Friday, September 9, 2011

CIMB Research maintains Outperform on DiGi

KUALA LUMPUR: CIMB Equities Research is maintaining its Outperform call on DIGI.COM BHD [] and retains its discounted cashflow-based target price of RM34.

It said on Friday, Sept 9 that it was positive on DiGi's move to potentially unlock RM692 million (RM0.89/share), on top of the RM509 million (RM0.65/share) capital distribution that is being proposed.'' DiGi also announced a 1-for-10 share split.

'We gather that the telco is confident of reaping RM1.1 billion in opex and capex savings from its collaboration with Celcom and would not be surprised if it exceeded the target.

'As we expect the capital distribution to be announced with its FY11 results, we raise our FY11 net DPS by 29%, which results in tweaks of less than 1% to our EPS forecasts,' it said.

However, CIMB Research said its DCF-based target price of RM34.00 is intact. It maintained its'' OUTPERFORM call, with likely re-rating catalysts being more capital management and consensus forecast upgrades for the just-announced prepaid sales tax pass-through.

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