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Wednesday, September 14, 2011

Axiata update – ROIC focus rings in investors’ ears (CIMB)

Axiata’s investors day reinforced our OUTPERFORM call and left us with a good impression as the company laid out a clear long-term plan for shareholder value enhancement via a focus on ROIC. This will be driven by lower capex, asset sharing, higher dividends and strategic M&As. We still think that Axiata is downplaying its dividend potential considering that its balance sheet and cashflows are strong, capex is on the decline and there are no imminent M&As. A likely re-rating catalyst is higher dividend payout. Our SOP-based target of RM5.80 and earnings numbers are unchanged.

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