Analysts positive on Axiata’s sell of minor stake in Boost

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CEO of Axiata Digital Mohd Khairil Abdullah (screen, right) and Group CEO of Great Eastern Khor Hock Seng (screen, left) speaking from Singapore via live streaming during the Axiata Digital and Great Eastern Strategic Investment and Deepen Collaboration in Fintech Services at Axiata Tower. Also present president and Group CEO of Axiata Group Tan Sri Jamaludin Ibrahim (seated, middle). — Bernama photo

KUCHING: Axiata Group Bhd’s (Axiata) sell of a 21.9 per cent stake in Boost Holdings Sdn Bhd (Boost) to Singapore-based insurance group, Great Eastern (GE) has been viewed positively by analysts as a way to unlock Boost’s value.

Of note, Axiata’s digital services arm, Axiata Digital announced that it has sold a 21.9 per cent stake in Boost to GE, for US$70 million as part of its strategy to drive the rapidly-growing digital financial services (DFS) business across the region.

According to the research team at AmInvestment Bank Bhd (AmInvestment), this is the third strategic investment secured by Axiata Digital from financial industry players and the largest foreign investment to date in the Malaysian fintech. In 2018, Sumitomo invested US$20 million (RM86 million) into the group’s digital advertising business ADA while Mitsui invested up to US$50 million (RM214 million) for a minority stake in Axiata Digital last year.

It noted that aiming Boost as a launch pad to provide digital financial services to other markets wherein the group is located, GE’s investment proceeds are earmarked for expansion plans for Axiata Digital’s DFS business over the next year in Malaysia and the region.

This also includes strengthening its ecosystem of merchants and customers, enhancing Aspirasi’s credit scoring technology, and potentially support a digital bank.

“We are positive on the group’s continuing strategy of unlocking its multiple assets which are currently underappreciated by the market,” it opined.

“As Boost is still likely loss-making, the minority sale will marginally improve Axiata’s near-term core earnings,” it added.

AmInvestment maintained its ‘buy’ recommendation on the stock.