Downgrade to Sell. We reckon the market may be too sanguine on DiGi. Its 1Q12 results came in as expected but we detect early signs of weakness that could become more serious threats in future quarters. Competition is expected to ratchet up several notches as Maxis turns up the heat in prepaid voice, a business that accounts for more than half of DiGi's revenue. With the switch of focus to small screen devices, data could also be vulnerable. 18 out of 30 analysts covering DiGi are sitting on the fence, but we take a more concrete stand and recommend to SELL the stock into strength as the market buys it up on the latest capital payout. Our EV-derived TP is lowered to MYR3.60.

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Source: Maybank Research - 27 April 2012