UNIVERSITI UTARA MALAYSIA

COLLEGE OF BUSINESS

ISLAMIC BUSINESS SCHOOL

__________________________________________________________

BIFS 3013 ISLAMIC INVESTMENT

GROUP ASSIGNMENT: STOCK EMPIRICAL EVIDENCE

__________________________________________________________

PREPARED FOR:
DR. MOHD FIKRI BIN MOHD SOFI

PREPARED BY:

NO. NAME MATRIC NUMBER

1. MUHAMMAD SALIHIN BIN RAMLI 279770

2. MOHAMMAD QAYYUM BIN HAJI 282909

MOHAMED

3. NURUL IMAN BINTI ASMADI 290033

Full Company Name:
Axiata Group Bhd

Stock Name:
AXIATA

Stock Code:
6888

Stock Market:
Main Market

1
Company Background

Axiata Group Berhad is an investment holding company established in Malaysia. The

Company's main business is providing technical and managerial services on a global basis.
The business is divided into four segments: infrastructure, mobile, fixed broadband, and
others. The mobile segment's main activities include providing mobile services as well as
additional services including selling devices, offering interconnect services, transmitting pay
television, offering internet services, and conducting digital commerce, among others.
Broadband and broadcasting are the main industries served by the fixed broadband segment.
The primary activity of the infrastructure segment is to provide communications
infrastructure and related services. The other category consists of investment holding
companies, financial institutions, and other operational businesses that offer additional
services, such as fiber optic transmission and digital business, in Malaysia and other nations.

Axiata has evolved from a holding company with a portfolio of pure-play mobile
assets into a Triple Core Strategy-driven business focusing on Digital Telco, Digital
Businesses, and Infrastructure. Axiata is one of the top telecommunications groups in Asia
and is pursuing a vision to be the Next Generation Digital Champion by 2024. As pioneers in
the telecom sector, we work hard to offer top-notch communication services utilizing the
most cutting-edge technologies. Our goals don't end there, either. Axiata is dedicated to
enhancing quality of life in the nations where it operates and has a significant footprint
throughout the area.

2
Business Model

This section is related to Stakeholder Engagement because we as investors want to know how
companies operate through a Business Model which consists of Customers,Employees and
Others.

Customer
Axiata will delivering the optimum services to satisfy the customer's assumption.We also
doing the surveys in market to know the customer's satisfaction,scores and benchmarked of
people to increase the business operation.So Axiata want to become lowest
producer,excellent operation to fulfill the customer need by creating digital lifestyle product
and self service care solution and support the customer when they want to know the
product,services and offer.

Supplier and Business partners

Axiata will partnership with supplier to build value in their operation plus generate profit to
create mutual beneficial benefit in expanding both business in same time.Axiata plan to do
the test of supplier code performance , expand the new corporate system,acknowledge the
long-term strategy , set the standard of ESG in supply chain,support supplier and
development department's partner.This plan will work by searching local vendors,discussion
of value chain for telecom operation industry,support local direct and indirect employment in
supply chain such as Bumiputera Agenda in Malaysia in order to create winner in every level
which are local ,country and international.

Community Civil and Organisation

Is basically about the involvement of society as a part to rise the economic system in country
which give Axiata the license to run the business.Axiata also built relationship with society or
NGO help, to create various program such as corporate responsibility programme and the
need of local authority through digital platform,print media and live version.Axiata make this
happen by initiatives the program of financial digital system and function ,disaster
management and response system,talent developing audition throughout the country and
establishment of Digital Innovation Fund in order to increase the innovation and built
entrepreneurship behavior in society.

3
Media
Axiata uses social media as the main communication and promotion platform to make
corporate announcement,leadership thought, promote product and services.Axiata also uses
interviews,press conferences to prepare the permanent performance and make the
implementation of Axiata 5.0 vision of digital footprint happen.

Shareholder,Investor and Analysts

Axiata always give the best performance to make a huge return for investor as their right and
being inform about business development.Axiata also do the annual meeting to meet the
stockholder and investor to tell about analyzation of share and current corporate development
including ESG .It also involve the briefing and engagement of shareholder in industrial and
country landscape.Therefore the investor will focus in ESG and invest more company when
know long-term business strategy,financial, the share price performance and outlook plus
indirectly involve with ESG strategy,performance and management of climate risk.

