德银-澳大利亚-电信行业-机会转换：买入Telstra，持有Vocus-2019.2.7-79页_2mb

Australasia Telecom Industry Summary: Telstra Buy, Vocus Hold

Core Content Overview

The Australian telecom industry is undergoing significant transformation, particularly in the fixed line and mobile segments, with ongoing consolidation reshaping the competitive landscape. This report evaluates Telstra and Vocus, highlighting their respective opportunities and risks in the evolving market.

Main Points

Telstra - Buy Recommendation

• Valuation and Yield: Telstra offers an attractive fully-franked dividend yield of 5.4%, with a 13% FCF yield and a 1.6x EBITDA gearing. It is currently trading at a slight discount to its international peers on an EV/EBITDA basis.
• Total Return Forecast: The report forecasts a 23% total return over the next 12 months.
• Dividend Sustainability: Telstra is expected to return to a 90% payout ratio by FY21, with cumulative FCF generation of ~21bn AUD over the next five years.
• Cost Out Program: Telstra's "T22" simplification strategy targets $2.5bn in net fixed-cost savings by FY22, with ~70% of this target achievable.
• 5G Positioning: Telstra's 5G network is viewed as a competitive advantage due to forward-compatible infrastructure, allowing for cost savings and customer benefits.
• Target Price: $3.70/share, derived from an equally weighted average of DCF, SOTP, and PE-based methodologies.
• Key Risks: Continued mobile market share losses, competitive pressures on ARPU, NBN-related share loss, and the success of the cost-out program.

Vocus - Hold Recommendation

• Turnaround Status: Vocus is in a turnaround phase with ambitious growth targets, but the market may be over-optimistic about its potential success.
• Valuation Concerns: Vocus is trading at a 14% premium to its historical average and a 20% premium to the market, despite expected earnings decline in FY19.
• Target Price: $3.10/share, implying a 12-month TSR of -7%.
• Key Risks: Failure to achieve growth targets, competition driving down ARPUs or market share.
• Key Upsides: Strong growth in the Corporate market, leading to market share gains and margin expansion, and effective utilization of the ASC project.

Industry Transformation and Digital Shift

• The digital transformation is expected to create new opportunities for telcos as enterprises move towards digital solutions.
• While legacy connectivity revenue declines, the sector is positioned to benefit from digital services and enterprise growth.
• Investor sentiment is shifting towards valuing telcos based on their broader opportunity set rather than just legacy declines.

Mobile Market Challenges and 5G Outlook

• Mobile Revenue Decline: Telstra expects a 6% decline in FY19 (excluding hardware), due to intense competition and price pressures.
• 5G Adoption: Mainstream 5G adoption is expected to be post-FY21, with Telstra better positioned than peers due to forward-compatible infrastructure.
• Subscriber Pressures: Telstra anticipates 1% decline in Postpaid and Prepaid subscribers in FY19, and churn from 5G adoption.
• Competitive Landscape: Competitors are offering more generous bundled and out-of-bundle plans, and lower-cost SIM-only options, increasing pressure on Telstra.

Key Financials and Valuation Metrics

Telstra Financials

• Revenue: Expected to decline at a CAGR of -1% over the next five years.
• Fixed Line Revenue: Projected to fall at a CAGR of -6%, driven by NBN transition.
• Mobile Revenue: Expected to grow at +1% CAGR.
• NAS Revenue: Projected to overtake Fixed Line revenue by FY22.
• Dividend Yield: 5.4%, with net dividend per share (DPS) expected to increase over time.
• Price/Book: 2.6x in FY19, with potential for improvement.
• ROIC: Expected to rise to >10% post-NBN, though currently at 8.4% in FY19.

Vocus Financials

• Revenue: Faces earnings decline in FY19, with a 17x FY19E PE multiple.
• Dividend Yield: Currently 0%, with no dividends expected for the foreseeable future.
• Price/Book: 0.9x in FY19, with potential for growth.
• Valuation: Traded at a premium to both its historical average and the market, suggesting a growth premium may be overestimated.

Conclusion

• Telstra is viewed as a buy due to its attractive valuation, strong FCF generation, and dividend sustainability.
• Vocus is given a hold due to its uncertain turnaround and overvalued market perception.
• Both companies face significant challenges, but Telstra has a more defensive positioning and clearer path to value creation.

Key Risks and Upsides

Appendices

• Appendix A: Telstra Key Personnel
• Appendix B: Vocus Key Personnel

Performance and Valuation Figures

• Telstra's 12-month rolling forward PE and comparison to ASX Industrials indicate fair valuation.
• Vocus's 12-month rolling forward PE shows premium pricing despite earnings decline expectations.