JF Apex Securities recommends investors subscribe for Sedania shares

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KUALA LUMPUR (June 18): JF Apex Securities Research has advised investors to subscribe for Sedania Innovator Bhd shares at 38 sen with a target price of 44 sen.

Sedania is slated to be listed on the ACE Market of Bursa Malaysia on June 29.

In a note today, JF Apex Securities said it pegged Sedania’s valuation at 44 sen based on 12x FY15 EPS forecast of 3.59 sen, and 40% discount on the average PER of telco and related services companies, due to its smaller market capitalisation.

“Potential catalyst to share price is the possible inclusion of new telcos as clients especially XL with 51.7m prepaid subscribers in Indonesia,” it said.

The research house said Sedania could be looking to enter Indonesia and tap its huge population.

“Given its close working relationship with Axiata Group Bhd, we expect Sedania to approach XL, Axiata’s Indonesian arm. Success in securing XL could propel Sedania’s earnings significantly in 2016, given XL’s 51.7m prepaid subscriber base.

“Almost all of Sedania’s income is derived from companies under the Axiata group (Celcom in Malaysia and Robi in Bangladesh). Last year, Sedania’s revenue was affected by technical issues in Celcom’s network,” it said.

JF Apex Securities said Sedania’s MSC status will expire in 2016 and the company would then subject to corporate tax rate of 24%.