Stock Name: AXIATA
Company Name: AXIATA GROUP BERHAD
Research House: CIMB

KUALA LUMPUR: CIMB Equities Research is cautious about Axiata Group Bhd's potential tie-up with its Thai associate Samart to bid for Thailand's 3G spectrum given the regulatory uncertainties and questions over Samart's balance sheet strength.

The research house said on Thursday, Aug 19 that alternatively, Axiata could acquire a minority stake in True.

'While this is a lower-risk alternative, we think it may not be palatable to Axiata which appears to prefer controlling its operating units,' it said.

CIMB Research said lastly, should Axiata decide to bid for the spectrum, we believe this would dash any hope of an earlier-than-expected dividend payout.

'Separately, we expect Axiata's 2Q10 core net profit to come in at RM640 million to RM660 million, up 6% to 9% QoQ and 131-138% YoY, driven mainly by Celcom, Dialog and Idea,' it said.

CIMB Research said Axiata remains its top Malaysian telco pick and an OUTPERFORM with an unchanged SOP-based target price of RM5.25.

'Likely re-rating catalysts are positive earnings surprises and an earlier-than-expected dividend payout. Our forecasts are 19-22% above consensus,' it said.