Thursday, 26 April 2012

DiGi advances on interim dividend, capital distribution plans

KUALA LUMPUR (April 26): Shares of DIGI.COM BHD [] advanced on Thursday after the company declared its first interim dividend for the year as well as a capital distribution exercise.

At 9.07m, DiGi rose three sen to RM3.99 with 116,400 shares traded.

In a statement Wednesday, DiGi said revenue first quarter ended March 3, 2012 grew 9.7% to 1.57 billion from RM1.43 billion in 2011, due mainly to data revenue which accounted for close to 31% of total revenue.

Earnings per share was 4.12 sen compared to 4.26 sen a year earlier.

DiGi will pay a first interim tax exempt dividend of 5.9 sen per ordinary share for the financial year ended Dec 31, 2012 on June 8 June this year.

In a separate announcement, DiGi said its wholly owned unit DiGi Telecommunications Sdn Bhd (DiGiTel) will undertake a capital distribution of about RM495 million to DiGi on the basis of cash repayment of 99 sen for every one existing share of RM1 each in DiGiTel.

“Upon receipt of the cash proceeds from DiGiTel, DiGi expects to distribute approximately RM495 million (less expenses) representing 64 sen per share to its shareholders,” it said.

MIDF Research has maintained its Buy rating on Digi with a target price of RM4.35 and said the company’s 1Q12 earnings were within expectations.

“Digi’s 1Q12 earnings came in within ours and consensus’ expectations at 24.1% and 24.0% of respective full year estimates,” it said in a note Thursday.

The research house said DiGi’s data revenue would continue to be robust in FY12, adding that the data demand would continue apace and Digi will be a main beneficiary.

It said DiGi expects data revenue will continue to be robust especially as it aims to acquire higher small and medium screen subscribers, which gives better margin.

“It maintains its guidance of a mid to single high digit revenue growth for FY12, and about 46% EBITDA margins,” it said.

“We maintain our FY12 and FY13 earnings estimate for Digi given its performance was within our expectation. We continue to like Digi for its continuing commitment to reward its shareholders. We opine that the growth in data will continue to be robust especially with the adoption of LTE.

“We maintain our BUY recommendation as the expected total return is only marginally below our 15% threshold. Our TP is based on the Discounted Dividend Model, with an estimated long-term dividend payout ratio of 100% and a WACC of 9.04%,” it said.

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