Employees,Management and Board

Our workforce will continue to develop and maintain best talent to represent business
strategy by undertake a culture of high performance and interesting accountability.Axiata
also conduct the work-life balance,employee well being support,career and talent
development to create a working opportunities to local society.They also have board
sustainability committee to monitor about ESG management in Axiata Integrated Annual
Report .Axiata also built the program that related with Group or OP Talent Development.This
department also ensure the diversity,equity and Inclusion(DEI) business is working in
environment efficiently plus be more Modern,Agile and Digital(MAD) organization.

Industry Bodies
Axiata also make collaboration with other industrial bodies to reach same main goal.They
also make regular discussion and continuation of improvement in telecommunication
field.This collaboration create benefit,for example: company participate actively in
industry,telco policies and proceeding become better,foster cooperation and concern as
anticipation of company and response to ESG regulation plus give many advantages to
communities and society through charity program,souvenir and help.

4
Regulator and Government
Axiata also have department that include law regulator and regulations,This tell that all
activities and apps that be launch such as access of OpCos will need to go through
supervision from this department to know whether the program is void or can be used in
future.We also always stay engage with regulators and authorities through industry
discussion,joining the building capacity workshop to make the digital ecosystem
happen.Axiata comply all the rules that being set by our country such as spectrum allocations
and licensing fees,securitisation and protection over information and customer data,industrial
long term sustainability plus tax application in financial .There also project that being
carried out such as IR 4.0 that lead to digital economy as contribution to this country.It also
indirectly invest in local development of telecommunication infrastructure.Axiata also run the
test and apply the deploying world-class cyber security and data privacies practices in their
product and project after got approval and verification from law regulator,department and
authorities.

5
Industry Analysis perlu tamabah averange utk compare dgn stock kita pilih

1) Price Earning Ratio

BASED ON THE COMPANY

GROUP ANNUAL
REPORT Axiata Star Media Maxis Time Telekom
Dotcom Malaysia

BIL RATIO CALCULATION (RM’000)

PRICE
EARNING
RATIO

MARKET
PRICE PER
SHARE 2.590 0.415 4.020 5.340 5.070

EARNING PER
SHARE 1.063 0.010 0.151 0.246 0.300

2.44 41.5 26.62 21.71 16.9

Analysis
Based on the company's net profit, the price-earnings ratio is a ratio used to establish the
share price. To put it briefly, PER is used to forecast stock price value or decide if a stock is
worthwhile to purchase. A statistic called the Price Earnings statistic (PER) is used to figure
out how much money investors are making back on their stock investments. A stock's PER
should be as low as possible. The PER ratio therefore has an opposite impact on stock prices,
it might be said.

Based on the PER table above, it shows that the PER for Axiata is the lowest which is 2.44
compared to other companies namely Star Media, Maxis, Time Dotcom and Telekom
Malaysia, which are 41.5, 26.62, 21.71 and 16.9 respectively. This shows that Axiata has a
good share price to invest in compared to the other four companies.

6
 2) Price to Book Ratio

BASED ON THE COMPANY

GROUP ANNUAL
REPORT Axiata Star Media Maxis Time Telekom
Dotcom Malaysia

BIL RATIO CALCULATION (RM’000)

PRICE TO
BOOK RATIO

MARKET
PRICE PER
SHARE 2.590 0.415 4.020 5.340 5.070

BOOK VALUE
PER SHARE 1.143 0.867 -0.656 1.613 1.882

2.27 0.48 -6.13 3.31 2.69

Analysis

The price-to-book ratio (P/B ratio) is used to identify undervalued or overvalued firms by
comparing a company's market capitalization to its book value. This ratio is computed by
subtracting the current share price from the book value per share (BVPS) of the firm. The P/B
ratio has been widely used by market analysts. Traditionally, any value below 1.0 is
considered reasonable for value investors, indicating that an undervalued stock may have
been identified while anything greater than 1.0 indicates overvalue.

Based on the P/B ratio table above, it shows that Star Media and Maxis are less than 1.0,
which are 0.48 and -6.13 respectively. This shows that both the company's share prices are
undervalued. While for Axiata, Time Dotcom and Telekom Malaysia it was found that the
P/B ratio exceeded 1.0 , namely 2.27, 3.31 and 2.69 respectively. This shows that all three
share prices of this company are overvalued.

