KUALA LUMPUR (Jan 26): OSK Research said Axiata Group remains an inexpensive regional mobile exposure and is its top regional telecoms pick, trading at 13.5 times FY12 EPS.
It said on Thursday it is maintaining a Buy on Axiata with a fair value of RM5.60 while its last traded price was RM4.81.
OSK Research said Axiata’s 19.7%-owned India associate, Idea Cellular reported strong 9% on-quarter (up 27.2% on-year) growth in revenue (2QFY12: +2.2% on-quarter) for the December quarter (3QFY12) to INR50.3 billion.
The stronger earnings came on the back of seasonally higher MOUs (+7.3% on-quarter) and improved subscriber growth of 6.2% on-quarter (+30.1% on-year). The strong topline growth led to the 1.2 percentage points on-quarter expansion in group EBITDA margin to 26.7%.
“The strong results from Idea reaffirm our view on the improved revenue and earnings outlook for Idea in an environment of rising tariffs following the massive price war in 2009-2010.
“Axiata remains an inexpensive regional mobile exposure and is our top regional telecoms pick, trading at 13.5x FY12 EPS. Idea contributes less than 10% of Axiata’s net earnings and 5% of our SOP valuation on the stock. We have tagged a 20% discount to Idea’s valuation to account for regulatory risks in India,” said OSK Research.
It said on Thursday it is maintaining a Buy on Axiata with a fair value of RM5.60 while its last traded price was RM4.81.
OSK Research said Axiata’s 19.7%-owned India associate, Idea Cellular reported strong 9% on-quarter (up 27.2% on-year) growth in revenue (2QFY12: +2.2% on-quarter) for the December quarter (3QFY12) to INR50.3 billion.
The stronger earnings came on the back of seasonally higher MOUs (+7.3% on-quarter) and improved subscriber growth of 6.2% on-quarter (+30.1% on-year). The strong topline growth led to the 1.2 percentage points on-quarter expansion in group EBITDA margin to 26.7%.
“The strong results from Idea reaffirm our view on the improved revenue and earnings outlook for Idea in an environment of rising tariffs following the massive price war in 2009-2010.
“Axiata remains an inexpensive regional mobile exposure and is our top regional telecoms pick, trading at 13.5x FY12 EPS. Idea contributes less than 10% of Axiata’s net earnings and 5% of our SOP valuation on the stock. We have tagged a 20% discount to Idea’s valuation to account for regulatory risks in India,” said OSK Research.
