Thursday, December 1, 2011

Axiata falls after one-day surge, active after 3Q results

KUALA LUMPUR (Dec 1): Shares of Axiata Group Bhd snapped its one-day price surge, as investors were quick to lock in gains on Thursday after the release of its third quarter results for the period ended Sept 30.

At 3.45pm, it was down 13 sen to RM4.97 with 10.16 million shares done. It has surged 25 sen to RM5.10 on Wednesday, pushing up the KLCI up by 4.10 points.

The KLCI was up 15.41 points to 1,487.51. Turnover was 1.27 billion shares valued at RM1.32 billion. There were 506 gainers, 281 losers and 271 stocks unchanged.

For the nine months, its earnings fell 15.7% to RM1.801 billion from RM2.137 billion. Its revenue rose 4.9% to RM12.183 billion from RM11.603 billion. At constant currency, revenue would have been up 8%. Earnings before interest, tax, depreciation and amortisation (EBITDA) dipped 0.2% partly due to the strengthening ringgit against local currencies.

In the third quarter ended Sept 30,'' its earnings fell 7.7% to RM589.62 million from RM639.12 million a year ago on foreign exchange translation losses and higher costs.

UOB Kay Hian Malaysia Research said Axiata's core nine-month results were broadly in line with its and consensus 2011 estimates.

However, it expected little excitement from Axiata in the medium term as the group focuses on building broadband capacity in this region. In its latest guidance, Axiata raised its capex budget to RM4.4 billion for 2011 vs RM3.9 billion earlier (guidance). This is due to the aggressive network rollout by XL.

'Hold call and sum-of-parts target price of RM5.20 are under review pending an analyst briefing. Its share price was ramped up at closing yesterday, but we see significant change in the fundamentals of the group to justify the market's excitement. Although we think Axiata has the capacity to pay more dividends, the group is expected to hold on to its cash pile in anticipation of potential in-country consolidation in the medium term,' it said.

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