January 19, 2011
Moderate Upgrade for Axiata's Share Price
Following he recent DiGi and Axiata Celcom tie-up ana;ysts are giving the thumbs up to Axiata for a buy. They based this on an expected cash savings of some RM2.2 billion over 10 years.
The two telecommunications companies, Celcom and DiGi had on Tuesday entered into a three-yearnetwork collaboration pact, where both parties will collaborate on sites, access transmission, aggregate transmission and trunk fiber transmission which will cover 218 sites under Phase 1.
Axiata remained OSK Research's top pick for domestic and regional telecoms exposure, given the strong prospects accorded by its regional mobile assets. It said the progressive ramp-up of sites over 10 years implies that the bulk of capital expenditure (capex)/operational expenditure (opex) savings would be back-loaded.
It gave a buy rating and a RM5.80 target price on Axiata, but maintained its neutral call on DiGi with a target price of RM24.40. OSK expects the cost savings from the collaboration to boost DiGi’s earnings from financial year 2012 (FY12) on top of the internal cost-down initiatives already in place.
"We believe the savings in terms of opex will be more apparent for DiGi, given that network cost constitutes 12% of DiGi’s revenue versus 10% for Celcom," it said in a report.
HwangDBS Vickers Research also gave similar calls on Axiata and DiGi, but lower target prices of RM5.10 and RM22.90, respectively.
It said that Celcom Axiata Bhd continues to do well especially in the broadband segment in addition to exposure in fast-growing overseas markets including Indonesia, Sri Lanka and Bangladesh.
Overall, HwangDBS said it is neutral on the DiGi and Axiata Celcom development, given expected marginal impact on FY12F earnings and its discounted cash flow-based (DCF) valuations.
"Assuming 50:50 capex to expense savings ratio (and 50:50 savings proportion between DiGi and Celcom), this could expand DiGi’s and Axiata’s FY12F Ebitda margins by 0.1-0.3 percentage points. It could also raise DiGi’s and Axiata’s target prices by 20 sen and 5 sen respectively," it said.
Meanwhile, Alliance Research has raised its FY12 earnings projection for DiGi and Axiata by 9.2% and 3.8% respectively. It also increased its target price for DiGi to RM26.50 from RM24.10, but maintained that for Axiata at RM5.42 per share.
It said the tie-up is timely as cost efficiency is pivotal in expanding margins given the saturated telco market in Malaysia and anticipates more similar tie-ups between players in the future.
To my best bet, it looks like Axiata will possibly ascend to the RM5.20 level at best bat.
Labels:
Stocks
KUB's Coup De Grace
KUB has dealt a deft masterstroke coup de grace by clinching 40% of a joint venture that would build and operate a 100 km inter-city transit system in Iskandariah with connections to metropolitan Singapore.
This project is worth over RM1 billion and is to be completed over 24 months. The concession period is 25 years.
Masteel and KUB has entered into a Joint Venture Agreement where Masteel and KUB would hold 60% and 40% equity stakes respectively in the JV company, Metropolitan Commuter Network Sdn Bhd.
.
Iskandar Malaysia is a huge regional development of the Federal government with an allocation of RM6.83 billion for its development.
Three years since its turnaround in 2008, KUB is focused on the Property, Engineering & Construction (PEC) side of the contracting income for the immediate term while at the same time to grow its recurring income base.
This project will serve KUB Group not only in the Construction area, but IBS supply on Kempas Baru Development and Facility Management as well, being part of our PEC sector. KUB’s ICT sector will also benefit from the integrated IT systems on ticketing, collection and security.
The project has two components: the “Build-Transfer” of the rail transit infrastructure, and the “Own-Operate” of the inter-city train system. The project is to be undertaken in 3 phases, and expected to be completed within 24 months from project commencement.
The building of the rail transit infrastructure would also be funded by project financing under the Public-Private Partnership scheme (PPP).
KUB Malaysia Berhad is an investment holding company Malaysia, operating in the core business of Information, Communications & Technology (ICT), Property, Engineering & Construction (PEC) and Food-Related Industries.
In the area of PEC, KUB has spread its involvement in the government as well as private projects, amongst others, residential housing projects, vocational and industrial training institute, hospitals, schools, health and nursing Colleges, industrial and high rise buildings. Actively involved in the Industrialized Building System (IBS), KUB also own an IBS manufacturing facility located in Senawang, Negeri Sembilan, which has the capacity to produce 60,000m3 per year of Pre-fabricated Concrete Component such as Precast Columns, Beams, Walls and Staircases as well as 600,000m2 per year of Hollow Core Floor Slabs.
