Though revenues grew by 51%yoy, EXCL’s highest so far and way above expected industry average, EXCL reported a net loss of Rp15bn in FY08. This is because of 1) Higher operating cost on the back of higher depreciation cost , and network cost as company expands significantly in FY08. 2) Interest expenses (+62%yoy) as debt almost doubled (From Rp9.6tn to Rp18.7tn). 3) Around 50% of debt is US$ leading to huge
forex loss in FY08 of Rp332bn.
Our estimates are way above primarily because of our under estimation of opex. 9M08 operating margin was 22.5% but it declined to 14.5% for the full year as 4Q08 performance was below expectation. 4Q08 reported an operating loss of Rp300bn. Operating margin is a loss of 10.1% in 4Q08. We have a net profit of Rp999bn and consensus of Rp1017bn.
Going forward, we expect less room to grow; Sim-card penetration has reached 70% because of so much competition. We don’t expect any operator to benefit from this competition as the subscriber base gets divided amongst all big players more balanced way, leading to loss-loss situation for all.
We maintain our neutral call. Currently trades at PER09F of 7.9x.
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