AXIATA – Fundamental Analysis (1 May 2015)

AXIATA Analysis:-

Excel – http://1drv.ms/1AMZ7wU

Notes – http://tinyurl.com/q95yes3

My View:-

  • Valuation:
    • Absolute EY%:
      • Trailing:
        • FY14 (EPS: 0.272) – Fair value 6.19 (Fair Value Uncertainty: HIGH)
        • R4Q (EPS: 0.265) – Fair value 6.03 (Fair Value Uncertainty: VERY HIGH)
      • Forward:
        • FY15 (EPS: 0.307) – Fair value 6.98 (Fair Value Uncertainty: HIGH)
        • FY16 (EPS: 0.342) – Fair value 7.78 (Fair Value Uncertainty: MEDIUM)
      • EPS applied to reach the current stock price (6.74): 0.297
  • 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.
  • Axiata has introduced its FY15 KPIs, where the group targets to achieve revenue and EBITDA annual growth rates of 4.0% each (at constant currency level). Its capex, meanwhile, is expected at RM4.8b (FY14: RM4.0b).
  • Management alluded to a potentially weak 1Q15 for Celcom, as
    • The IT issues have still not been fully resolved and,
    • There is likely some spill-over impact from the East Coast floods.
  • 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 – Annual Report 2014 (28 Apr 2015) http://www.bursamalaysia.com/market/listed-companies/company-announcements/4719513

At the time of writing, I owned shares of AXIATA.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s