Relief rally may trigger more selling in Axiata stock

KUALA LUMPUR: Investors may look to reduce their holdings in Axiata Group Bhd in the event of a relief rally following the recent sharp fall in share price.

Affin Hwang Capital research said fund managers and analysts it had conversations with were not eager to bargain hunt given their disappointment over the aborted merger between Axiata and Telenor.

However,the investors were also loathe to sell their shares at the current price level due to the sharp decline.

“We interacted with >10 fund managers / buyside analysts today. Most investors expressed their disappointment over Axiata’s poor guidance in relation to the merger discussion,” said the research house.

Meanwhile, Digi’s share price experienced a smaller percentage of loss as investors continue to hold the stock for its 4% dividend yield despite a lacklustre growth outlook.

“Investors are less critical of Digi’s management. Most of them are willing to hold on to Digi for its dividend yield.

“We sense that investors are not eager to increase their positions due to a lack of earnings growth but may reconsider should there be further price weakness,” said Affin Hwang.

Axiata’s and Digi’s share prices fell 16% and 6% in the previous session respectively.

Following the price retracements, Affin Hwang upgraded Axiata to hold from sell with an unchanged target price of RM4.25 while Digi remains a hold with an unchanged target price of RM4.55.

Source: TheStar