Leveraging on the experience from the PEC sector, KUB has continued to nurture and harness exposure from the experience in facilities management as a strategic platform to upscale its existing FM business through its Total Comprehensive Facilities Maintenance and Management Services.
In the area of ICT, KUB is moving up the value chain to position itself as a total ICT solution provider in Malaysia. Ranked as one of Malaysia’s most prolific ICT companies, KUB’s range of communication services include integrated solution in broadcasting and telecommunication, telecommunication network service and systems engineering services.
Positioned as a specialist provider to Managed IT Services with its own in-house developed product called Probit, KUB also provides specialized services in systems integration; support and maintenance services, consultancy and IT project management.
The major shareholders of KUB are Gaya Edisi Sdn Bhd and Minister of Finance currently holds approximately 29.62% and 22.55% respectively.
Looks like KUB is going great guns.
So watch KUB closely as it may just do a spirited run. It touched 92 sen today and may just hop, skip and jump beyond RM1 very soon if fortune star favours KUB.
Labels:
Stocks
Penang- Investment Powerhouse 2010
Yes, Penang has done it again!
In 2010, this island state ramped up foreign direct investment ofRM12.2 billion, topping all states in Malaysia.
This is more than one quarter of total investments into Malaysia for the year of RM47.2 billion as well as a jump of 465 per cent increase from 2009 according to figures just released by the Malaysian International Development Agency (Mida).
Chie Minister Lim Guan Eng attributed this runaway success to foreign confidence i n the island state's
energy, expertise and entrepreneurship of Penang’s human talent.
He claimed that with the best financial performance, the best state in clean governance, the best green practices and as “the newly-crowned champion amongst all states in attracting investments., Penang leads the way again!
He credited Penang’s success to the hard work of the state’s 1.6 million residents, together with that of the state government as well as federal government agencies such as Mida and the Ministry of International Trade and Industry.
Lim said this was the first time Penang had led other states in investments and was the highest figure ever achieved by the state, totalling 26 per cent of total investments in the country.
He said the success affirms the state administration’s strategy of promoting Penang based on the availability of skilled workers, efficient supply chain management, reliability as a logistics and communications hub, strong protection for intellectual property, good governance, building creativity and innovation in science and technology, and George Town as a liveable and intelligent city.
Yesterday, Minister of International Trade and Industry Datuk Seri Mustapa Mohamed announced a 45 per cent increase in Malaysia’s investment performance from RM32.6 billion in 2009 to RM47.2 billion in 2010.
Well, Penang seems to be doing the right thing. I do hope otehr states can take a leaf from this success to earn brownie points as well to attract foreign investment in 2011.
In 2010, this island state ramped up foreign direct investment ofRM12.2 billion, topping all states in Malaysia.
This is more than one quarter of total investments into Malaysia for the year of RM47.2 billion as well as a jump of 465 per cent increase from 2009 according to figures just released by the Malaysian International Development Agency (Mida).
Chie Minister Lim Guan Eng attributed this runaway success to foreign confidence i n the island state's
energy, expertise and entrepreneurship of Penang’s human talent.
He claimed that with the best financial performance, the best state in clean governance, the best green practices and as “the newly-crowned champion amongst all states in attracting investments., Penang leads the way again!
He credited Penang’s success to the hard work of the state’s 1.6 million residents, together with that of the state government as well as federal government agencies such as Mida and the Ministry of International Trade and Industry.
Lim said this was the first time Penang had led other states in investments and was the highest figure ever achieved by the state, totalling 26 per cent of total investments in the country.
He said the success affirms the state administration’s strategy of promoting Penang based on the availability of skilled workers, efficient supply chain management, reliability as a logistics and communications hub, strong protection for intellectual property, good governance, building creativity and innovation in science and technology, and George Town as a liveable and intelligent city.
Yesterday, Minister of International Trade and Industry Datuk Seri Mustapa Mohamed announced a 45 per cent increase in Malaysia’s investment performance from RM32.6 billion in 2009 to RM47.2 billion in 2010.
Well, Penang seems to be doing the right thing. I do hope otehr states can take a leaf from this success to earn brownie points as well to attract foreign investment in 2011.
Labels:
Economy
Subscribe to:
Posts (Atom)