Axiata Group Bhd is poised to attract positive investor sentiment following its strategic move to unlock value, despite a subdued near-term earnings outlook. Hong Leong Investment Bank (HLIB) Research maintains an optimistic stance, underscoring the monetisation of Axiata’s stake in edotco as a key catalyst for share price revaluation.
HLIB Research has revised its financial year 2025 (FY25) to FY27 earnings projections upwards by between 2% and 15%, reflecting management’s latest guidance and refined operational assumptions.
While second-quarter (2Q25) financial results are expected to be influenced by several one-off factors—including the deconsolidation of XLSmart, gains from the XLSmart stake divestment to Sinar Mas, and a loss on the disposal of edotco’s Myanmar operations—foreign exchange volatility will also play a role in earnings fluctuations.
Despite these transitional dynamics, HLIB has reaffirmed its “buy” recommendation on Axiata, maintaining a target price of RM2.50 per share.
The recent exit from Myanmar’s tower infrastructure business is seen as a step towards the broader monetisation of edotco. Market speculation indicates that a Khazanah Nasional Bhd–Employees Provident Fund (EPF) consortium may acquire Axiata’s 63% holding in edotco, valuing the deal at approximately US$3.5 billion.
This proposed transaction aligns with Khazanah’s recent strategic moves, including its March 2025 acquisition of a 21% stake in edotco from Innovation Network Corporation of Japan, raising its total interest to 32%. Retirement Fund Inc. holds the remaining 5%.
Should the transaction proceed, Axiata could realise an estimated RM6.3 billion from the sale. Coupled with US$475 million in equalisation payments from the completed XLSmart merger in April 2025, the company stands to significantly strengthen its balance sheet, enhancing its financial flexibility and positioning for future growth.
-The Star
