For QE31/12/2016, Axiata reported a net loss of RM309 million while revenue rose 6% q-o-q or 8% y-o-y to RM5.79 billion. Revenue increased q-o-q with all the segments registered positive growth. For the period, operating costs increased by 13.2% q-o-q to RM3,809.9 million mainly arising from higher operation cost in Indonesia, Bangladesh and Sri Lanka. As a result, EBITDA margin decreased by 4.1 percentage points to 34.0%. The Group reported an after tax loss of RM272.1 million arising from higher depreciation and amortization due to network modernization in Indonesia and Bangladesh, net finance cost, foreign translation losses and share of losses from associates and joint ventures. The foreign exchange (forex) losses amounted to RM685 million at PAT level, was mainly due to the USD exposed debt incurred from the acquisition of Ncell.
Table; Axiata's last 8 quarters' P&L
Graph: Axiata's last 40 quarters' P&L
Axiata (closed at RM4.53 today) is now trading at a PER of 79x (based on last 4 quarters' adjusted EPS of 5.7 sen). This is not a meaningful guide. A better matrix to look at is the Price to Book ratio of the stock today as compared to the last 2 occasions when it made a loss. This is given below:
I think Axiata is fairly priced compared to its book value or NTA p.s.
Axiata is in a downtrend line, RR. Its immediate support will come from the horizontal line at RM4.45 & then the recent low at RM4.10.
Chart 1: Axiata's weekly chart as at Feb 23, 2017_15.00 (Source: MalaysiaStock.Biz)
Chart 2: Axiata's monthly chart as at Feb 23, 2017_15.00 (Source: MalaysiaStock.Biz)
As I believe Axiata can recover in the next 1-2 quarter(s), I rate it as a HOLD or a contrarian BUY if it drops to RM4.00-4.20.
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