PETALING JAYA: Axiata Group Bhd's surprisingly high dividend payout for the financial year ended Dec 31, 2011 (FY11) will be a catalyst for its stock, analysts said.
“What they have announced is better than we had expected, and will likely stir investors' interest,” an analyst with MIDF Research wrote in his report.
Axiata, a telecommunication services provider with regional presence, on Wednesday said the management had proposed a dividend payout of 19 sen per share for FY11, representing a 60% payout ratio, and doubled that of last year's 30%.
In addition, Axiata's management had raised its dividend guidance for FY12 to 65%, which analysts said would boost investor sentiment towards the stock.
“Despite a more challenging outlook, Axiata maintains that it has sufficient cashflow generation power to improve its dividend,” Maybank Kim Eng said in its report.
In general, Axiata's performance for FY11, when benchmarked against market consensus, was not surprisingly great hence, the dividend surprise was a welcome.
Raking in a net profit of RM2.34bil on revenue of RM16.4bil, which represented an increase of 32.5% year-on-year and 5.3% year-on-year, respectively, analysts said they were within expectations.
Benchmarked against its own targets, Axiata had even missed its headline key performance indicators (KPI) targets for FY11; it merely achieved around 5% growth in revenue and hit only a growth of 1% in earnings before interest, tax, depreciation and amortisation (EBITDA) compared with its KPI target of a 10% growth for both categories.
Following the failure to meet its FY11 headline KPI, the company had set lower headline KPI targets for FY12, that is, a 5.3% increase in revenue and 1.8% growth in EBITDA.
“The company is faced with increasing competition from other players and there is increasing pressure on its margin,” an analyst said. “Nevertheless, we think its FY12 headline KPI targets are achievable.”
Most analysts concurred.
MIDF analysts, in their reports, indicated that Axiata's FY12 headline KPI targets were conservative; hence it would not be too difficult for the company to achieve them.
Axiata closed at RM5.15 yesterday, representing a gain of six sen from the previous day.
