Axiata Group (AXIATA) states a core net loss of RM499m in1HFY23. Nonetheless, it still declared a 5.0 sen dividend per share, on track to deliver the 10.0 sen total dividend it has committed for FY23.
“YoY, after discontinuing Celcom’s operations, 1HFY23 revenue improved 12%, underpinned by a strong recovery in domestic and regional operations,” said Kenanga Research (Kenanga) in the recent Results Note.
Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) declined 2%, dragged by higher operational and network costs, mostly from Dialog.
In terms of earnings, all its operating OpCos disappointed with the exception of XL Axiata (+25%), Robi (+35%), and Smart (Cambodia) which saw a 23% uptick in earnings.
Its mobile subscription was mixed across all Axiata’s telcos with Dialog leading the way, growing 6% YoY but down 1% QoQ, followed by Robi at +3% YoY and +1% QoQ.
Ncell saw its subscription decline by 1% YoY and QoQ but similarly, blended average revenue per unit saw improvement or stayed stable across all its operating companies, with the exception of Ncell which saw a rebound to RM188 from RM176 in the last reporting quarter.
“Cash balance is still healthy, up by 15% to RM6.3b. AXIATA maintained its commitment for a gross debt to EBITDA of less than 3.0x for the next few years,” said the research house.
To lower its gross debt to EBITDA, AXIATA intend to part-divest its stake in Edotco, turn XL Axiata into a fibreCoon JV with other Investors, and grow the EBITDA of its mobile and infra units.
Axiata is looking forward to the Dialog + Airtel merger. Although it’s a non-cash deal, the merger will improve its market structure in Sri
Lanka. Currently Dialog is one of Sri Lanka’s largest telecommunications company but the largest mobile network operator.
“We continue to like AXIATA for its strong foothold in the growing telco markets in the region, its dominant position in the telco tower sector in the region via edotco, and the strong execution of its M&A strategy, having concluded major acquisitions in Indonesia and the Philippines recently,” said Kenanga.
The research house maintains the Outperform rating with a Target Price of RM3.60. Risks to Kenanga’s call include unfavourable terms with regards to the 5G roll-out in Malaysia, and risks associated with overseas operations.
