Axiata and TM shares take a beating on weaker results
Jamaludin says Axiata unfazed by possible non-cash impairment
PETALING JAYA: Shares of Axiata Group Bhd and Telekom Malaysia Bhd (TM) were hammered down after they reported weaker-than-expected first quarter results.
Axiata shares were down 12.6% or 64 sen to close at RM4.43 while TM shares slipped 4.76% or 20 sen to RM4 per share.
Axiata had recorded a net loss of RM147.4mil for the quarter, down from a net profit of RM239mil a year ago, mainly due to losses on dilution of the group’s investment in India.
The group’s revenue for the period was also down 2.3% to RM5.75bil due to unfavourable forex translation arising from the stronger ringgit.
TM, on the other hand, saw its net profit fall 31.8% to RM157.16mil from RM230.43mil previously.
On Tuesday TM’s share price was down 50 sen to close at RM4.20.
Public Investment Bank Research said its poor set of results was largely due to lower revenue contribution from voice, data and others as well as higher tax costs.
However, the research house said there was attractive valuation for TM as it is trading at near -1SD of 19x forward PER compared with its three-year historical average of 25x forward PER.
“As such, we upgrade TM from neutral to trading buy,” it said.
Alliance DBS Research, in a note about Axiata, said that “while there are improvements across most of its operational companies, we believe this is balanced out by the competitive pressures in key markets (particularly in Malaysia and Indonesia) as well as continued deteriora- tion in associates’ earnings.
“We think the share price could be well supported due to the potential listing of edotco.
At a press conference in Kuala Lumpur yesterday, Axiata president and group CEO Tan Sri Jamaludin Ibrahim said the stronger ringgit, the adoption of MFRS15 and losses on dilution of the group’s investment in India had impacted its earnings for the quarter, despite most of its operational companies seeing improved performance.
The merger between its affiliate, India’s Idea Cellular and Vodafone is expected to be completed in the next quarter, and the dilution post merger will reduce its stake to a simple investment, from 16% to about 8%.
Once the merger takes place, he said, the group would face a technical impairment of between RM2bil and RM3bil.
He stressed, however, that the group was not concerned about this as the impairment was non-cash and would not have an impact on its normalised earnings and dividend-paying ability.
On the potential listing of edotco, he said the group was exploring all possibilities.
“Last month we started talking to bankers on how to fund this huge growth to become the world’s fifth largest independent tower company.
“There are many ways – an initial public offering, private placement or an investment by the group – we are looking at our options as we speak,” he said.
we speak.