Malaysia
telecommunications sector is of great interests to investors due to its
potential technological advancements and future prospects. Maxis, Digi, Celcom
(Axiata) and XOX are main providers of mobile network services, while Telekom
and Time DotCom are providers of telecommunications infrastructures, such as
fibre optics networks.
Below
is a comparison of the abovementioned counters, in terms of earnings, dividend
return and efficiency of the management. Scores are assigned to each indicator
and added up together to obtain an overall performance score for each manufacturer,
which gives an indication of the glove counters most worthy to invest in.
SECTION
1 – CURRENT EARNINGS, SHARE PRICE AND PRICE TO EARNING (P/E) RATIO
In
terms of share price and earning per share, MAXIS, DIGI and TIMECOM are the top
three performers. Overall, TIMECOM has the highest earning per share value. As
shown by the five-year earning per share trend, most counters earnings remain
steady from year 2015 to 2019. Only Axiata shows a clear decreasing trend. Most
counters show a P/E ratio above 15, which indicates that they are relatively
expensive to invest in.
SECTION 2 – DIVIDEND PER SHARE, DIVIDEND YIELD AND DIVIDEND PAYOUT RATIO
Dividend
payout by listed companies to shareholders is an additional return of
investment to shareholders in addition to the increase of share values.
Generous dividend payout to shareholders will attract more investors to invest
in the counter.
TIMECOM
pays the highest dividend per share overall. However, due to the expensive
share price, the dividend yield is around 2%, which is lower than fixed deposit
rate. Noted MAXIS and DIGI’s result in a dividend yield of more than 3.5%,
which are more worthy to invest in. Also notable that MAXIS, DIGI and AXIATA
are among the most generous in dividend payout, whereby they paid out more than
85% of their earnings in the latest financial year.
SECTION
3 – PERFORMANCE OF THE MANAGEMENT TEAM
The
long term success and profitability of the telecommunications counters will
depend of the efficiency and smart strategies of the companies’ management
team. Some of the indicators offer some ideas on the strength of the management
teams.
Among
the telecommunications counters investigated, it is shown that DIGI has the
highest return on equity, meaning it earns the most profit per unit of capital
provided by the shareholders. Also it has the lowest cost-to-income ratio,
meaning it is able to control operational cost to the lowest possible level. Noted
that TELEKOM has unusually high cost-to-income ratio, indicating that it needs
very high cost to generate per unit of income. Improvement on this aspect is
highly beneficial for future profitability of the counter.
Overall, most of the telecommunications counters
have significant capex spending in order to maintain and improve their networks
capability and provide better services to their customers. This is important
for the future developments of the companies.
SECTION
4 – CASH AND ASSETS VALUES
Sufficient
amounts of assets and cash are important for security of the companies in
case any emergency situations happen. According to below graphs, it is shown
that except for XOX, most of the companies investigated are well-supported
by sufficient amount of assets, such as net tangible assets (NTA), market
capital and cash flows. So, overall these counters are safe to invest in.
SECTION 5 – MARKET CONFIDENCE ON THE COUNTERS
SECTION 5 – MARKET CONFIDENCE ON THE COUNTERS
Overall,
there is great interest invest in the telecommunications counters, such as MAXIS,
DIGI and TELEKOM, which is shown by the number of shareholders and daily
trading volume. Also noted most of these counters are well supported by
institutional investors such as EPF, foreign and local investments funds and
insurance companies.
SECTION
6 – OVERALL PERFORMANCE AND SCORING OF THE TELECOMMUNICATIONS COUNTERS
Each
of the investigated telecommunications counters are assigned a score based on
the above indicators. For each indicator, the best performing counter is given
score 6, the second best performing counter is given score 5 and so on. The
total score for each counter is added up to give an overall performance score
of each counter. According to the below graph, overall best performing counters
are MAXIS, DIGI and TELEKOM, respectively. In conclusion to the above analysis,
these are the three counters most recommended to invest in in the telecommunications
sector.
NOTES:
**DATA BASED ON ROLLING 4 QUARTERS AS OF 12/12/2019 AND THE LATEST
PUBLISHED FINANCIAL REPORTS.
VOL: VOLUME, EPS: EARNING PER SHARE, NTA: NET TANGIBLE ASSET PER SHARE,
DPS: DIVIDEND PER SHARE,
P/E: PRICE EARNING RATIO, ROE: RETURN ON EQUITY, DY: DIVIDEND YIELD, DPR:
DIVIDEND PAYOUT RATIO
Latest
analysis reports of individual telecommunications counters:
1.
MAXIS
2.
DIGI
3.
AXIATA
4.
XOX
5.
TELEKOM
6.
TIMECOM
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encouraged to carry out further research and analysis as well as follow up
latest update information before making any investment decisions.
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