HwangDBS: Axiata valuations more expensive than region

by **Cals** Thu 28 Nov 2013, 10:25

Business & Markets 2013

Written by Chong Jin Hun of theedgemalaysia.com

Thursday, 28 November 2013 09:59

KUALA LUMPUR (Nov 28): Axiata Group Bhd shares are trading at higher valuations versus regional markets. This comes amid a less-optimistic outlook at the telecommunication-network provider's Indonesian unit, HwangDBS Vickers Research Sdn Bhd said.

In a note today, HwangDBS Vickers said Indonesian unit PT XL Axiata Tbk's "muted earnings growth" will have a negative impact on Axiata's near-term outlook.

"Valuations on Axiata are still at a premium relative to regional markets (on a PE basis), and offers muted growth prospects until XL Axiata completes its integration of Axis.

"We maintain our forecast and fully valued recommendation for now, pending Axiata’s analyst call later this afternoon," HwangDBS Vickers said.

HwangDBS Vickers which has a target price of RM5.75 for Axiata shares, has issued its note following the announcement of Axiata's financials yesterday.

Axiata said net profit rose 1% to RM715.05 million in the third quarter ended September 30, 2013 from RM709.92 million a year earlier.

Cumulative nine-month (9MFY13) net profit rose to RM1.97 billion from RM1.94 billion a year earlier. Revenue was higher at RM13.86 billion versus RM13.2 billion.

HwangDBS Vickers said Axiata's 9MFY13 core profit of RM826 million which excludes foreign exchange (forex) losses and one-off gains, came in above HwangDBS' and consensus expectation.

"Excluding forex losses and one-offs, core earnings would have been RM826m, bringing 9M13 net profit to 84% and 80% of our and consensus estimates respectively

"However, EBITDA was in line with expectations," HwangDBS said.