Hot Stock DiGi falls as much as 2.4% after 1Q results

Hot Stock DiGi falls as much as 2.4% after 1Q results
Business & Markets 2013
Written by Kamarul Anwar of theedgemalaysia.com
Wednesday, 24 April 2013 11:54


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KUALA LUMPUR (April 24): DIGI.COM BHD []’s shares dipped by as much as 11 sen or 2.4% in morning trades after releasing its financial results for the first quarter, which missed analysts’ estimates.

At 11:39 am, the telecommunications provider’s counter fell eight sen or 1.7% to RM4.56, with 5.75 million shares traded. Earlier, it had traded as low as RM4.53.

In its financial quarter ended March 31, 2013 (1QFY13), DiGi brought in a net profit of RM329 million, which was up 2.5% only.

Kenanga Research analyst Cheow Ming Liang said the results “came in below expectations and accounted for 20.1% of ours (Kenanga) and 18.7% of the consensus full-year earnings estimates, respectively.”

In FY12, DiGi had an EBITDA margin of 46%, while its 1QFY13’s margin fell to 43.7%.

The marginal rise in earnings, Cheow explained, was due to higher handset-related expenses and higher accelerated depreciation costs of RM91 million and seasonality factor.

But he raised the target price of Digi by 5.66% to RM5.60 from RM5.30 and retained an “outperform” rating on the telco group.

“Our TP has been raised after rolling over our valuation base year to FY14 with a targeted EV/forward EBITDA of 13.6 times (+1.5 standard deviation),” said Cheow.

“DiGi reiterated its FY13 earnings guidance of a 5% to 7% rise in revenue and its earnings before interest, tax, depreciation and amortisation (EBITDA) margin to be sustained at FY12 level,” Cheow commented on the telco group’s outlook.