in Indonesian Rupiah

A depreciation of Rupiah could result in losses on foreign exchange

translation, significantly affect its total expenses and net income and

reduce the USD amounts of dividends received by shareholders. The

depreciating rupiah also increased the Rupiah cost for Telkom’s capital

expenditure as most of its capex are priced in reference to foreign

currencies, mainly USD and Euros, while a substantial amount of its

revenue is in Rupiah.

Intense competition within the sector

Telkomsel’s competition against Indosat and XL, potential cause further

decrease in number of subscribers, especially in cellular and fixed line

services. The increasing popularity of mobile voice services also weighed

on Telkom’s revenues derived from its wireline voice services. Moreover,

Telkom’s fixed wireless telephone business also faces competition from

an increasing number of operators, including Bakrie Telecom and

Indosat, as well as mobile cellular services, SMS, VoIP services, and

email.

Rapidly changing environment

The telecommunication industry is characterized with rapid and

significant changes in technology which requires huge investment,

significant capital and human resources to support the development of

relevant competencies within the sector. In addition, new products and

services may be expensive to develop and the risk of new comers in the

marketplace is also visible.

Higher dividend payout

An increase in dividend payout potentially lowers retained earning for

Telkom, hence diluting its fair value. We expect Telkom to distribute

40% dividend payout in FY14-19F, lower than 70% payout ratio in FY13.

The decrease in fair value varies from 0.6% to 3.2% for every 10%

additional dividend payout ratio in FY14-19F.

Investment Correlation

The correlation between Telkom’s stock price and the Jakarta Composite

Index (JCI) has been 62.9% positive over the past 12 months. Among

Indonesian telco companies, Telkom’s share price movement has the

highest correlation with the JCI.

Telkom’s share price movement among telco sector companies

and its correlation with the JCI over the past 12 months

Correlation - r JCI

Telekomunikasi Indonesia 62.9%

Indosat 12.8%

XL Axiata 32.8%

Smartfren 16.1%

Average 31.2%

2000

2500

3000

Feb-

14

Mar

-14

Apr

-14

May

-14

Jun-

14

Jul-1

4

Aug

-14

Sep-

14

Oct

-14

Nov

-14

Dec

-14

Jan-

15

Feb-

15

TLKM IJ JCI - rebased

Source: Bloomberg, PSI Research

Telkom’s share price movement has 62.9% positive correlation with the JCI over the past 12 months.



Financial Review and Forecast

Capital Expenditure

Based on the management guideline, Telkom is expected to allocate

capex of IDR 24 trillion or roughly 25% of its revenue in FY15 compared

to 22% in FY14. Its subsidiary, Telkomsel, would require IDR 10 trillion

to build cloud computing and 12,000 new BTSs. While the rest of IDR 14

trillion will be used for infrastructure development and other

subsidiaries.

Additional Debt

Based on FY14 result, Telkom increased its total borrowings to IDR 23.5

trillion compared to IDR 20 trillion in 2013. Currently, the net gearing is

0.27x, lower than Telco industry average of 0.60x. Given the low cash

flows expectation in FY15 and FY16 we reckon that next investments

can largely be funded externally and increases its net gearing.

Earnings Forecast

We expect to see significant growth of 14% in PATMI in FY15 to IDR

16.73 trillion compared to IDR 14.64 trillion in FY14, and double-digit

earnings growth for the next 5 years. FY15 earnings will mainly come

from: (1) strong growth in data business following the launch of its 4G

LTE network, (2) strong and still-growing smart phone penetration in

Indonesia, and (3) aggressive investment and consistent strategy.

Management target for FY15:

(1) Expanding business penetration into 3 more countries (Taiwan, Arab

Saudi, New Zealand) to reach target of 10 countries by 2015.

(2) The ARPU of its data business services to grow 30% backed by its

4G LTE technology.

(3) Higher annual capex budget of IDR 22-25 trillion in FY15.

(4) Revenue to grow 20%, higher than the Telco industry average in

Indonesia.

We forecast the earnings of Telkom by estimating subscription growth

and ARPU growth for its various business segments. In our estimates,

we assume Telkom’s ARPU in cellular business to decline 2 – 5% in FY15

– FY19F while data business to increase 0.5 – 2% in the same period.

