KUALA LUMPUR: AmResearch has maintained its Hold call on Digi with a fair value of RM6.50, it said in a note on Tuesday.
The research house said Digi reported net profit of RM479mil for the 1Q15.
"This is at the lower end of our expectation, accounting for 22% of our FY15F earningsand 23% of consensus, although 1Q14 is notably a shorter quarter," it said.
It added that mobile revenue growth momentum was weaker at +2.2%YoY in 1Q15 compared to +3.2% last quarter.
While data revenue growth was sustained at around +18% YoY, voice revenue’s decline was steeper.
It said that competition in the prepaid segment seems to have intensified.
Digi’s prepaid ARPU took a big hit, falling 2% YoY to RM39. Price aggression, particularly in the IDD segment, on top of increased competition, drove the fall in earnings, it said.
Dividend yield of 4.4% is decent but from a valuation standpoint, Digi is no longer cheap at 14 times FY15F EV/EBITDA.
Furthermore, Digi entails the highest forecast risk among the celcos if there is failure to pass through the GST, or if there is elasticity in demand, given expectations that have been built into current projections.
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