KUALA LUMPUR: CIMB Equities Research said though DiGi's 1Q11 annualised core net profit was only 1% above its forecast and consensus was spot on, it considered the performance to be above expectations as 1Q is a seasonally weak quarter.
CIMB Research said on Tuesday, May 3 that the outperformance came from better-than-expected revenue and margins.
'Although we raise our revenue and EBITDA margin assumptions, our FY11-12 core EPS numbers are reduced by 14-16% because of accelerated depreciation resulting from a network upgrade.
'FY13 EPS is raised by 11%. Our DCF-based target price, which uses an unchanged WACC of 11.6% rises from RM28.65 to RM31.60. We also cap our FY11-13 DPS forecasts at levels similar to FY10's.
'Rising prepaid competition and DiGi's stretched valuations keep the stock as a NEUTRAL despite the commendable results. Downside risks should be limited by its dividend yield of 7%. Axiata remains our top Malaysian telco pick,' it said.
CIMB Research said on Tuesday, May 3 that the outperformance came from better-than-expected revenue and margins.
'Although we raise our revenue and EBITDA margin assumptions, our FY11-12 core EPS numbers are reduced by 14-16% because of accelerated depreciation resulting from a network upgrade.
'FY13 EPS is raised by 11%. Our DCF-based target price, which uses an unchanged WACC of 11.6% rises from RM28.65 to RM31.60. We also cap our FY11-13 DPS forecasts at levels similar to FY10's.
'Rising prepaid competition and DiGi's stretched valuations keep the stock as a NEUTRAL despite the commendable results. Downside risks should be limited by its dividend yield of 7%. Axiata remains our top Malaysian telco pick,' it said.
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