Monday, April 16, 2018

FW: AmBank Research - Digi.Com: Sees slight service revenue drop despite MFRS 15 boost HOLD, 16 Apr 2018




Digi.Com: Sees slight service revenue drop despite MFRS 15 boost           HOLD


We maintain our HOLD rating on Digi.Com with an unchanged DCF-based fair value of RM4.50/share, which implies an FY18F EV/EBITDA of 13x, the stock’s 2-year average. Digi’s FY18F-20F earnings are maintained as the group’s 1QFY18 net profit of RM352mil (excluding the impact of MFRS 15) came in within expectations, accounting for 25% of our forecast and 24% of street’s. Including the MFRS 15 adoption, which largely affected the accounting treatment of its handset contracts, Digi’s net profit increased by 10% or RM34mil to RM386mil, while revenue rose 2% or RM36mil.


Post-MFRS 15 treatment, the group’s service revenue fell 1.5% or RM22mil. This supports the group’s unchanged FY18F service revenue guidance of a flat-to-low single-digit decline vs. a 5% decrease in FY17.  Given the highly competitive

landscape, we expect Digi’s subscriber growth and ARPUs to remain under pressure as both Maxis and Celcom are also aggressively improving 4G coverage and service quality.





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