Sunday, July 28, 2013
Digi Earnings Should Rise in 2014
Tan Chi Wei, analyst at Maybank Investment Bank discusses Digi Q2 results:
- Digi’s 1H13 net profit vs Maybank's expectations
- LTE services intro’d in July so not captured yet - should bode well for next quarter? Digi’s LTE services are priced at a premium, while its coverage lags its rivals.
- Digi expects data to drive growth i.e. mobile internet and broadband business - but so do all the other telcos?
- Digi’s guidance for 2H looks positive?
- During Morten Lundal’s stint as Digi CEO back in 2004 to 2008, Digi’s market share rose by 9% to 26%. That was also when the mascot, Yellow Coverage Fellow was introduced. What should Digi do, now that he’s heading Maxis? Though, of course, change is unlikely to be immediate.
- Digi has 98% div pay out ratio - Q2, with dividend yield of 4% - this is on the low end of the scale, as industry pay out ranges from 4 to 6%. Upside looks limited for capital appreciation as well. So, should investors still hold on to Digi ?
- Digi shares seem fully valued, and perhaps, lacks rerating catalysts. Why Digi is still preferred pick for this sector? Hold call at RM4.85.