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Published: Wednesday January 9, 2013 MYT 8:36:00 AM
KUALA LUMPUR: CIMB Equities Research keeps Axiata as an Outperform and its top Malaysian telco pick and among its preferred pick for the region for its potential dividend surprise.
"We expect Axiata to pay out 70%-80% of its FY12 earnings versus its guidance of 65% as Axiata sits on RM7.67bil cash at the holding company and has an underleveraged balance sheet with a net debt/EBITDA of 0.64 times - which we project will fall to 0.5 times in FY13," it said.
CIMB Research said DiGi (Neutral) is its next pick as it thinks there is room for it to rightsize its balance sheet if it pursues a business trust.
Meanwhile, Maxis slashed the price of its entry-level iPhone plan to claw back lost market share from DiGi, while Celcom has revamped its voice plans.
Separately, the telcos have accrued between RM500mil and RM750mil to the regulator for the universal service provision fund.
"Stripping out this sum, their net debt/EBITDA is 0.1-0.2 times higher. We make no changes to our forecasts and reiterate our Neutral stance on the sector as we see no re-rating catalysts," said CIMB Research.
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