7
 3) Dividen Yield

BASED ON THE COMPANY

GROUP ANNUAL
REPORT Axiata Star Media Maxis Time Telekom
Dotcom Malaysia

BIL RATIO CALCULATION (RM’000)

DIVIDEND
YIELD

ANNUAL
DIVIDEN PER
SHARE 0.090 0.012 0.184 0.068 0.112

MARKET
PRICE PER
SHARE 2.590 0.415 4.020 5.340 5.070

0.03 0.02 0.04 0.01 0.02

Analysis

Dividend yield is the rate of profit that the company gives to investors. The ratio that
measures the rate of return of dividend income is usually expressed in the form of a
percentage, so that investors can more easily see how much profit there is from each capital
invested. Dividend yield shows how much the issuer has paid out in dividends over the year
against its share price. Dividend income will allow shareholders to more easily see how much
return each invested and received. Dividend Yield shows the percentage of dividends per
share compared to the share price. The higher the Dividend Yield of a company, it can be
concluded that the higher the dividend "interest" given by the company relative to its share
price. A high dividend yield will give a high return as well. Because of this, there are some
investors who include dividend yield criteria in stock selection for the long term.

Based on the dividend yield table above, it shows that the highest dividend yield is Maxis
which is 0.04. While the lowest dividend yield is Time Dotcom which is 0.01. The dividend
yield for Star Media and Telekom Malaysia is the same which is 0.02. Axiata's dividend yield
is 0.03. This shows that all the companies give dividends to their investors.

8
 4) Return on Equity

BASED ON THE COMPANY

GROUP ANNUAL
REPORT Axiata Star Media Maxis Time Telekom
Dotcom Malaysia

BIL RATIO CALCULATION (RM’000)

RETURN ON
EQUITY

NET INCOME 9,751.08 6.92 1,182.00 449.91 1,143.30

SHAREHOLD
ER’S EQUITY 23,935.06 652.15 6,369.00 3,101.79 7,936.50

0.41 0.01 0.03 0.15 0.14

Analysis

The term "ROE" refers to a statistic for comparing a company's total net income and the total
amount of investor and owner capital invested in it. While in the world of equities, ROE
refers to the amount of net business income divided by the quantity of investor capital
received. One key indicator of how well a company can manage investor cash is its return on
equity (ROE). The repute of the firm among participants in the capital market improves when
the ROE calculation is higher. It may be demonstrated that a business can maximize financial
assistance.

The ROE table above indicates that Axiata has the highest ROE at 0.41 and Star Media has
the lowest ROE at 0.01. This shows that while Star Media uses capital assistance less
effectively than Axiata, Axiata is able to make the most use of it. The ROEs for Maxis, Time
Dotcom, and Telekom Malaysia are, respectively, 0.03, 0.15, and 0.14.

9
 5) Debt to Equity Ratio

BASED ON THE COMPANY

GROUP ANNUAL
REPORT Axiata Star Media Maxis Time Telekom
Dotcom Malaysia

BIL RATIO CALCULATION (RM’000)

DEBT TO
EQUITY
RATIO

TOTAL DEBT 57,705.67 123.19 16,676.00 1,087.60 15,194.80

SHAREHOLD
ER’S EQUITY 23,935.06 652.15 6,369.00 3,101.79 7,936.50

2.41 0.19 2.62 0.35 1.91

Analysis

The meaning of Debt to Equity Ratio is the ratio of debt to equity. In simple language, the
total current debt of the company. The ratio is determined through a calculation involving the
amount of equity with the current debt experienced by the company. Debt to Ratio that has a
ratio reading of less than 0.3 shows that the company has no debt or little debt. As for Ratio
0.4 - 2, it shows that the company has debt and that debt is able to be paid in a disciplined and
orderly manner. And finally, for a ratio reading of 2 and above, it shows that the company has
debt and that debt is used to cover current operating costs.

Based on the table above, a ratio reading of less than 0.3 is for Star Media, which is a ratio of
0.19. For the 0.4 to 2 ratio, Time Dotcom and Telekom Malaysia are 0.35 and 1.91
respectively. The ratio that exceeds 2 is for Axiata and Maxis which are 2.41 and 2.62
respectively.

