Axiata has just announced its results for QE31/3/2010. Its net profit increased by 65% q-o-q or 13-fold to RM921 million while turnover increased by 3% q-o-q or 31% y-o-y to RM3.812 billion. The improved bottom-line was attributable to the following factors:
i) one-off gain on disposal of shares in XL of RM307.5 million; and
ii) one-off gain arising from the completion of the merger of Spice & Idea of RM173.2 million.
If these one-off gains are excluded, Axiata's bottom-line would actually drop when compared to the immediate preceding quarter (QE31/12/2009).
Table 1: Axiata's last 8 quarterly results
Chart 1: Allianz's 13 quarterly results
Valuation
Axiata (closed at RM3.77) is now trading at a PER of 9.2 times (based on last 4 quarters' EPS of 30 sen). However, if we exclude the aforementioned one-off gains of RM480 million, the last 4 quarters' EPS would be about 24 sen. On this basis, Axiata's PER would be about 15.7 times. As such, I believe Axiata is trading at its fair value.
Technical Outlook
Axiata has been consolidating in a "flag" formation over the past 3 months. Recently, it tested the 100-day SMA line & rebounded. That rebound was checked by the 50-day SMA line yesterday. I think Axiata will continue to drift & retest the 100-day SMA line at RM3.63 and, if this support failed, it might test the 200-day SMA line at RM3.36.
Chart 2: Axiata's daily chart as at May 31, 2010 (Source: Tradesignum)
Conclusion
Based on unexciting valuation and mildly bearish technical outlook, Axiata is deemed a candidate for some profit-taking.
2 comments:
Hi Alex,
Could you share your inputs on KPJ please ?. Thank you.
Hi qian qian,
KPJ tested its long-term uptrend line at RM2.65 on May 25. It rebounded & broke above its medium-term downtrend line at RM2.88 last week. yesterday, it pulled away to close at RM2.99. If KPJ can stay above the RM2.90, it is likely to continue with the prior uptrend.
If you are looking to get into this stock, the good entry level is RM2.90.
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