Dividend

Telkom’s dividend policy is determined every year through the General

Meeting of Shareholders (GMS). In FY13, Telkom paid full-year dividend

of IDR 102, translating into payout ratio of 70%, compared to 65% in

FY12. We expect lower dividend payout ratio of 40% in the future along

with government policy to decrease State-owned enterprises’ dividend

payout.



Telkom’s dividend and payout ratio over FY10-15F

Source: PSI Research Est.

Valuation

We initiate coverage on Telkom with Accumulate rating at price target of

IDR 3,350. Our price target is derived using DCF valuation model with

10.1% WACC and 3% terminal growth. While favourable demographics,

strong growth in smart phone market share and rising digital lifestyles

provide good growth prospects for Telkom, we deemed that the stock

may be fairly valued at the moment, with FY15F P/E of 19.46x. Positive

price catalyst includes concrete plans for Telkom’s expansion network

and area.

We compared Telkom with its telecommunication peers both regionally

and globally. The average industry P/E for the peers currently stands at

24.08x for FY15F. Telkom is currently trading at 23.7% discount

compared to its peers while delivering a higher Return on Equity (ROE)

and net margin. Our price target is IDR 3,350, with an upside potential

of 14.3% which remains attractive to us.

Telkom’s DCF valuation and WACC calculations

2013 2014F 2015F 2016F 2017F 2018F 2019F

EBIT 27,846 29,377 31,106 33,854 37,066 40,683 44,618

Add: Depreciation 4,087 13,547 9,356 10,750 12,743 12,396 13,595

Less: Tax Expense (2,302) (2,403) (2,177) (2,370) (2,595) (2,848) (3,123)

Less: Capex (24,898) (20,000) (23,842) (25,563) (27,423) (29,450) (31,659)

Less: Change in Working Capital (4,207) (1,454) (2,283) (3,556) 1,199 (162) (178)

Free Cash Flow (FCF) 526 19,067 12,160 13,116 20,990 20,619 23,252

Equity Value 2015F WACC Components

Terminal growth, g (%) 3% Debt to Total Capitalization 21.4%

WACC 10.1% Equity to Total Capitalization 78.6%

Cumulative PV of FCFF 189,093 Tax Rate 7.0%

Terminal FCFF 136,179 Cost of Debt 7.0%

Outstanding shares ('mn) 97,101 Risk free rate 7.43%

Target Price 3,350 Market risk premium 3.20%

Beta 0.96

Cost of equity 10.89%

WACC 10.06% Source: Company, PSI Research Est.

Our TP of IDR 3,350 implies P/E of 19.46x with WACC of 10.1% and terminal growth of 3%.



Peer group valuation comparison

2015F 2016F 2017F 2015F 2016F 2017F 2015F 2016F 2017F 2015F 2016F 2017F 2015F 2016F 2017F15Y 16Y 17Y 15Y 16Y 17Y 15Y 16Y 17Y 15Y 16Y 17Y 15Y 16Y 17Y

