Axiata (BUY, TP: RM4.82)

Axiata (BUY, TP: RM4.82)

2Q10 Results: 30% Dividend Policy
§ 2Q10 Revenue, EBITDA, and EBIT were in-line with our forecasts but above consensus.
§ Announced dividend policy of 30%.
§ Axiata will not be participating in Thailand’s 3G bidding.
§ Group level tax rates should trend lower.
§ Celcom’s revenue growth weakened qoq due to weaker prepaid ARPU and slower postpaid net adds but has potential for further EBITDA margin improvements.
§ XL is self-financing and will not divest its tower business, still has spare capacity on its 3G network.
§ Robi is taking subscriber market share while Hello faces stiff competition in Cambodia.
§ Our EPS for FY10, FY11 and FY12 is revised by +7.6%, +5.8% and +4.2% respectively.
§ Maintain Buy. Raised target price to RM4.82 (from RM4.78) based on a Sum of Parts methodology. Announcement of the dividend policy is expected to narrow the discount valuations gap with its peers.