Apr 19, 2010

AXIATA - Hold Target price RM4.20

Axiata (RM3.73; Hold; Price Target: RM4.20; AXIATA MK)
Proposing notes issue

Axiata has proposed to issue USD300m (RM960m) notes to pay down its borrowings and for general purposes. It would be used to repay SGD240m (RM552m) debt, which was raised to acquire MobileOne (M1 SP). The coupon and yield would be determined via a book-building exercise. 

The net proceed after paying of the SGD240m and expenses related to issuing the debt is c. RM400m. Based on 5% interest rate, there is negligible impact to its FY10F and FY11F net profit (<1%) and net gearing (c. 2ppt). 

Hence, we retain our Hold call on Axiata with a sum-of-parts TP of RM4.20. In our opinion, there is no visible catalyst for the near term.

source: HDBS Vickers