PT. Telekomunikasi Indonesia Tbk. TLKM IJ 22.59 19.46 17.57 15.50 3.29 2.88 2.47 1.59 1.69 1.77 22.82 21.89 21.68 2.06 2.28 2.58 IndonesiaPT Indosat Tbk. ISAT IJ 1.73 30.33 21.43 n.a 1.43 1.41 n.a 4.13 3.92 n.a 4.13 6.59 n.a 1.87 2.66 n.aPT XL Axiata Tbk. EXCL IJ 2.85 34.98 20.35 14.48 2.45 2.28 2.16 5.85 5.21 4.74 7.08 10.32 14.28 1.10 2.09 3.03 Mean 28.26 19.78 14.99 2.39 2.19 2.31 3.86 3.61 3.25 11.34 12.93 17.98 1.68 2.34 2.80 Median 30.33 20.35 14.99 2.45 2.28 2.31 4.13 3.92 3.25 7.08 10.32 17.98 1.87 2.28 2.80 SingaporeStarhub Ltd. STH SP 5.27 19.19 18.93 18.04 45.11 37.86 28.84 10.26 10.02 9.49 254.11 219.15 172.15 4.79 4.88 5.09 Singapore Telecommunication Ltd. ST SP 47.86 17.52 16.55 15.33 2.66 2.55 2.44 14.70 14.50 14.00 15.47 15.54 16.07 4.20 4.46 4.84 M1 Ltd. M1 SP 2.58 18.87 17.81 17.25 3.26 3.15 3.11 10.89 10.41 10.11 47.02 47.42 47.69 4.86 5.04 5.35 Mean 18.53 17.76 16.87 17.01 14.52 11.46 11.95 11.64 11.20 105.53 94.04 78.64 4.62 4.79 5.09 Median 18.87 17.81 17.25 3.26 3.15 3.11 10.89 10.41 10.11 47.02 47.42 47.69 4.79 4.88 5.09 MalaysiaTelekom Malaysia Bhd. T MK 7.07 26.39 24.37 21.73 3.40 3.33 3.21 7.66 7.31 6.88 12.74 13.85 14.74 3.50 3.77 4.17 Digi.Com Bhd. DIGI MK 13.20 23.22 22.31 21.18 65.31 32.08 64.64 14.66 13.95 13.22 298.44 304.44 333.89 4.26 4.43 4.63 Maxis Bhd. MAXIS MK 14.45 26.73 25.04 24.02 12.01 12.63 13.49 13.86 13.46 13.10 43.45 50.47 58.55 4.18 4.35 4.43 Mean 25.45 23.91 22.31 26.91 16.01 27.11 12.06 11.57 11.07 118.21 122.92 135.73 3.98 4.18 4.41 Median 26.39 24.37 21.73 12.01 12.63 13.49 13.86 13.46 13.10 43.45 50.47 58.55 4.18 4.35 4.43 Overall industry mean 24.08 20.48 18.06 15.44 10.91 13.63 9.29 8.94 8.51 78.36 76.63 77.45 3.42 3.77 4.10 Overal industry median 26.39 20.35 17.25 3.26 3.15 3.11 10.89 10.41 10.11 43.45 47.42 47.69 4.18 4.35 4.43

ROE (%) Div Yield (%)Company Ticker

Market

Cap (USD

BN)

P/E (x) P/B (x) EV/EBITDA (x)

Source: Bloomberg, PSI Research Est.

SWOT Analysis



FYE Dec FY2013 FY2014 FY2015F FY2016F FY2017F FYE Dec FY2013 FY2014 FY2015F FY2016F FY2017F

Income Statement (USD Mn) Balance Sheet (USD Mn)

Revenue 82,967 89,696 95,369 102,252 109,692 PPE 86,761 94,809 101,013 107,009 114,029

EBITDA 43,626 46,508 49,128 53,216 58,009 Investment 304 1,767 2,137 3,584 3,942

Depreciation & Amortization 15,780 17,131 18,022 19,362 20,943 Others 7,811 10,557 13,023 15,832 17,062

EBIT 27,846 29,377 31,106 33,854 37,066 Total Non-current Assets 94,876 107,133 116,173 126,425 135,033

Net Finance (Expense) / Income (668) (576) (296) 88 578 Inventories 509 474 605 607 673

Other Items 0 0 0 0 0 Account Receivables 6,026 6,465 6,784 7,379 7,967

Associates & JVs (29) -17 0 0 0 Cash 14,696 17,672 26,138 32,147 45,148

Profit Before Tax 27,149 28,784 30,810 33,943 37,644 Others 11,844 9,151 11,373 12,373 12,468

Taxation (6,859) (7,338) (6,676) (7,158) (7,678) Total Current Assets 33,075 33,762 44,900 52,507 66,256

Profit After Tax 20,290 21,446 24,134 26,785 29,966 Total Assets 127,951 140,895 161,073 178,932 201,288

Non-controlling Interest 6,085 6,808 7,420 8,271 8,987 Short Term Loans 432 1,810 3,500 3,500 3,500

PATMI 14,205 14,638 16,714 18,514 20,979 Account Payables 11,600 11,830 11,736 13,501 12,955

Others 16,405 18,146 19,969 21,731 24,650

Total Current Liabilities 28,437 31,786 35,205 38,732 41,105

FYE Dec FY2013 FY2014 FY2015F FY2016F FY2017F Long Term Loans 14,731 15,743 17,481 17,133 18,762