10
 Selected Financial Analysis perlu tambah graf

PRICE EARNING RATIO

BASED ON THE AXIATA YEARS

GROUP ANNUAL REPORT

2018 2019 2020 2021 2022

BIL RATIO CALCULATION (RM’000)

PRICE EARNING RATIO

MARKET PRICE PER

SHARE 3.25 3.73 2.66 3.25 2.590

EARNING PER SHARE (0.53) 0.16 0.04 0.081 1.063

0 or negatif earning 0 p/e (6.13) 23.31 66.5 40.123 2.436

Analysis

This ratio tell us whether the stock are undervalue or overvalue compared to its share.The
information in table Price earning ratio show that there are fluctuate ratio in 5 years period of
Axiata group.Its began with the lowest ratio which is -6.13 in 2018 and began to rise in the
next following years.This also show company facing financial crisis which is losing money in
2018 that resulted to negative earning per share.However company climb up to good price
earning ratio in 2019 which is 23.31.The investor and market are assuming the company may
have higher growth potential and they will overspend to get higher future earning as well as
in 2020 and 2021 which are 66.5 and 40.12 respectively.Meanwhile the stock in 2022 is
declined to be overvalue because the ratio show the amount of 2.44 that may give the
curiosity for investor to determine whether company is able to pay the dividends to them or
not when they compared with higher share price.

11
 PRICE TO BOOK RATIO

BASED ON THE AXIATA YEARS

GROUP ANNUAL REPORT

2018 2019 2020 2021 2022

BIL RATIO CALCULATION (RM’000)

PRICE TO BOOK RATIO

MARKET PRICE PER

SHARE 3.25 3.73 2.66 3.25 2.590

BOOK VALUE PER

SHARE (0.38) (0.38) (0.33) (2.47) 1.14

(8.55) (9.82) (8.06) (1.315) 0.99

Analysis

This ratio above shows that Axiata stock is undervalued because it is below one, especially
the highest ratio which is 0.99 in 2022.The Axiata makes good improvement to build solid
investment compared to other previous ratios that are negative. Axiata may not be listed to be
a valuable stock in those 5 periods except for 2022 because the company focuses to cover the
outstanding liabilities and debt.

12
 DIVIDEND YIELD

BASED ON THE AXIATA YEARS

GROUP ANNUAL REPORT

2018 2019 2020 2021 2022

BIL RATIO CALCULATION (RM’000)

DIVIDEND YIELD

ANNUAL DIVIDEND PER

SHARE - - - - 0.090

MARKET PRICE PER

SHARE 3.25 3.73 2.66 3.25 2.590

- - - - 0.03

Analysis

The dividend yield is use to measure the annualized return of payout stock in form of
dividend to investor.The table show that the company do not provide any dividend except for
2022 which is 0.03.However the company not able to reach the good ratio of 2% until 5 %
that show company is facing adverse economic condition and financial problem.The
previous year that the company do not pay the the dividend may tell us that the company tried
to make financial recovery that may being affected because of external factor which are
changeable of law,economic recession,inflation and Covid 19.

13
 RETURN ON EQUITY

BASED ON THE AXIATA YEARS

GROUP ANNUAL REPORT

2018 2019 2020 2021 2022

BIL RATIO CALCULATION (RM)

RETURN ON EQUITY

NET INCOME (4762025) 1457.55 365.16 818.90 9571.08

SHAREHOLDERS’
EQUITY 17476.80 16180.79 17641.14 18005.32 23935.06

(2.72) 0.09 0.02 0.05 0.40

Analysis
Based on the comparison of return on equity shows that all ROE values of the companies are
less than 5. This shows that the companies are less effective in using their company's capital
in gaining the profit. This low ROE also reflects the poor management of Axiata companies
for 5 years periods.The company must raise the company’s return on equity,so that it can
catch the interest of investor to invest in their company by raising profits while cutting
expenses, growing asset investments while cutting liabilities, increasing dividend payments,
or increasing equity buybacks are all examples of ways to improve company’s efficiency.

