Thursday, September 8, 2011

CIMB Research overweight on telcos

KUALA LUMPUR: CIMB Equities Research is maintaining its Overweight stance on the telcos sector, with the latest development stemming from expectations that the the 6% sales tax to prepaid users starting Sept 15.

'Though we did bring up this possibility two months ago, this news is a mild positive surprise as there was talk that the telcos had been asked to delay or shelve the plan given the rising cost of living. DiGi will benefit the most from this development,' it said on Thursday, Sept 8.

However, CIMB Research said it was not raising its earnings numbers, having increased its core net profit forecasts earlier by 6%-8% for DiGi, 4% for Maxis and about 3% for Axiata on the assumption of a 50% recovery rate.

'This news affirms our OVERWEIGHT stance on the sector, which we like for its resilience and attractive dividends. However, our top pick remains Telekom Malaysia which does not benefit from this development,' it said.

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