PETALING JAYA: Axiata Group Bhd
’s recent share price weakness may have created a buying opportunity, with CGS International (CGSI) Research saying the market has largely priced in the risk that the telecommunications group’s infrastructure asset-monetisation programme could face further delays.
In a note to clients, the research house said “checks with management reveal no further updates on its asset-monetisation programme since the first quarter of financial year 2026 (1Q26) results call on May 15, 2026”.
It noted that the stock’s removal from MSCI Malaysia index and fears of the asset- monetisation programme failing have led to its share price easing 12.8% in three months.
The stock was trading at RM1.99 at the time writing.
“At current levels, which place Axiata’s shares at a 38% discount to our revalued net asset value (RNAV) estimate of RM3.19, we believe the market has largely discounted the likelihood of Axiata monetising its infrastructure assets.
“Management had last updated during the 1Q26 results call that it was hoping to complete the asset-monetisation programme in 2026. Our recent checks reveal no further updates.”
CGSI Research said the delay in the proposed sale of edotco is likely due to the complexity of the tower company’s operations across seven countries, as well as potential buyers seeking to exclude certain assets from the transaction.
This could require further negotiations with other parties, including prospective buyers of those assets.
The sale of Axiata’s infrastructure assets remains the key catalyst for a rerating of the stock. However, its forecasts, as well as Bloomberg consensus estimates, do not assume any proceeds from the planned asset sales.
“Based on our current estimates, the sale of edotco and Link Net in 2026 would lift financial year 2027 (FY27) core earning per share by 12% versus a 29% lift if only loss-making Link Net were to be disposed.
“In the event that the edotco sale does not materialise, we believe the market could revert to a yield-based valuation methodology to value Axiata.”
Assuming a 5% dividend yield target (which is similar to mobile operators FY26 dividend yields), Axiata would be valued at RM2.40 per share.
Assuming a Link Net sale and 80% of the incremental profits paid out as profits, this same 5% dividend yield target would value Axiata at RM3.03 a share or about 53% above current levels, CGSI Research said.
With yield-based valuations still healthy, CGSI Research has retained its “add” call on the stock and RNAV-derived target price of RM2.87. In the meantime, it said a sustainable FY26 dividend yield of 5.6% provides downside support.
An analyst with another brokerage said Axiata’s medium-term strategy remains on track, with the group continuing to optimise its portfolio and balance sheet while pursuing higher shareholder returns. This was reflected in its stronger 1Q26 earnings.
The group’s 2026 to 2028 priorities include growing dividends per share by 10% annually, reducing its net debt-to-earnings before interest, taxes, depreciation and amortisation ratio to below two times from 2.51 times in 1Q26 and delivering annualised total shareholder returns in the high single digits
