One of major telco services provider in the regional market
Axiata was birthed out of the demerger exercise in 2008 and the company has registered an outstanding growth since. This is supported by contributions from Malaysia’s Celcom, XL (Indonesia), Dialog (Sri Lanka), Robi (Bangladesh), Smart (Cambodia), Ncell (Nepal), Edotco and digital business. The group is servicing around 290mn subscribers, almost half of ASEAN population.
Strategic M&A
For Celcom-Digi merger, we opine that the synergistic benefits arising from the combination of expertise from both Telenor and Axiata will be more than compensate for the earnings dilution. The merger deal will also build a world-class Innovation Centre that will focus on development of 5G. In regards with the proposed acquisition of tower assets from PLDT, we are positive on this deal as this transaction comes together with long-term sale and leaseback MSA terms. It is worthwhile to note that the Philippine government is planning to increase the number of telco towers across the nation, a great potential for Axiata, in our view.
Anticipate Axiata to maintain more than 70% dividend payout ratio.
Historically, we learnt that the company has been paying more than its dividend policy of distributing 30% of net profits and this is expected to continue in the foreseeable future. Assuming a 75-80% dividend payout ratio, we expect Axiata to declare 11sen/12sen/12sen dividend per share for 2022E/2023F/2023F respectively, translating into an attractive 3.6%/3.9%/4.1% yield at current price level.
Re-initiate with a ‘BUY’ call and TP of RM4.07
We re-initiate coverage on Axiata with a BUY call at TP of RM4.07. Our valuation is derived based on sum-of-part (SOP) valuation with each of the operating company valued using EV/EBITDA metrics. Note that the share price has recently rallied by almost 10% month-to-date (MTD) on the back of positive sentiment on telco stocks following the formation of a new government.
Source: BIMB Securities Research - 28 Nov 2022
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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