Posted 10 May 2012 - 12:38 PM
PTCL : The Call to Make- PTCL, the largest integrated service provider, posted an increase of 8% in its 9MFY12 revenues. However, the increase could not materialize into profits (down 11%YoY) mainly on account of decrease in operating income (lower return on investments)
- We expect highest growth broadband segment to emerge as a savior as the segment’s revenue stream would offset the revenue decline from fixed line operations FY12 onwards
- The subsidiary’s performance has been better than expectations with an impressive 57% increase in the bottom-line due to substantial cost savings and cheap financing from the parent company (PKR 11bn as of FY12)
- Though the actual increase in Approved Settlement Rate (ASR) has not been finalized yet, our estimates suggest that the establishment of ICH would push up the earnings of PTCL by PKR0.4/sh (in case of USc0.5/min increase in ASR) or PKR0.8/sh (in case of USc1/min increase ASR)
- We have factored in a 15% rise in salaries for the next fiscal year, however, higher than that would shrink the bottom line
- Currently PTCL provides an upside potential of 31% to our target price of PKR21 along with FY13 dividend yield of 8%
(BMA)
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