Thursday, 26 April 2012

MIDF Research maintains Buy on DiGi, target price RM4.35

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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