DIGI (6947) : Affin Hwang maintains Buy on DiGi
KUALA LUMPUR: Affin Hwang Research has maintained its Buy call on DiGi with a target price of RM6.56, adding that DiGi remained its preferred sector pick, both for its growth and dividend element.
In a note on Monday, the research house said it believed DiGi is still strongly committed in returning excess cash to shareholders and that it is still working on a business trust route which should pave the way for further dividend enhancement.
"GST, which kicks off in Apr15, should also benefit DiGi the most amongst the telcos given its larger contribution from the prepaid segment, assuming the GST is fully passed through," it said.
Coupled with DiGi’s strategy of providing affordable services, data traffic is up 88% yoy, also fuelling much of its earnings growth.
The successful migration of its customers into a modernised billing network should also enhance its product offering and services and is supportive of stronger net adds ahead.
"No major developments on its business trust plans but we believe that DiGi remains committed to maximising shareholder returns," it said.
It added that DiGi’s stock price is up 32% ytd, and is among the better performing telcos.
"Its stock price gain is nevertheless justifiable, considering that it is the only telco that has reported stronger earnings ytd. For 9M14, DiGi’s core net earnings grew a hefty 27% yoy to RM1.47bil, as oppose to Maxis’ RM1.49bil, Axiata RM1.87bil and TM RM591mil.
"So far, DiGi’s stronger financial performance has been attributed to revenue growth, margin expansion as well as lower depreciation charges," it added.
Affin Hwang said it believed DiGi will continue to outperform its peers in 2015, and likely to continue to gain revenue market share.
http://www.thestar.com.my
KUALA LUMPUR: Affin Hwang Research has maintained its Buy call on DiGi with a target price of RM6.56, adding that DiGi remained its preferred sector pick, both for its growth and dividend element.
In a note on Monday, the research house said it believed DiGi is still strongly committed in returning excess cash to shareholders and that it is still working on a business trust route which should pave the way for further dividend enhancement.
"GST, which kicks off in Apr15, should also benefit DiGi the most amongst the telcos given its larger contribution from the prepaid segment, assuming the GST is fully passed through," it said.
Coupled with DiGi’s strategy of providing affordable services, data traffic is up 88% yoy, also fuelling much of its earnings growth.
The successful migration of its customers into a modernised billing network should also enhance its product offering and services and is supportive of stronger net adds ahead.
"No major developments on its business trust plans but we believe that DiGi remains committed to maximising shareholder returns," it said.
It added that DiGi’s stock price is up 32% ytd, and is among the better performing telcos.
"Its stock price gain is nevertheless justifiable, considering that it is the only telco that has reported stronger earnings ytd. For 9M14, DiGi’s core net earnings grew a hefty 27% yoy to RM1.47bil, as oppose to Maxis’ RM1.49bil, Axiata RM1.87bil and TM RM591mil.
"So far, DiGi’s stronger financial performance has been attributed to revenue growth, margin expansion as well as lower depreciation charges," it added.
Affin Hwang said it believed DiGi will continue to outperform its peers in 2015, and likely to continue to gain revenue market share.
http://www.thestar.com.my
