Following the disposal of its largest earnings generator, Axiata Group’s (Axiata) 1QFY23 reflected the absence of Celcom as a subsidiary, resulting in core net profit falling to RM83.2m. The results came in significantly below our and consensus full-year estimates of RM1.2bn and RM1.3bn respectively. The discrepancy was largely due to losses incurred by its recently-acquired fixed broadband company in Indonesia (Link Net), Dialog in Sri Lanka and Boost. Contribution from edotco was also lower-than-expected due to higher depreciation and financing costs. Given this disappointing set of results, we slash our FY23-25F earnings forecasts by an average of 40%. Consequently, we revise down our SOTP-based TP to RM2.40 and downgrade Axiata to Underperform. Although the group has completed several acquisitions in high-growth emerging markets last year, we do not expect them to make any meaningful earnings contribution to compensate for the loss of income from Celcom anytime soon. In addition, we are also concerned with regulatory and investment risks attached to these operations.
Source: PublicInvest Research - 26 May 2023
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AXIATACreated by PublicInvest | May 03, 2024