Journey to Wealth
Digi.com - Launches Digi SendMoney
News Digi and Maybank have launched Digi SendMoney, a new over-the-counter remittance service that will enable Malaysians and migrants alike to remit cash to nine countries across Asia.
With this collaboration, customers can remit cash over the counter to their families or foreign employees at the 23 Digi remittance centres in Malaysia on top of being able to do so at Maybank'soutlets, branches and money exchange booths.
The countries which the funds could be remitted to are Indonesia, the Philippines, Nepal, Vietnam, Cambodia, India, Pakistan, Myanmar and Brunei.
Maybank recorded a total remittance of RM2.6b last year and is confident to achieve a RM3.4b target inFY13.
Comments The collaboration is another value-added service provided to migrant customers. While we believe the collaboration will not have any significant material financial impact to the group, it will allow Digi to retain its migrant customers where it has a dominant 50% of the migrant worker market share.
Outlook The group's operating environment has continued to perform at the expense of its peers thanks to better economic of scale as a result of a wider network coverage as well as improved network quality.
Market may have potentially overlooked Digi's FY13 DPS (consensus is for a 24.6 sen payout) as this has yet to include the proposed capital distribution ofRM495m (or 6.4 sen) into account. Should we include the proposed capital distribution, Digi's FY13 dividend yield will be boosted to 7.0%-7.3%, which will make it the highest dividend yield stock in the telco sector.
Forecast No changes in our FY12-FY14 earnings forecasts.
Rating Maintain OUTPERFORM
Digi remains our favourite pick in the mobile operator segment due to its consistent earnings, better corporate governance and its highest ROE in the telco industry.
Valuation Maintaining Target Price at RM4.68 based on targeted FY13 EV/forward EBITDA of 10.8x.
Risks Any delay in the network modernisation progress may result in a potential reduced in customer base.
Potential shrinking in Digi's IDD market share as a result of escalating competition.
Source: Kenanga
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