• Review: AXIATA’s share prices tumbled 51 sen or 10.6% in two days and 11.1% wow after a set of sluggish 4Q16 results, driven by a combination of higher depreciation, interest charges, M&A-related charges, forex losses coupled with underperformance of some OpCos and Associates. Dividends also disappointed, with FY16 DPS of 8 sen, slumping 60% against FY15 20 sen. Hence, HLIB institutional SOP-derived TP was lowered to RM4.65 (-11.9% from RM5.28).
   
• Technical outlook. Axiata’s short term outlook remains negative, reflected by bearish weekly indicators and daily MACD and RSI, despite an oversold daily slow stochastic indicator. Share prices may find an interim support near RM4.11 (52-wk low), followed by RM4.00 psychological support. A breakdown below RM4.00 will witness prices falling further towards major LT support at RM3.89 (26 Aug 2011 low). Conversely, Axiata may resume its uptrend if share prices are able to stage a meaningful breakout above RM4.34-4.48 key resistances, to advance further towards RM4.60 (50% FR), RM4.72 (38.2% FR) and RM4.86 (23.6% FR) levels.
   
•  Action: Buy on dips near short term supports at RM4.00-4.11 levels for technical rebound

Source: Hong Leong Investment Bank Research - 27 Feb 2017