KUALA LUMPUR (Feb 24): MIDF Amanah Investment Bank Bhd Research has upgraded Axiata Group Bhd to “Buy” at RM4.25 with a new target price of RM4.77, from RM4.48 previously, and said the group has performed well and improved its earnings in its two main operating companies, Celcom and XL

In a note today, the research house said Axiata's reported earnings before interest, taxes, depreciation, and amortization (EBITDA) for 4Q19 came in 13.6% year-on-year (y-o-y) higher at RM2.37 billion, mainly due to the cost excellence program, while the revenue was unchanged at RM6.28 billion.

“Full year FY19 EBITDA amounted to RM9.311 billion, an increase of +11.7% y-o-y, higher than the group’s guidance for FY19, it was within ours and consensus expectations, accounting for 104.7% and 96.5% of full year FY19 EBITDA estimates,” it said.

MIDF Research said there is a slight increase in earnings of 1.5% y-o-y, totalling RM1.025 billion, driven by higher finance costs (+13.4%) y-o-y.

The research house said FY20 and FY21 earnings estimates rose to RM1.104 billion and RM1.145 billion respectively.

FY19 capital expenditure (capex) came in marginally higher at RM6.202 billion. The increase in capex primarily came from XL, which grew by 12.6% y-o-y to RM2.361 billion, and Ncell, which grew by 273.2% y-o-y to RM571 million, it said.

At 10.35am, Axiata shares fell 1.88% or eight sen to RM4.17, valuing the group at RM38.95 billion.