KUALA LUMPUR, June 13 ― Axiata Group Bhd’s (Axiata) shares eased two sen this morning following the latest update on its wholly-owned subsidiary, Axiata Investments UK and 80 per cent-owned Ncell Axiata’s claims against the government of Nepal.
At 10.22am, the counter declined two sen or 0.75 per cent to RM2.65 from RM2.67 with 708,100 shares traded.
Yesterday, it was reported that the claims by its subsidiaries against the government of Nepal were dismissed by the International Centre for Settlement of Investment Disputes.
In a note today, PublicInvest Research said consequently, Axiata’s statement of comprehensive income would be adjusted by approximately RM376.6 million arising from the write-off of related receivable assets.
“Despite the strong potential growth of the emerging markets, we had highlighted our concerns on regulatory and investment risks attached to Axiata’s aggressive diversifications that could lead to further impairments in the future.
“Following its disposal of Celcom, which had been a strong income as well as a cashflow generator of the group, we see a little avenue for Axiata to compensate for this loss in the near term,” it said.
Nonetheless, the research house is maintaining its core earnings forecast for the telco as the write-off would be treated as a one-off and has no cashflow impact.
“We believe our financial year of 2023 (FY 2023) earnings forecast of RM508 million ― which comes in 42 per cent below consensus -- is conservative and fair.
“Although the share price has fallen by about 10 per cent since our downgrade on May 26, we reiterate our 'underperform' rating on Axiata with an unchanged target price of RM2.40,” it added. ― Bernama
