14 May 2012
Sharp fall of Indian, Indonesian and Sri lankan currencies and regulatory risks in India and Bangladesh to affect Axiata's valuations as overseas units contributes 34% of Axiata's earnings - CIMB Research
(AXIATA closing stock price today (14.5.2012) was RM 5.39)
CIMB Equities Research is downgrading Axiata from Outperform to Neutral given the sharp fall of the Indian rupee, Indonesian rupiah and Sri Lankan rupee in recent months.
"In addition, regulatory risks in India and Bangladesh are rising with potentially exorbitant spectrum prices. These overseas units contribute to 34% of Axiata's earnings and 37% of our SOP valuation," it said on Monday.
CIMB Research said after announcing higher dividends, Axiata's share price has rerated significantly and valuations are no longer compelling.
However, it said that downside risks should be limited by its rising free cashflow.
"Our target price (RM5.48) is maintained. Switch to StarHub or Jasmine," it said.