CIMB Research: Plunge in telco stocks presents buying opportunity
KUALA LUMPUR: CIMB Equities Research describes the recent plunge in Malaysian telco stocks as an opportunity to accumulate at better values.
It said on Monday the share prices of Axiata, DiGi, Maxis and Telekom Malaysia plunged 9%, 6%, 3% and 6% respectively and have lagged the KLCI by 2%-8% since Oct 1.
“We know of no adverse industry developments that had triggered the sell-off, which was probably the result of investors locking in their gains for the year,” it said.
CIMB Research said its four telcos returned 31%-43% to outpace the KLCI by 20%-31% in the 10 months for 2012.
“The sector is still a Neutral while Axiata remains our top pick, followed by DiGi. We think TM may struggle to be re-rated to its former levels given earnings headwinds from competition and a likely higher retirement age,” it said.
The research house said investors should accumulate the shares as they now offer higher dividend yields of 4.3%-6.0% versus 4.0%-5.8% previously while fundamentals are mostly intact.