PETALING JAYA: Analysts expect Axiata Group Bhd
to deliver stronger quarters ahead, supported by improved contributions from XLSmart Telecom as merger synergies progressively ramp up and flow through into earnings.
Additionally, Kenanga Research noted that the telecommunications company’s (telco) digital ventures and TowerCo operations in emerging markets such as Bangladesh, Sri Lanka and Cambodia present growth opportunities.
“This will be driven by low penetration rates and the upcoming roll-out of 5G. Axiata may be able to unlock value through the monetisation of its digital ventures like Boost and ADA, as well as infrastructure assets like Edotco and Link Net,” it highlighted in a report.
However, Kenanga Research said the telco’s near-term earnings from its Indonesian operations may face pressure from elevated depreciation and financing costs at Link Net as it accelerates fixed broadband roll-out across the country, where take-up currently lags deployment.
Intense competition and inflationary headwinds are also likely to add to this pressure.
The research house has maintained its forecasts and a “market perform” call on the stock with a target price (TP) of RM2.70.
Meanwhile, RHB Research said Axiata’s core earnings for the first half of 2025 (1H25) of RM342.4mil represented 46% of its full-year forecast.
The numbers reflected a three-and-a-half-month consolidation of XL Axiata (XLS), and six-and-a-half months for edotCo Myanmar, which was divested on June 15, 2025.
“We deem the results broadly in line, as the progressive paring down of holding company’s debt should yield significant interest savings into 2H25,” it said.
RHB Research believes EdotCo could fetch between RM6.6bil and RM13.1bil, based on an enterprise value (EV) to earnings before interest, taxes, depreciation, and amortisation (Ebitda) multiple of eight to 12.
Following the results call, the research house has adjusted Axiata’s forecast earnings for financial year 2025 (FY25) to FY27 by a 2% rise, 4% decline and 2% fall, respectively, mainly to reflect lower interest charges and housekeeping.
“We maintain a ‘buy’ call with a higher TP of RM2.95 from RM2.70,” RHB Research added.
Meanwhile, BIMB Securities Research said the telco’s management has maintained its KPI of achieving high single-digit Ebit growth for FY25.
It noted that for 1H25, revenue from continuing operations declined 10% year-on-year (y-o-y) to RM5.9bil, mainly due to the stronger ringgit.
“Revenue from operating companies were mostly lower: Robi’s revenue declined 4.4% y-o-y to nine billion Bangladeshi taka, LinkNet declined 14% to 1.6 trillion rupiah, whilst Edotco dropped 11% to RM1.2bil.”
This was partly offset by higher revenue from Dialog and Smart, which grew 5.9% to 87.4 billion Sri Lankan rupees and 3% to US$210mil, respectively, it explained.
BIMB Securities has maintained a “buy” call on the stock with a TP of RM3.
