Results Update

Axiata has just announced its results for FYE31/12/2009. For QE31/12/2009, its net profit increased by 10.8% q-o-q to RM558 million on the back of a 9.2%-increase in turnover to RM3.69 billion. The improved performance was attributable to increased turnover from all its operating units coupled with lower finance cost & positive contribution from AxB, which offset against lower forex gains & higher depreciation charges incurred by Celcom. Axiata has turnaround from a net loss of RM515 million recorded in QE31/12/2008.


Table 1: Axiata's 8 quarterly results


Chart 1: Axiata's 12 quarterly results

Valuation

As at 10.00am, Axiata was trading at RM3.61. From its last 3 quarters' EPS which averages about 6.5 sen each, Axiata's full-year EPS is estimated to be about 26 sen. As such, Axiata is now trading at a PER of 14 times.

With top-line growth of 15% last year, Axiata's Price/Earnings To Growth ('PEG') ratio is about 0.93 time. A PEG ratio of less than 1 means that the stock is attractive.

PEG ratio = PE / (Growth Estimate + Dividend Yield)
= 14 / (15 + 0)
= 0.93 times

Note: I have substituted Revenue growth for Earning growth due to volatility in Axiata's earning.

Technical Outlook

Axiata broke above its recent high of RM3.50 this morning. Its next resistance is at RM3.70 & thereafter at RM4.00.


Chart 2: Axiata's daily chart as at Feb 24, 2010 (Source: Tradesignum)

Conclusion

Based on improved financial performance, fairly attractive valuation & positive technical outlook, Axiata could be a good stock for either a trading BUY or for long-term investment.