Kuala Lumpur, Feb 20 – AMBank Research is maintaining its BUY call on Axiata Group (Axiata) with a lower sum-of-parts (SOP)-based fair value of RM6.00\/share (from an earlier RM6.15\/share), which implies a FY16F EV\/EBITDA of 7x \u2013 half of Singapore Telecommunications Ltd\u2019s present 14x.\u00a0<\/p>\n
\u201cWe have only fine-tuned FY16F net profit which has already incorporated weaker 4QFY16 earnings assumptions impacted by Celcom\u2019s likely weak earnings and 19.8%-owned Idea Cellular\u2019s loss.\u201d<\/p>\n
\u201cHowever, our lower SOP stems from a reduction in associate contributions from 19.8%-owned Idea Cellular (Idea) in India and 28.5%-owned M1 in Singapore, which has reduced Axiata\u2019s FY17F-FY18F earnings by 5%-10%. Idea, which registered a 4QCY16 loss of INR3.8 billion vs. a 3QCY16 net profit of INR915 million is expected to remain in the red in FY17F on persistently depressed average revenue per user (ARPUs)as new cellular rival Reliance Jio Infocomm\u2019s free voice and 4G data service promotion, which began in September 2016, has been extended from Dec 31, 2016 until March 2017.\u201d<\/p>\n
While the research house is positive on the appointment of Celcom\u2019s new CEO Michael Keuhner, who joined in September last year, AM Research expects incremental progress in operational improvement against the background of intense competition amid the re-entry of TM\u2019s webe service.\u00a0<\/p>\n
Given the poor performance from Idea and M1, Axiata\u2019s 4QFY16 results, scheduled to be announced Feb 23, 2017, are likely to be weak, but should be largely in line with AM Research\u2019s assumptions.\u00a0<\/p>\n
\u201cWhile operational issues will continue to drag Axiata\u2019s earnings in the medium term, we highlight that the stock currently trades at a bargain FY17F EV\/EBITDA of 5x, far below 13x for Maxis and Digi. Additionally, dividend yields are attractive at 4%,\u201d it states.<\/p>\n
\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"
Kuala Lumpur, Feb 20 – AMBank Research is maintaining its BUY call on Axiata Group (Axiata) with a lower sum-of-parts (SOP)-based fair value of RM6.00\/share (from an earlier RM6.15\/share), which implies a FY16F EV\/EBITDA of 7x \u2013 half of Singapore Telecommunications Ltd\u2019s present 14x.\u00a0 \u201cWe have only fine-tuned FY16F net profit which has already incorporated […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[33],"tags":[],"class_list":["post-138","post","type-post","status-publish","format-standard","hentry","category-markets"],"_links":{"self":[{"href":"https:\/\/malaysian-business.com\/portal\/wp-json\/wp\/v2\/posts\/138","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/malaysian-business.com\/portal\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/malaysian-business.com\/portal\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/malaysian-business.com\/portal\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/malaysian-business.com\/portal\/wp-json\/wp\/v2\/comments?post=138"}],"version-history":[{"count":1,"href":"https:\/\/malaysian-business.com\/portal\/wp-json\/wp\/v2\/posts\/138\/revisions"}],"predecessor-version":[{"id":6542,"href":"https:\/\/malaysian-business.com\/portal\/wp-json\/wp\/v2\/posts\/138\/revisions\/6542"}],"wp:attachment":[{"href":"https:\/\/malaysian-business.com\/portal\/wp-json\/wp\/v2\/media?parent=138"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/malaysian-business.com\/portal\/wp-json\/wp\/v2\/categories?post=138"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/malaysian-business.com\/portal\/wp-json\/wp\/v2\/tags?post=138"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}