KUALA LUMPUR: Apex Securities Bhd has cut its target price on Axiata Group Bhd's stock by 13 per cent on impact of anti-government protests in Bangladesh on its business there.
Bangladesh is one of the key markets for Axiata through its 61.8 per cent-owned Robi and 63.0 per cent-owned edotco.
After accounting for rising macroeconomic risk from the frontier market as well as weaker investor sentiment, the research firm lowered the company's target price to RM2.55 from RM2.94 previously while maintaining the "hold" call.
It was down two per cent at midday break at RM2.43 a share.
On Wednesday, Axiata told Business Times it was unable to determine the financial consequences of the recent service outage affecting its 61.8 per cent-owned subsidiary Robi in Bangladesh.
Analysts flagged a sizeable weakening in Axiata's profit and revenue as a result of protests across Bangladesh which escalated into deadly violence last week.
Apex Securities in its note today said broadband services were partially restored in selected areas on Tuesday evening after a five-day shutdown, but mobile services remain unavailable.
It anticipates the lockdown to have an impact on Robi due to its reliance on the prepaid mobile sector, as the subsidiary contributed 18 per cent to Axiata's earnings before interest, tax, depreciation, and amortisation (EBITDA).
The research firm explained that Robi is more likely to be affected compared with Edotco due to its reliance on the prepaid mobile sector.
"Although the Bangladesh market accounts for 33 per cent of Edotco's revenue, we expect Edotco's tower operations remain stable due to the security provided by long-term contracts, which ensure consistent revenue," it said.
Consequently, the firm tweaked the bottom-line forecast for FY24 lower, with reduction of 3.7 per cent year-on-year.