Wednesday, August 10, 2011

CIMB Research maintains Outperform on Axiata

KUALA LUMPUR: CIMB Equities Research is retaining its earnings per share (EPS) estimates, sum-of-parts based target price of RM6.20 or Outperform call on Axiata Group Bhd'' pending the release of its results on Aug 24.

It said on Wednesday, Aug 10 that Axiata remains one of its regional favourites given the potential for dividend surprises underpinned by its strong free cashflow yield.

In line with regional trends, Dialog Axiata, Axiata's Sri Lankan subsidiary is seeing a rising incidence of voice-to-data substitution.

CIMB Research said this was the main surprise from its 2Q11 results conference call.

Other takeaways are i) tariffs remain rational despite the cut in off-net floor rates, ii) further cost savings will take time as most of the low-hanging fruits have been plucked, and iii) capex should remain elevated in the near term as Dialog completes its fibre network expansion.

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