Axiata shares hit highest level in more than a year

SHARES of Axiata Group Bhd (6888) rose to their highest in more than a year, as investors and analysts became more optimistic of its prospects after the group gained market share from rivals.

Its shares rose 4.3 per cent to RM3.89 yesterday, with more than 56.3 million shares changing hands. At one point during the day, it was traded as high as RM4.01.

The company recorded a net profit of RM558.28 million in the quarter to December 31 2009, clawing back its net loss of RM515.25 million in the previous corresponding period. Its full-year net profit more than tripled to RM1.65 billion.

"The key driver of our more positive view on Axiata is Celcom, the improved product offerings and marketing strategies of which continue to deliver sector-leading revenue and Ebitda growth," said Macquarie in a research report recently.
It has an "outperform" view on the company with a target price of RM4.20.

Celcom is the only incumbent mobile operator in Malaysia that gained both revenue and subscriber market share in 2009. It also registered 15 consecutive quarters of revenue and earnings growth.

"We expect Celcom to maintain its robust growth in earnings from subscriber growth and expanding revenue contributions from wireless broadband," said ECM Libra Investment Research.

What attracted investors was not only the strength of its local operations, but also the improving overseas operations. Its Indonesian operations PT XL Axiata Tbk registered a net profit of 1,709 billion rupiah (about RM624 million) in 2009, compared with a net loss of 15 billion rupiah (RM5.5 million) a year ago. XL's full-year revenue was also up by 14 per cent to 13,880 billion rupiah (RM5 billion).

"We have revised our FY10-11 EPS (earnings per share) upwards as Axiata's major operating companies (except for Dialog) continue to deliver stellar sequential improvements .., as subs growth has been robust while Ebitda margins have improved," said ECM Libra, which upgraded its recommendation to "buy", with a target price of RM4.15.

MIDF Research also upgraded its call on the mobile operator, from "neutral" to "buy", with a target price of RM4.50.

So far this year, the company's shares have appreciated by more than 27 per cent, with a market capitalisation of over RM32.85 billion.