Thursday, October 23, 2014

AmResearch maintains Buy on DiGi

KUALA LUMPUR: AmResearch has reaffirmed its Buy call on DiGi at an unchanged fair value of RM6.30 a share.

Digi reported core net profit of RM487mil for its 3Q14, which brought 9M14 core earnings to RM1.47bil. This is broadly within expectations, AmResearch said on Tuesday.

The research house said its 4Q14 could show stronger momentum given the introduction of new smartphone models like the Iphone 6 and Note 4, on top of subs growth seen in 3Q14.

Topline growth of 4% in 3Q14 was at the lower end of guidance of 4%-6%. Digi cautioned of increased price competition in voice and data. This, besides its billing system migration, caused ebitda margins to shrink slightly to 45% in 3Q14.

Despite increasing competition, AmResearch said its likes Digi for stock specific reasons, being the biggest beneficiary of GST, much better ability to monetise subs via a modernised network and the biggest beneficiary of affordable smartphone introductions.
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