PETALING JAYA: Improved earnings trajectory following CelcomDigi Bhd
’s network integration completion by the first half of 2027 is impacted by uncertainties surrounding the Digital Nasional Bhd (DNB) issue which will become a material drag on valuations, says CGS International (CGSI) Research.
It also cited downside risks that included increased price competition and extended delays in resolving the DNB issue, leaving CelcomDigi and other shareholders in DNB at a disadvantage to the second 5G network.
A 5% financial year 2026 (FY26) dividend yield, meanwhile, will provide downside support, according to the research house.
MBSB Research said a striking key risk is the eventual inclusion of DNB’s financial health into CelcomDigi’s profit and loss statement namely equity accounting.
The research house made some adjustments that led to around 9% to 10% downward revision in earnings. Its target price (TP) was also adjusted slightly lower to RM3.54 from RM3.67 a share previously.
CGSI Research, meanwhile, reiterated its “hold’ call on the stock with an unchanged TP of RM3.38 a share.
In a report, Maybank Investment Bank (Maybank IB) Research said for FY26, management is guiding for low-single digit earnings before interest and tax (Ebit) growth from FY25 normalised Ebit of about RM2.8bil on low-single digit service revenue growth.
It lowered its FY26 and FY27 net profit by 10% and 11% respectively. Its TP is also lowered to RM3.30 from RM3.60 a share and assumes 100% payout, which implies dividend yields of over 4%.
RHB Research expected higher synergies in FY27 fuelling stronger core earnings growth of 20% versus a 3% growth for FY26.
UOB Kay Hian Research trimmed its 2026-2027 earnings forecasts marginally by 1% to 3% as its housekeeping for elevated depreciation charges into 2026. It kept its “buy” call with a TP of RM4.05 a share.
Phillip Research introduced its 2028 earnings forecast of RM2.1bil. It maintained its “hold” rating with a TP of RM3.47 a share.
It liked CelcomDigi for its strong market leadership as Malaysia’s largest mobile operator and the potential value creation from its RM8bil post-merger synergy target, supported by ongoing integration efforts.
However, it remained cautious on limited average revenue per user (Arpu) upside, a saturated market, and slower-than-expected 5G monetisation.
The upside risks include stronger-than-expected Arpu growth. The downside risks include tougher competition and slower-than-expected synergy realisation.
CIMB Research, in a note to clients, projected CelcomDigi’s core earnings per share (EPS) to rise 6.3% year-on-year in FY26 on greater net cost synergies. It upgraded the stock to a “buy” from a “hold” with a target price of RM3.85 a share.
It said a rerating of CelcomDigi’s share price might take time due to the uncertainty over the potential earnings hit from equity accounting for DNB and core EPS charting stronger growth only in FY27–FY28.
The key rerating catalysts are attractive FY26–FY28 dividend yields of 4.6% to 5.2% supported by CelcomDigi’s free cashflow and return to core EPS growth in FY26–FY28.
Kenanga Research, meanwhile, introduced FY27 earnings and lower FY26 profit by 15% to account for higher 5G access costs and increased depreciation.
In tandem with the earnings cut, it lowered its target price by 9% to RM4.27 from RM4.67 a share.
