RESEARCH FIRMS REMAIN OPTIMISTIC OF AXIATA'S FUTURE EARNINGS

KUALA LUMPUR, May 26 (Bernama) -- Research firms remained optimistic about Axiata Group Bhd's future earnings in light of its plans for its regional and digital businesses, despite the group registering losses in the first quarter ended March 31, 2022 (Q1 2022).

Axiata posted a net loss of RM42.97 million in Q1 2022 due to foreign exchange (forex) losses of RM476.9 million, mainly due to its mobile operations in Sri Lanka, while its revenue rose by 6.7 per cent to RM6.47 billion from RM6.06 billion previously.

In a note, Kenanga Research said Axiata's strong external performance has reinforced its view that the group has a lot going on in its regional and digital businesses, making the stock a good hedge against the uncertain operating environment for local mobile network operators (MNOs).

“Axiata has a lot going on, including the acquisition of PLDT Inc’s towers to become the leading independent tower company in the Philippines; Boost and RHB consortium securing a digital banking license; as well as the acquisition of Hipernet Indodata by XL and the Celcom-Digi merger," it said. 

As such, the research house has maintained its ‘outperform’ rating for Axiata, with an unchanged target price (TP) of RM4.25 based on the financial year 2022 estimated (FY22E) enterprise value of RM62.5 billion.

Meanwhile, Maybank Investment Bank Bhd said Axiata's Q1 results were in line with its expectation, taking into account the potentially lower Sri Lanka contribution in the upcoming quarters due to the devaluation of the Sri Lankan rupee.

“Dialog Axiata PLC's revenue metrics have remained healthy; the potential earnings shortfall from Sri Lanka would likely be currency-driven in our view," it said, thus it has maintained its 'buy' call on Axiata with an unchanged TP of RM4.50.

MIDF Research is also maintaining its revenue and earnings forecast for Axiata, after taking into account macroeconomic challenges -- particularly in Sri Lanka -- and regulatory uncertainties.

“Sri Lanka could be facing increased taxes, higher inflation and forex volatilities, while in Indonesia, there is likely a need for operational expenditure reinforcement to navigate the hyper-competitive mobile telecommunications market," it said.

The research firm has maintained its 'buy' call for Axiata, with an unchanged TP of RM4.90.

At 10.20 am, Axiata's share price eased two sen to RM3.17 with 859,300 shares traded.

-- BERNAMA