GLOBAL BANKS UPBEAT ON AXIATA
JP Morgan expects improving operational performance to boost telco’s share price
SOME global investment banks expect Axiata Group Bhd’s share price to recover significantly after the stock traded more than 30 per cent below its one-year high.
JP Morgan is bullish about Axiata and believes the group’s improving operational performance will drive its share price up.
“A reason for Axiata’s underperformance is due to reports on its RM2.16 billion tax bill for the Ncell Pte Ltd buyout which weighed negatively on its share price. However, this will change,” it said in a note.
Axiata hit a one-year high of RM5.77 on February 19 last year. The stock, however, has been on a downtrend since then and has not traded above its major support level of RM5. It went below RM3 in October last year.
On Friday, after the tax bill news came out, the counter tumbled as much as 20 sen, or 5.13 per cent, to RM3.70 before closing 17 sen, or 4.36 per cent, lower at RM3.73, with 14.22 million shares changing hands.
Axiata ended 1.27 per cent lower yesterday to RM3.89 from Tuesday’s close of RM3.94.
Australia-based Macquarie Group Ltd also expects Axiata’s shares to “outperform” this year, and revised its target price for the telco to RM5.47. This means there is a 39 per cent upside potential for Axiata, the highest among all target prices stated by analysts tracking the telco.
Macquarie is bullish about Axiata even after news on the capital gains tax for Ncell buyout surfaced.
Axiata now has 19 “buy” calls, 10 “hold” calls and zero “sell” call, according to Bloomberg data. Its consensus target price stands at RM4.47.
Other global investment banks that are upbeat about Axiata are Japan-based Nomura, Morgan Stanley, Credit Suisse, HSBC and an independent research boutique focused on the telecommunications and technology sectors, New Street Research.
Meanwhile, JP Morgan has “underweight” calls on Maxis Bhd and Telekom Malaysia Bhd (TM), and a “neutral” call on Digi.Com Bhd.
Macquarie has “outperform” calls on TM and TIME dotCOM Bhd, an “underperform” call on Digi and a “neutral” call on Maxis. Kenanga Research had said Axiata’s relatively decent valuation, coupled with a stronger Celcom Axiata Bhd and earnings recovery at XL Axiata, would drive the group’s share price.