Earnings Report /
Sri Lanka

Dialog Axiata: 4Q CY19 – Higher usage and cost efficiency drives EBITDA

    Asia Securities
    24 February 2020
    Published byAsia Securities

    We maintain BUY with an unchanged TP of LKR 15.00/share (+19.0% upside; +23.7% TSR). Overall, we see better cost efficiency and higher data usage supporting EBITDA, and depreciation costs to moderate on slightly lower capex intensity in CY20E.

    Adjusted net profit (ex. FX translational gain) for 4Q CY19 was LKR 2.4bn (+53.8% YoY on a low base), and LKR 10.5bn for CY19. CY19 EBITDA got a strong tailwind from cost savings, and given the ongoing initiatives, we expect this momentum to continue in CY20E. Data usage continues its upward trajectory as expected, adding to organic EBITDA. 

    While structurally higher depreciation would be a norm (4G capex in CY17/18 + IFRS 16), with capex intensity coming down after the coverage ramp up, we expect depreciation charges to normalise in CY20E and CY21E.