M1 shareholders received a pre-conditional offer from Konnectivity Pte Ltd, a company jointly owned by Keppel Corp Ltd and Singapore Press Holdings Ltd, to acquire M1 at SGD 2.06 per share. This is a 26% premium over the last traded price of SGD1.63 (21 Sep 2018 closing). The share price has poor performance after falling 8.43% YTD and touching 9 years low of SGD1.51 recently.
We are positive on the offer as it implies a reasonable 7.5x EV/EBITDA multiple. This is approximately +1 standard deviation of M1’s 2-year blended forward. On top of that, M1’s earnings have also declined at - 2.2% compounded rate over the last 3 years. The poor performance reflected the intense competition from new entrants in the market. On that note, we view this as a good opportunity for Axiata to crystallise its investments and redeploy in other markets or operations that offer better growth prospects.
We revamped our valuation model to factor in the MFRS15 adjustment as well as revisit our key assumptions to reflect the escalating price war in certain markets. We also took the opportunity to review our FX rate assumptions as well as debut our 2020F figures.
We recommend to HOLD with SOP derived TP of RM4.60. Despite of escalated price war and regulation challenges, we believe Axiata would record long-term growth given its exposure in low smartphone penetration and data usage in emerging countries.
Source: BIMB Securities Research - 28 Sept 2018
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AXIATACreated by kltrader | Aug 12, 2024
Created by kltrader | Aug 12, 2024
Created by kltrader | Aug 09, 2024
Created by kltrader | Aug 09, 2024