PETALING JAYA: Axiata Group Bhd
’s earnings are likely to remain lacklustre in the near term and the market is likely to respond positively to the group’s efforts to unlock value, according to Hong Leong Investment Bank (HLIB) Research.
It viewed the potential monetisation of Axiata’s stake in edotco as a key near-term catalyst for share price rerating.
It slightly raised its financial year 2025 (FY25) to FY27 earnings forecasts by 2% to 15% to reflect management’s guidance and fine-tuned assumptions.
It said the second quarter (2Q25) financial results and headline earnings might see a lot of noise due to XLSmart deconsolidation, disposal gains on XLSmart stake sale to Sinar Mas and the disposal loss on the Edotco Myanmar divestment, besides foreign exchange (forex) volatility.
It retained its “buy” call on the stock with a target price of RM2.50 a share.
It said the recent divestment of Myanmar tower assets would pave the way for Edotco’s monetisation, with reports suggesting a Khazanah Nasional Bhd-Employees Provident Fund consortium could acquire Axiata’s 63% stake at a US$3.5bil valuation.
It is strategically consistent, given that Khazanah had acquired the entire 21% stake from Innovation Network Corp of Japan in early March 2025, boosting its ownership in Edotco to 32%. The remaining 5% stake is currently held by Retirement Fund Inc.
Assuming this materialises, Axiata could net around RM6.3bil from the sale. With up to US$475mil in equalisation payments from the concluded XLSmart merger in April 2025, the proceeds would accelerate balance sheet-repair for Axiata.
