Tuesday, November 15, 2011

RHB Research sees Axiata's 3Q earnings moderately higher

KUALA LUMPUR (Nov 15):''RHB Research Institute said Axiata's 3Q11 core net profit will likely come in moderately higher year-on-year basis, underpinned by unexciting but steady performances at XL and Dialog.

It said on Tuesday that 3Q11 was unlikely to surprise on the upside, due to downward pressure on EBITDA margin and marginal appreciation (2%-3% on-year) of the ringgit versus Indonesian rupiah and Sri Lankan rupee.

RHB Research said that 3Q11 revenue likely to grow a mid single-digit on-year, driven largely by: (1) decent revenue growth at XL and Dialog (+7.6% and +10.1% on-year respectively in local currencies); and (2) steady low single-digit revenue growth expected at Celcom.

RHB Research forecasts Axiata's 3Q11 EBITDA margin could trend marginally lower on-year to 46-47% (3Q10: 48%) due to slight margin erosion at XL and Dialog.

'Maintain Market Perform with unchanged sum-of-parts fair value of RM5.35. We see limited upside to Axiata's regional growth prospects, which are moderating, while simultaneously facing lingering regulatory risks in India and Bangladesh,' it said.

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