Journey to Wealth
Digi.Com - In line with expectations
Period 1H12
Actual vs. Expectations
1H12 reported a NP of RM645m (+13.6% YoY), which was in line with our expectation and accounted for 49.3% and 45.9% of ours and the street's full-year estimates respectively.
Dividends Declared a higher second interim net dividend of 5.9 sen, translating into a 142% payout ratio, which brought the half year DPS to 11.8 sen (out of which 3.51 sen was from the RM509m capital distribution plan announced last Sept). The exdate for this second interim DPS is set on 24 August.
Key Result Highlights
YoY, 1H revenue rose by 8.6%, driven by higher service revenue on the back of a higher voice revenue. NP rose 13.6% as a result of better cost measures and a lower effective tax rate.
QoQ, revenue and NP grew marginally by 0.7% and 1.1% respectively. The 1.6% increase in cost of services was completely offset by a 2.0% decline in OPEX. The former increase was mainly driven by higher international traffic-related expenses while the latter was due to a one-off adjustment on the reversal of prior years' accruals for site rentals.
2Q12 EBITDA margin of 47.6% was higher by 0.6ppt as compared to 1Q12.
293k net adds in 2Q12 comprised of 277k new prepaid users and 16k in the postpaid segment.
Both prepaid and postpaid ARPU were flat QoQ at RM41 and RM85, respectively.
Data revenue accounted for 30.3% (1Q12: 30.7%) of Digi's service revenue, which stood at RM1.47b. Smartphone users account for 23.5% (1Q12: 22.2%) of the total 10.2m subscriber base.
Outlook Maintaining a mid-to-high single digit revenue growth guidance with a sustainable EBITDA margin. Targeted FY12 capex of RM700mRM750m remains unchanged.
Change to Forecasts
FY12-FY14 NP relatively unchanged.
Increased FY12 and FY13 DPS forecasts to 23.3 sen and 28.5 sen respectively after imputing the announced two capital distribution plans.
Rating Maintain OUTPERFORM
Valuation TP maintained at RM4.68, based on a targeted FY13 EV/forward EBITDA of 10.8x.
Risks Spectrum re-farming , access pricing, etc.
Source: Kenanga
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