(AXIATA MK/BUY/RM4.66/Target: RM5.50)

Axiata signed a share subscription agreement with INCJ and Khazanah to place out 34.1% of unlisted edotco at US$600m, following Bursa Malaysia’s announcement of this move in Dec 16. This values edotco at an equity value of US$1.5b (or RM6.8b) or 12.5x 2016F EV/EBITDA, implying RM4.4b (or RM0.50/share) equity enhancement to Axiata group. We raise our SOTP target price to RM5.50, reflecting the partial stake sale in edotco. Potential listing of edotco could further lift valuations. Maintain BUY.

Source: UOB Kay Hian Research - 19 Jan 2017