14
 DEBT TO EQUITY RATIO

BASED ON THE AXIATA YEARS

GROUP ANNUAL
REPORT
2018 2019 2020 2021 2022

BIL RATIO CALCULATION (RM)

DEBT TO EQUITY
RATIO

TOTAL DEBT 22224.02 25666.56 27374.04 29221.49 35879.52

SHAREHOLDERS
’ EQUITY 17476.80 16180.79 17641.14 18005.32 23935.06

1.27 1.59 1.55 1.62 1.5

Analysis

All the years’ ratios show that Axiata's company has a bad debt equity ratio because it is
more than 1. Axiata cannot cover all their liabilities with equity efficiently. We can see the
highest ratio that is near to 2 is 1.62 in 2021 shows that you have RM1.62 of debt for every
RM1.00 in equity.Meanwhile, Axiata got the lowest ratio in year 2018 which Is 1.27 .Next
for the ratio in other years which are 2022(1.5),2020(1.55) and 2019(1.59) show that
company facing problem in paying the debt because has a large amount of liabilities and a
small amount of equity to cover all of it. However, it also shows the company is excessive in
taking on more debt in expanding their company.

15
Valuation

Price Earning Ratio

Company Price/ Earning/ Price/ Averange Overvalued/

Name share share Earning P/E Under

Axiata 2.59 1.063 2.437 21.833 23.2088

Star Media 0.415 0.01 41.5 0.218

Maxis 4.02 0.151 26.623 3.2968

Time 5.34 0.246 21.707 5.3710

Dotcom

Telekom 5.07 0.3 16.9 6.55

Malaysia

Valuation in investment refers to the process of determining the fair value of an asset, a
company, or an investment opportunity. It is a crucial step in the investment decision-making
process as it helps investors assess whether an asset is overvalued, undervalued, or priced
fairly based on its intrinsic characteristics and potential for future growth.Markets can be
impacted by a variety of events in the short term, which can lead to volatility and erratic
results. Both exhilaration and distress may result from this. However, long-term investing
emphasises the underlying fundamentals and values of assets, which calls for patience and a
focus on the broad picture. Investors may make better selections with more knowledge by
taking into account long-term patterns and without being distracted by short-term swings.

For the stock we chose, which is from the company Axiata Group Berhad, we found that it
showed a rather encouraging performance compared to other companies in the same industry.
Based on the financial analysis that we have carried out, we recommend that investors invest
in the shares of this Axiata company based on certain factors.The company's ability to grow
and generate profits is quite good considering that the P/E ratio is shown to increase from
2018 to 2022 from -6.13 to 2.437. Axiata company's P/E shows a good change from a
negative ratio to a positive ratio within 5 years. The P/E ratio of this stock is good because it
is below 10 and not less than 1.

16
Based on the table above, The company's ability to grow and generate profits is quite good
considering that the P/E ratio is shown as RM 2.437 compared to other companies with high
value. The P/E ratio of this stock is good because it is below 10 and not less than 1. If the
stock is in this ratio range, then the stock is undervalued. This shows that investing in Axiata
at that price has the potential to get returns in the future. It can also be evaluated from the
market price of the participants. Axiata indicated that the current price is undervalued which
is RM 2.59 compared to the market price of the participant which recorded a value of RM
23.2088. This shows a far and wide difference. So this shows the potential to enter the
investment into the Axiata company because the current price is undervalued which has the
potential to increase in the future. With this investment in this company has the potential to
give returns to investors.

In conclusion, valuation is critical to an investor since it establishes the investment's worth

and influences decision-making. In contrast to short-term market movements, which can be
unpredictable and influenced by a number of different factors, long-term investment focuses
on fundamentals and value. Axiata Group Berhad outperforms its sector rivals in terms of
market share, growth potential, P/E ratio, and reliance on debt financing.

17
 perlu tgk roe and...
Recommendation and Reasons tgk voluation
long term or short term

1. Growth rate and high investment value catalyst

Axiata Group Bhd shows observations on a potential and stable valuation. The process of
analysis to calculate the actual or expected value of an asset or company is known as
valuation by including growth rates and the market that is lagging, exploration in driving
to more extensive and planned investment, the company's potential market and the
company's confidence. Where the company gains the trust of investors and the market can
be more efficient. This is because the company is a reflection of the collective opinion of
growth to the market about the value of the company. When compared to the other five
companies that have been studied, Axiata Group Bhd does a good job of making money.
However, Axiata Group Bhd still shows a favorable profit compared to others. Investing
involves choosing profitable companies. High profit companies provide investors with
good returns. The stability of profits reassures investors. Good profits also reflect the
long-term durability and longevity of the company, providing shareholders with
dividends, better stock value and future growth potential. Investors can minimize risk and
increase returns by choosing successful firms. Therefore, a wise investment selection
depends on solid profitability. Investors' ability to receive dividend payments is closely
related to the company's ability to generate continuous and sustainable income. Net
income, earnings per share and return on equity are just some of the financial indicators
that can be used to determine a company's success.

