CIMB Research has technical sell on DiGi

KUALA LUMPUR: CIMB Equities Research has a technical sell on DIGI.COM BHD [] at RM31.12 at which it is trading at a FY12 price-to-earnings of 17.9 times and price-to-book value of 19.4 times.

It said on Wednesday, Sept 14 the stock is among the stocks that have held up steadily despite the recent market volatiitly.

'However, we are starting to see some weakness creeping in. The recent candles following the gap up do not signal that there is more bullishness ahead. The long spike to RM33.58 but the buying power could not be sustained, which signals a possible reversal,' it added.

CIMB Research said coupled with the triple bearish divergence on both its indicators, it believed that the downside risk is much higher than the upside potential.

It added that locking in profits now would be a good idea in its opinion. A break below RM29.90, its 50-day SMA would likely add weight to its bearish call, targeting the 200-day SMA at RM27.76 and lower.

DiGi falls on news service charge may be put off, weak sentiment

KUALA LUMPUR: Shares of DIGI.COM BHD [] fell the most among the telcos in the afternoon session on Monday, Sept 12, on news the government would advice them to put off the 6% service tax on prepaid mobile phone users effective Sept 15.

At 3.22pm, DiGi fell 34 sen to RM31.66 with 376,100 shares done. DiGi is deemed to be more affected by the service charge as most of the subscribers are pre-paid users.

The fall in the share price was also in line with the weak market sentiment and also that its share price had run up following its capital distribution plan last week.

The corporate exercise would see it potentially unlocking 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.

However, the authorities are against the move and even the Prime Minister Datuk Seri Najib Tun Razak was not happy with the imposition of the charges.

Maxis shed five sen to RM5.36 and Axiata one sen to RM4.78.

OSK Research maintains Neutral on telcos

KUALA LUMPUR: OSK Research is maintaining its Neutral call on telcos but downgraded DiGi from Buy to Neutral.

It said on Thursday, April 21 Malaysia and Singapore have agreed to cut roaming rates by 20% for voice calls and 30% for SMS with effect from May 1. The mobile operators that have signed reciprocal agreements to cut roaming tariffs are SingTel, StarHub, M1, Celcom Axiata, Maxis, Digi and U Mobile.

'While lower roaming rates are typically negative for the telcos in the short term given the inelastic nature of roaming calls, it is expected to stimulate usage in the longer term to offset the revenue dilution,' it said.

OSK Research is maintaining its NEUTRAL recommendations for SINGTEL (FV: S$3.00) and STARHUB (FV: S$2.85) whilst keeping its BUY rating on M1 (FV: S$2.85), its'' top pick for the Singapore telecoms sector.

For the Malaysian mobile telcos, it is retaining its BUY recommendation on AXIATA (BUY, FV: RM5.83) and NEUTRAL call on MAXIS (FV: RM5.20).

'We are downgrading our recommendation on DIGI to NEUTRAL from BUY previously as its share price has rallied 15% since our upgrade in late January and has surpassed our DCF fair value of RM27.90,' it said.