Axiata might see further upside, rebounding from a low of RM2.18 in Aug

Axiata Group Bhd share price may rise further after rising from a low of RM2.20 in mid-Nov to RM2.36 currently, Despite the intense competition in the telco industry, the stock has posted positive returns in December in 12 of the last 15 years.

Axiata posted a net profit of RM976.7 million in 3QFY24 versus 3QFY23’s net loss of RM797.4 million. This brings the year-to-date earnings to RM1.17 billion from a net loss of RM1.30 billion previously.

Its earnings were propped up by a massive amount of forex gains in 3Q as a result of US dollar loans recording positive forex translation gains. Consensus forecasts the group will register a core net profit of RM708.9 million for FY24 and RM937.9 million for FY25.

This implies prospective price earnings ratios of 30.6x and 23.1x for the respective years. Axiata’s share price has recorded positive monthly returns in Dec in 12 of the past 15 years with an average return of 4% since 2009. As such, the stock could see further gains from the end-Nov’s closing price of RM2.34 by 31 Dec this year.

Axiata is a diversified telecommunications and digital conglomerate operating digital telcos, digital businesses and infrastructure businesses across a footprint spanning ASEAN and South Asia.

Meanwhile, investors are also excited about the possibility of Malaysian wireless carrier and Indonesian conglomerate PT Sinar Mas Group merging their telecommunications operations in Southeast Asia’s largest economy.

According to Bloomberg, the owners of PT XL Axiata and PT Smartfren Telecom are finalising details of a transaction that could be announced soon. The companies have been discussing the structure of a deal that may involve a mix of cash and shares, and that would create an entity with about 100 million customers.