We are adding 3,000 Digi.com (Digi) shares @ RM6.03/share to our Dividend Yield portfolio. Similar to other Cellcos, Digi has weakened, by c.4.3% since 1st of April, partially due to the on-going regulation hiccup in the prepaid segment following the GST implementation and we believe a permanent solution may take months due to the complexity involving various parties.
Despite some concerns arising from the Cellco prepaid segment, Digi’s outlook remains intact, in our view. In fact, the recent weakness could provide an opportunity for investors to participate in the company’s long-term prospect. We continue to favour Digi among the other Cellcos due to its higher operational efficiency and better competency in monetising data.
At current market price, Digi is trading at 22.5x and 21.4x FY15 and FY16 PERs, respectively, which is below Maxis (FY15: 26.8x; FY16: 25.1x) but on par with Axiata (FY15: 21.6x; FY16: 19.5x). On top of that, the group has declared a first NDPS of 6.1 sen (in conjunction to its 1Q15 result announcement), which is scheduled to go ex on 13-May. For the full financial year, we expect Digi to declare 25.8 sen (consensus: 26.6 sen) dividend, which implies a decent dividend yield of 4.3%.
Source: Kenanga Reseach - 12 May 2015
http://klse.i3investor.com/blogs/kenangaresearch/76383.jsp
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