Kenanga keeps 'market perform' on Axiata
Kenanga Research has maintained a 'market perform' call on Axiata Group following its proposed acquisition of PT Axis
Telekom Indonesia which is expected to create significant synergies to the group.
Axiata's Indonesia unit, XL Axiata, has signed a conditional sale and purchase agreement to buy 95 per cent stake in PT Axis Telekom Indonesia.
The research house said the proposed US$865 million acquisition is expected to be completed by end-March 2014 or the earliest by end-2013.
XL Axiata expects earnings accretion to materialise in financial year 2015 should the acquisition perform to expectations.
"We, however, believe the expectation is challenging in view of a short-term transition period.
"There is no changes to our financial year 2013-2014 estimates earnings for now," said Kenanga in a research note today.
As such, the research firm was maintaining its "market perform" call on Axiata, with an unchanged target of RM6.70, added the research firm.
Meanwhile, HwangDBS Vickers Research said that it was maintaining 'fully valued' call but has trimmed the target price to RM5.75 and expects the earnings per share dilution in the near-term but this would not affect its 75 per cent dividend policy payout.
However, RHB Research has retained its 'neutral' call on Axiata, with an unchanged standard operating procedures future value at RM6.55.
"While Axiata's future earnings growth will remain challenging due to XL's current under performance and potential earnings dilution to XL from acquiring Axis.
"We think proper execution should boost earnings in the long-term, while capital expenditure savings will allow XL to pay more dividends," it said in a separate note.-- Bernama