KUALA LUMPUR (July 5): CIMB IB Research has downgraded Axiata Group Bhd to “Hold” at RM5.26 with a higher target price of RM5.40 (from RM4.80) and said recent comments by the government suggest a good chance of the Axiata-Telenor Asia merger (MergedCo) getting regulatory approval in Malaysia.

In a note July 4, the research house said the MergedCo may potentially be Malaysia’s largest stock when listed in 2022.

“Assuming 20x P/E on the FY18 proforma net profit of RM4bn and factoring in the RM15 billion-20 billion of synergies, the merged entity (MergedCo) could have a market capitalisation of circa RM100 billion, making it potentially the largest stock in Malaysia. Axiata provide investors an exposure to the eventual listing of MergedCo.

“However, we believe a listing may only happen in 2022 after integration is completed.

“Downgrade to Hold on higher target price of RM5.40, given limited share price upside,” it said.