Telco oh Telco
Alliance Research remains 'neutral' on the telecommunications sector given its valuation is not cheap vis-a-vis regional peers. In a note today it said for the first quarter of this year, Malaysian telcos have largely underperformed the benckmark FTSE Bursa Malaysia KLCI.
"The share performances for Axiata (+0.2 per cent) and Maxis (-0.6 per cent) were relatively in line with the -0.1 per cent decline in the benchmark index but Digi and TM suffered double-digit decline of 12 per cent and 10.8 per cent, respectively," it added. Ahead of the 13th general election, it believes investors would be increasingly more cautious as the polling date draws nearer, making the defensive telco sector a good choice for investors to hide from political risks. "Nonetheless, we like Digi (Trading Buy, with a target price of RM4.95), as we believe it is defensive during the pre-election period and offers potential upside post-election from the passing on of six per cent service tax and capital management initiatives," it said it a note today.
Meanwhile, Kenanga Research reiterates its 'overweight' call on the telecommunications sector while maintaining the telco companies' financial year 2013-2014 earnings estimates. It said Maxis yesterday introduced its iPhone 5 4G-long-term evolution (LTE) services that operate at 1.8GHz instead of the official 2.6GHz spectrum band assigned by the Malaysian Communication and Multimedia Commission in December. "We are positive on this latest industry development given the 1.8GHz spectrum could provide wider LTE coverage as well as better indoor signal strength," it said, adding TM, with a target price (TP) of RM6.25, remains its top pick in the sector.
"We also reiterate our 'outperform' calls on Maxis (TP: RM6.75); Digi (TP: RM5.30) and Redtone (TP: RM0.56) while maintaining our market perform rating on Axiata (TP: RM6.60)," it added.-- Bernama