2. Stocks are stable

The thing to remember is that a sector will not always be making a profit or a loss. So the
need to be vigilant. For example, in 2020 companies in the health sector such as Top
Glove Corporation Bhd, Supermax Corporation Bhd, Kossan Rubber Industries Bhd,
Hartalega Holdings Bhd and others made excellent gains after the Covid-19 pandemic hit
the world. At that time, the sector seemed to give high hopes to investors to make a profit.
However, after the vaccination program was implemented, this sector was seen to be
unable to attract the interest of many. The Technology sector is also seen to rise sharply in
2020 as a result of the Movement Control Order (MCO) which has forced many workers
to work from home and Home Teaching and Learning for school children has to be
carried out at home. At that time, the demand for devices such as laptops, tablets,
smartphones and internet data all increased to meet the pandemic situation. High demand
causes the price of the device to rise. But today, demand has decreased again.

18
3. Long Term Growth Expectations

Don't be easily fooled by the sudden rise by any sector. We need to be careful in making
decisions before entering any sector. For example, the month of May 2021 shows a price
increase in the iron sector. The question that needs to be asked is, is this increase a
long-term or short-term increase? This will help in understanding the current situation of
the sector before making any decision. Will this sector be dominant in this pandemic
situation and coincide with government policies and policies? This question will help
investors to make smarter decisions and avoid making wrong steps. Long-term growth
expectations are an important item in investment. Where a stable stock market is assessed
by the duration of the investment. Long term is a measurement rate that can show the
company's stability situation in the management of the company that gives confidence to
investors. Where it drives the image of management and efficiency. Syakita that has
potential and is on a solid track will show the line of progress that increases or aligns in a
long period. Situations in different conditions that still show that growth is the most
appropriate choice with an example where a company that is still able to survive or thrive
despite the covid-19 pandemic and high inflation in Malaysia still records profits and the
development of a company that is always growing well . The time period shows the
potential progress of the company.

19
3. The company's development policy that is parallel and consistent with the national
development goals

Investment policy is related to national strategies, institutions, laws, regulations and

practices that directly mobilize investment and increase returns from investment. The
investment policy then directly affects the decisions of investors, whether small or large
investors, domestic or foreign. Investment policy begins with setting clear economic
strategic goals and directions at the national level. In this sense, the National Investment
Aspirations (NIA) outlines important criteria for the quality of investment necessary for
Malaysia. These five NIA criteria will ensure investment prospects in Malaysia are
focused on increasing economic sophistication, creating high-value jobs, expanding
domestic networks, developing new and existing clusters, and enhancing economic
inclusion. Applying these goals to new investments will drive growth in the high-tech
sector and strengthen the front and back chains, which will significantly accelerate
development. Additionally, clearly outlining broader innovation as a goal will encourage
companies to place emphasis on innovation and technology at every stage of the
development process. An important aspect of implementing the NIA is that investment
incentive policies should shift from policies that mostly target specific sectors to policies
that encourage high-value activities (for example, advanced Research and Development
(R&D)). This will ensure that the incentives will remain relevant even as business models
evolve, for example, based on the rapid development of sophisticated digital investments
across sectors. At a broader level, the country's overall economic development policy
needs to include the Government's role in facilitating private sector investment that is
coordinated with the NIA. The Government's role needs to be expanded beyond the
traditional role of providing infrastructure, developing human capital and creating a
business-friendly environment. An important aspect is creating policies that encourage
investment in more sophisticated and complex products, while helping companies,
especially domestic companies, to continue to innovate and develop local technology.
This encouragement includes appropriate incentives aimed at encouraging the use of
technology and innovation by local companies, as well as export-oriented strategies to
expose companies to global competition. A recent IMF paper18 presents an argument for
investment policy to support

20