Wednesday, July 6, 2011

DiGi climbs, benefits from sales tax plan

KUALA LUMPUR: Shares of DIGI.COM BHD [] climbed on Wednesday, July 6 as it is expected to benefit the most from a plan by telcos to pass on the 6% sales tax on pre-paid revenue to the customers.

At 3.16pm, DiGi was up 16 sen to RM29.76 with 482,800 shares done.

The FBM KCLI rose 6.43 points to 1,588.28. Turnover was 707.36 million shares valued at RM1.17 billion.

CIMB Equities Research said the proposal to pass the sales tax to users would be good news for the sector and reinforces its Overweight rating.

'We are upgrading DiGi from Neutral to Outperform as it should benefit significantly. DiGi has the highest proportion of prepaid revenues among the telcos while Axiata stands to benefit the least,' it said.

CIMB Research said it expected the cellcos' revenues to rise by about 3% instead of 6% because some users, especially the price-sensitive ones, are likely to cut back on usage.

'We are raising our FY11-13 core net profit estimates for Axiata, DiGi and Maxis by 2%-8%. Our target prices rise by 2%-6%. Axiata and Telekom Malaysia remain Buys while Maxis is still a Hold,' it said.

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