A month ago, it was hovering at RM2.20. Then came the AGM. CEO Jamaluddin talked about the possibilities of better performance for 2009 as some accounts from their Indian venture have yet to be accounted for. The fall of the rupiah against the USD has also impacted Axiata negatively. However, he assured that all those foreign exchange losses were just paper losses and most have been recouped. He pointed out clearly to shareholders that Axiata is a growth stock, unlike TM. If solid dividends is the objective, they should buy into TM and not go along with Axiata.
AXIATA Group Bhd, Southeast Asia’s second-largest mobile-phone operator, rose to an eight-month high after CIMB Investment Bank raised its earnings estimates as its Malaysian and Indonesian business improves.
The stock jumped 6.3 per cent to 2.87 ringgit at 3.23 pm local time in Kuala Lumpur, set for the highest level since November 12, making it the biggest gainer on the benchmark stock index.
CIMB increased the target price on the company to RM3.30 from RM2.75 it said in a report today.
The company’s Malaysian unit will “deliver the largest positive surprise as it benefits from operating leverage and very robust growth in voice and data subscribers,” Kelvin Goh, an analyst at CIMB Investment, said in a report today (July 16). It’s “taking market share” from its Malaysian rivals, he said.
CIMB raised its profit estimate between 2009 and 2011 by 3 to 7 per cent, saying investors should “switch out” of rival Digi.Com Bhd and buy shares of state-controlled Axiata because of better growth prospects. The company operates in about 10 countries and spent about US$2 billion last year buying a stake in Idea Cellular Ltd in India and merging it with Spice Communications Ltd.
State-controlled Axiata was spun off as the mobile-phone unit of Telekom Malaysia Bhd in April 2008.
Apart from the report,are there any other factors favouring a price upgrade?
To me, apart from being an index stock of the new FTSE CI, Axiata needs to go back to its theoretical price of RM8.65. It fell throughout 2008 because of the impending rights issue. Now that it has cash in its coffers, it can continue on its expansion plan to have a bigger foot-print in Asia.
And who would be driving Axiata back to its former price. Jamaluddin in the efficiency department and Azman Mokhtar with the Khazanah bulldozer!
Watch the price spiral upwards after the slow digestion on late Thursday (16 July) and early Friday morning (July 17). The closing price for today was RM2.86.
Next week should see further consolidation and minimal price increases and then perhaps another big push may be in the offing.
Can you hear the bulldozer moving forward?
