Tuesday, August 8, 2017

FW: AmBank Research - Digi.Com: Service revenue trajectory still ambiguous HOLD


STOCK FOCUS OF THE DAY                         

Digi.Com: Service revenue trajectory still ambiguous                                       HOLD


We maintain our HOLD rating on Digi.Com with unchanged forecasts and DCF-based fair value of RM4.50/share, which implies a FY18F EV/EBITDA of 13x, the stock’s 2-year average. Digi’s management introduced its new CFO Nakul Sehgal together with outgoing CFO Karl Erik Broten and CEO Albern Murty today in a breakfast meeting with analysts.

Management envisions a future where prepaid and postpaid plans eventually merge into a hybrid composition which will offer customers more flexibility according to their requirements.


We do not expect Digi’s efforts in monetising its digital platforms will materialise in the near to medium term. Recall that management has recently lowered its FY17F service revenue guidance from a flat YoY to a low-to-mid-digit decline amid the unabated competition amongst cellular operators (celco) given the need to constantly offer more attractive value propositions to consumers. Hence, the prospects for Digi’s service revenue trajectory next year are ambiguous at this stage. Given the highly competitive landscape, we expect Digi’s subscriber growth and ARPUs to remain under pressure as both Maxis and Celcom are already aggressively improving 4G coverage and service quality. The stock currently trades at a fair FY18F EV/EBITDA of 14x, slightly above its 2-year average.




Econpile Hildgs, Tong Herr Resources,Eonmetall Group,Malayan Banking




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