MONEY MASTER

Maintain buy with target price (TP) of RM5.00 Axiata and its wholly-owned subsidiary, edotco Group (edotco) announced a USD600m primary and secondary equity private placement deal with Innovation Network Corporation of Japan (INCJ) and Khazanah Nasional (Khazanah). The maiden equity fund raising exercise for edotco sets a new benchmark as the largest global tower sector private placement in 2016. Currently managing 25,200 towers across five countries, edotco is the world's 11th largest tower company. With this fund raising exercise, we expect edotco to be more aggressive in M&A activities before pursuing its planned IPO in 2017. Meanwhile, we estimate that the secondary share placement by Axiata of USD200m would help to pare down FY17F gross debt/EBITDA from 2.2x to 2.0x. Overall, we are positive on this deal as it allows Axiata to unlock value of edotco in the future as well as reduce its gearing, albeit marginally. We maintain our Trading  Buy  call and...

Maintain Neutral, Preference: Axiata Malaysia telco sector Muted outlook   4Q15 results were mixed – mobile players struggled while it was more business-as-usual for fixed-line players. 2016 guidance was unanimously muted, and we have lowered FY16/17 net profit forecasts across the board. We now have HOLD ratings on all our stocks. On a relative basis, our preference is for Axiata (HOLD, TP: MYR6.10).  4Q15: Mobile struggled; routine for fixed 4Q15 proved to be another challenging quarter for the mobile players, with net profit of the Big 3 all below expectations. The Big 3 again posted sequential service revenue decline (-0.7% QoQ), which meant fullyear service revenue of the Big 3 declined for a second consecutive year (-1.0% YoY). Net profit was further depressed by higher-than-expected depreciation, interest expense and taxes. Meanwhile, full-year results of fixed-line players (TM and TDC) were not as negative, with TM in line and TDC above expectations on f...