Excel – http://1drv.ms/1HFeLhp
– Fair values:
– Absolute EY%:
– FY13 (EPS: 0.299) – Fair value 6.95 (Fair Value Uncertainty: HIGH)
– R4Q (EPS: 0.265) – Fair value 6.16 (Fair Value Uncertainty: VERY HIGH)
– FY14 (EPS: 0.3) – Fair value 6.97 (Fair Value Uncertainty: HIGH)
– FY15 (EPS: 0.342) – Fair value 7.95 (Fair Value Uncertainty: HIGH)
– EPS applied to reach the current stock price (7.19): 0.309
– I expect Celcom’s earnings to remain stable going forward amid rational competition. XL meanwhile will have to absorb Axis’ losses in the initial years post-merger. The potentially value-accretive tower spin-off exercise is not close to being completed. Besides, AXIATA is still highly leveraged. CROIC and ROIC are just stable, but not improving significantly.
– New acquisition activities are expected, such as Viom Networks Ltd in India. Thus, more funding and gearing will be needed.
– As of now, I do not see new growth catalysts for Axiata in the near term. The Indonesia operation, the group’s second largest segment, is still loss making subsequent to the acquisition of Axis. Higher contributions from other segments are still insufficient to compensate for this loss. In addition, sizeable exposure to forex, particularly the Indonesia operation, also impacted the group’s bottomline.
– I will continue to hold, but won’t accumulate AXIATA in the near term.
Latest Financial – Q3 2014 Financial Report (24 Nov 2014) http://www.bursamalaysia.com/market/listed-companies/company-announcements/1802405
At the time of writing, I owned shares of AXIATA.