Kenanga Research said in a report yesterday Axiata
KUALA LUMPUR: AmInvestment Research is maintaining its Buy call on Axiata Group with unchanged forecasts and sum-of-parts-based fair value of RM5.32 a share.
It said on Wednesday this translates to an unchanged FY19F enterprise value/ earnings before interest, tax, depreciation and amortisation (Ebitda) of six times, which is one standard deviation below its three-year average of seven times.
“We are neutral on Axiata’s decision to cancel its dividend reinvestment scheme (DRS) on the electable portion of its interim dividend of five sen, which goes ex tomorrow, due to the sharp drop in its share price,” it said.
On Sept 27, Axiata had set the issue price for its shares under its DRS at RM4.26 a share, which represented an 8.8% discount to the theoretical ex-dividend price of RM4.62.
This was based on the five-day volume weighted average market price up to last trading day of Sept 26, prior to the price-fixing date.
However, Axiata’s share price has since dropped by 25% to RM3.48 currently, which is 18% below the share exchange value for the dividends.
“Hence, we view Axiata’s board decision as logical given that its existing shareholders would not be opting for the DRS under the current conditions,” it said.
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