Per Share Data (USD) Others 7,359 7,241 9,401 10,298 9,608

EPS, reported 146.29 150.75 172.13 190.67 216.05 Total Non-current Liabilities 22,090 22,984 26,882 27,431 28,370

DPS 102.40 60.30 68.85 76.27 86.42 Non Controlling Interest 16,882 18,318 20,320 22,274 28,731

BVPS 699.54 797.36 886.96 1,019.41 1,161.35 Shareholder's Equity 60,542 67,807 78,666 90,494 103,082

FYE Dec FY2013 FY2014 FY2015F FY2016F FY2017F

FYE Dec FY2013 FY2014 FY2015F FY2016F FY2017F Valuation Ratios

Cashflow Statement (USD Mn) P/E (X) 14.70 19.00 19.46 17.57 15.50

CFO P/B (X) 2.70 3.23 3.29 2.88 2.47

Net Income 14,205 14,638 16,714 18,514 20,979 EV/EBITDA (X), adj 1.38 1.47 1.59 1.69 1.77

Adjustments 5,158 6,997 3,033 5,492 361 Dividend Yield (%) 4.76% 2.10% 2.06% 2.28% 2.58%

WC Changes (4,207) (1,454) (2,283) (3,556) 1,199 Growth & Margins

Cash generated from ops 951 5,543 751 1,936 1,560 Growth

Others 0 0 0 0 0 Revenue 0 8.11% 6.32% 7.22% 7.28%

Cashflow from ops 15,156 20,181 17,465 20,450 22,539 EBITDA 0 6.61% 5.63% 8.32% 9.01%

CFI EBIT 0 5.50% 5.89% 8.84% 9.49%

Capex, net 24,898 20,000 23,842 25,563 27,423 Net income 0 3.05% 14.18% 10.77% 13.31%

Others (35,776) (32,019) (32,241) (35,090) (35,739) Margins

Cashflow from investment (10,878) (12,019) (8,399) (9,527) (8,316) EBITDA margin 52.58% 51.85% 51.51% 52.04% 52.88%

CFF EBIT margin 33.56% 32.75% 32.62% 33.11% 33.79%

Share Issuance 0 0 0 0 0 Net Profit Margin 17.12% 16.32% 17.53% 18.11% 19.13%

Loans, net of repayments 1,108 1,012 1,738 (348) 1,629 Key Metrics

Dividends (9,944) (5,855) (6,686) (7,406) (8,392) ROE (%) 23.46% 21.59% 21.25% 20.46% 20.35%

Others 6,130 (343) 4,348 2,840 5,540 ROA (%) 11.10% 10.39% 10.38% 10.35% 10.42%

Cashflow from financing (2,706) (5,186) (599) (4,914) (1,223)

Net change in cash 1,572 2,976 8,466 6,009 13,001 Net Debt/Cash 1.38 1.33 1.06 0.87 0.67

CCE, end 14,690 17,666 26,132 32,141 45,141 Net Gearing (X) 0.26 0.27 0.28 0.25 0.27 Source: Company, PSI Research Est.



Contact Information (Singapore Research Team) Management Chan Wai Chee (CEO, Research - Special Opportunities)

[email protected] Research Operations Officer Jaelyn Chin [email protected]

Macro | Equities Market Analyst | Equities US Equities Soh Lin Sin [email protected] Kenneth Koh [email protected] Wong Yong Kai [email protected] Bakhteyar Osama

[email protected]

Finance | Offshore Marine Real Estate REITs Benjamin Ong [email protected]

Caroline Tay [email protected] Dehong Tan [email protected]

Telecoms | Technology Transport & Logistics Consumer

Colin Tan [email protected] Richard Leow, CFTe

[email protected] Shane Goh [email protected]

Contact Information (Regional Member Companies) SINGAPORE

Phillip Securities Pte Ltd Raffles City Tower

250, North Bridge Road #06-00 Singapore 179101 Tel +65 6533 6001 Fax +65 6535 6631

