Axiata Group exhibited impressive performance in its first half of Fiscal Year 2024 (1HFY24), according to reports by Kenanga Investment Bank. The company reported robust revenue growth driven by an expanded subscriber base and increased traffic volumes. Enhanced cost management led to a significant rise in earnings despite pressures from higher depreciation, interest costs, and taxes.

Kenanga has maintained its OUTPERFORM rating on Axiata with a target price of RM3.00. Theinvestment bank commends Axiata's effective cost controls and revenue growth, reflecting positively on its investment outlook. They highlight Axiata's ability to exceed consensus expectations and its strong position in the market.

Axiata's 1HFY24 core net profit of IDR1.05 trillion, up 68% year-on-year, aligned with Kenanga's forecasts at 55% of their full-year estimate, while surpassing consensus at 57%. The company's revenue grew by 8% year-on-year, primarily due to data and digital revenue expansion and a 13% increase in traffic. Effective cost management led to a 17% rise in EBITDA and a substantial increase in core net profit.

Despite facing challenges such as higher depreciation, increased finance costs, and a spike in the effective tax rate to 23%, Axiata successfully managed to lower operational expenses through efficient infrastructure and sales & marketing cost reductions. The subscriber base showed a 2% quarter-on-quarter increase in 2QFY24, driven by a surge in prepaid net additions.

Link Net's losses widened in 2QFY24, attributed to higher depreciation and financing costs linked to expanded home passes. Nonetheless, Axiata's continued focus on deleveraging and strengthening its balance sheet, coupled with growth prospects in digital telecommunications and asset monetisation, reinforces its favourable outlook.