Website: www.poems.com.sg

MALAYSIA Phillip Capital Management Sdn Bhd

B-3-6 Block B Level 3 Megan Avenue II, No. 12, Jalan Yap Kwan Seng, 50450

Kuala Lumpur Tel +603 2162 8841 Fax +603 2166 5099

Website: www.poems.com.my

HONG KONG Phillip Securities (HK) Ltd

11/F United Centre 95 Queensway Hong Kong

Tel +852 2277 6600 Fax +852 2868 5307

Websites: www.phillip.com.hk

JAPAN

Phillip Securities Japan, Ltd. 4-2 Nihonbashi Kabuto-cho Chuo-ku,

Tokyo 103-0026 Tel +81-3 3666 2101 Fax +81-3 3666 6090

Website: www.phillip.co.jp

INDONESIA PT Phillip Securities Indonesia

ANZ Tower Level 23B, Jl Jend Sudirman Kav 33A Jakarta 10220 – Indonesia

Tel +62-21 5790 0800 Fax +62-21 5790 0809

Website: www.phillip.co.id

CHINA Phillip Financial Advisory (Shanghai) Co Ltd

No 550 Yan An East Road, Ocean Tower Unit 2318,

Postal code 200001 Tel +86-21 5169 9200 Fax +86-21 6351 2940

Website: www.phillip.com.cn

THAILAND Phillip Securities (Thailand) Public Co. Ltd

15th Floor, Vorawat Building, 849 Silom Road, Silom, Bangrak,

Bangkok 10500 Thailand Tel +66-2 6351700 / 22680999

Fax +66-2 22680921 Website www.phillip.co.th

FRANCE King & Shaxson Capital Limited

3rd Floor, 35 Rue de la Bienfaisance 75008 Paris France

Tel +33-1 45633100 Fax +33-1 45636017

Website: www.kingandshaxson.com

UNITED KINGDOM King & Shaxson Capital Limited

6th Floor, Candlewick House, 120 Cannon Street, London, EC4N 6AS

Tel +44-20 7426 5950 Fax +44-20 7626 1757

Website: www.kingandshaxson.com

UNITED STATES Phillip Futures Inc

141 W Jackson Blvd Ste 3050 The Chicago Board of Trade Building

Chicago, IL 60604 USA Tel +1-312 356 9000 Fax +1-312 356 9005

Website: www.phillipusa.com

AUSTRALIA Phillip Capital Limited

Level 12, 15 William Street, Melbourne, Victoria 3000, Australia

Tel +61-03 9629 8288 Fax +61-03 9629 8882

Website: www.phillipcapital.com.au

SRI LANKA Asha Phillip Securities Limited

No-10 Prince Alfred Tower, Alfred House Gardens, Colombo 03, Sri Lanka Tel: (94) 11 2429 100 Fax: (94) 11 2429 199

Website: www.ashaphillip.net

INDIA PhillipCapital (India) Private Limited

No.1, 18th Floor Urmi Estate

95, Ganpatrao Kadam Marg Lower Parel West, Mumbai 400-013

Maharashtra, India Tel: +91-22-2300 2999 / Fax: +91-22-2300 2969

Website: www.phillipcapital.in

TURKEY PhillipCapital Menkul Degerler

Dr. Cemil Bengü Cad. Hak Is Merkezi No. 2 Kat. 6A Caglayan 34403 Istanbul, Turkey

Tel: 0212 296 84 84 Fax: 0212 233 69 29

Website: www.phillipcapital.com.tr

DUBAI Phillip Futures DMCC

Member of the Dubai Gold and Commodities Exchange (DGCX)

Unit No 601, Plot No 58, White Crown Bldg, Sheikh Zayed Road, P.O.Box 212291

Dubai-UAE Tel: +971-4-3325052 / Fax: + 971-4-3328895

Website: www.phillipcapital.in

mailto:[email protected]












http://www.poems.com.sg/

http://www.poems.com.my/

http://www.phillip.com.hk/

http://www.phillip.co.jp/

http://www.phillip.co.id/

http://www.phillip.com.cn/

http://www.phillip.co.th/

http://www.kingandshaxson.com/

http://www.kingandshaxson.com/

http://www.phillipusa.com/

http://www.phillipcapital.com.au/

http://www.ashaphillip.net/

http://www.phillipcapital.in/

http://www.phillipcapital.com.tr/

http://www.phillipcapital.in/



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