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MALAYSIA

INVESTMENT RESEARCH REPORT


KDN PP13226/04/2014 (032022)

JF APEX SECURITIES BERHAD


(47680-X)

Company Result

25 April 2015

DiGi.Com Bhd

HOLD

Steady profit despite lower prepaid revenue

RM4.68 Results Highlight


RM4.90 o 1Q16 net income was below expectation after falling

Share Price
Target Price

Company Description
One of the three biggest mobile telecommunication
companies in Malaysia.
Stock Data
Bursa / Bloomberg code
Board / Sector
Syariah Compliant status
Issued shares (m)
Par Value (RM)
Market cap.
52-week price Range
Beta (against KLCI)
3-m Average Daily Volume
3-m Average Daily Value
Share Performance
Absolute (%)
Relative (%-pts)

Maintained

16.7% YoY but increased 4.5% QoQ to RM399m as traffic


cost increased 17% YoY to RM378m .

o Lower prepaid revenue - Quarterly revenue decreased


7.7% YoY and 4.2% QoQ to RM1.65bn as prepaid revenue
declined 5% YoY and 3.6% to RM1.1bn.

6947 / DIGI MK o Steady postpaid revenue - Postpaid revenue inched up


Telco
6.9% YoY and 3.1% QoQ to RM464m on the back of flat
Yes
ARPU and higher subscribers.
7,775.0
0.01 o Slightly Below forecast Three months revenue of
RM36.39bn
RM1.65bn achieved 23% of our full year forecast and
RM4.64 RM6.27
similarly net profit of RM399m make up 23% of FY16
0.96
estimate.
7.78m
RM38.34m o Steady subscriber growth In 1Q16, total subscribers

1m
-5.5
-5.1

3m
-5.3
-13.5

Major Shareholders
TELENOR ASA
EMPLOYEES PROVIDENT FUND
AMANAHRAYA TRUST
KUMPULAN WANG PERSARAAN
TIME DOTCOM BHD
Historical Chart

12m
-24.6
-18.6

increased 11.7% YoY and 1.7% QoQ to 12.3m, after


prepaid subscribers increased to 10.4m (up 5% YoY and
1.4% QoQ) while postpaid net adds also increased to 1.9m
vs (up by 8.2% YoY and 3.4% QoQ)..
o Lower ARPU Amid the competitive environment, DiGis

blended ARPU for 1Q16 was lower at RM42 (vs RM44 in


%
4Q15) mainly due to prepaid ARPU falling to RM35 (vs
49.00
12.15
RM38 in 4Q15) with postpaid ARPU unchanged at RM80.
6.48
2.66 o Steady operating cash flow 1Q16 operating cash flow
increased to RM533m (vs RM413m in 4Q15) as capex for
1.51
the quarter declined to RM171m (vs RM288m in 4Q15).
Cash reserves doubled to RM503m (vs RM234m in 4Q15)
while interest-bearing debts rose to RM1.6bn from
RM1.29bn in 4Q15. Net debt/EBITDA remains low at 0.4x.

o Interim dividend DiGi declared its first interim


dividend of 5.1 sen/share. We expect full year dividend of
22 sen, translating into a yield of 4.7% which is the
highest in the industry.
o Lowering earnings forecast In view of the
challenging environment, we are cutting our EPS forecasts
for FY16 and FY17 by 7.5% and 6.7% respectively. Risks
include heightened price competition and inability to
monetize data which resulted in decline in prepaid ARPU.
Source: Bloomberg

Lee Cherng Wee


03-87361118, ext. 759
leecw@jfapex.com.my

o Maintain HOLD Our recommendation is kept at HOLD

with a lower target price of RM4.90 (previously RM5.18)


based on DDM.

25 Apr 2016

JF APEX SECURITIES

Results Review DiGi.Com Bhd

Quarterly Figures
Year to 31 Dec

1Q16

4Q15

QoQ

1Q15

YoY

RM million
Prepaid revenue

1096

1137

-3.6%

1154

-5.0%

Postpaid revenue

464

450

3.1%

434

6.9%

93

138

-32.6%

203

-54.2%

1653

1725

-4.2%

1791

-7.7%

704

701

0.4%

775

-9.2%

43.0%

41.0%

2pp

43.0%

399

382

4.5%

479

-16.7%

24%

22%

2pp

27%

-3pp

533

413

29.1%

582

-8.4%

Prepaid Subscribers (m)

10.43

10.29

1.4%

9.93

5.0%

Postpaid Subscribers (m)

1.90

1.84

3.4%

1.76

8.2%

12.34

12.13

1.7%

11.69

5.5%

Prepaid ARPU (RM)

35

38

-7.9%

39

-10.3%

Postpaid ARPU (RM)

80

80

0.0%

81

-1.2%

Blended ARPU (RM)

42

44

-4.5%

46

-8.7%

Device & other revenue


TOTAL REVENUE
EBITDA
EBITDA margin
PAT
PAT margin
Operating cashflow

Total Subscribers (m)

Financial Summary
Year to 31 Dec (RM m)
Revenue
EBITDA

2011

2012

2013

2014

2015

2016F

2017F

5964

6360.9

6733.4

7018.5

6914.0

7132.6

7310.9

2765

2929.1

3043.0

3163.0

3033.0

2943.0

3016.6

Operating profit

1818.1

1599.3

2165.0

2671.0

2354.5

2336.7

2395.1

PBT

1560.3

1591

2140.2

2645.2

2308.7

2310.0

2367.7

Net profit

1313.6

1205.8

1705.9

2031.1

1722.6

1732.5

1775.8

EPS (sen)

16.1

15.5

21.9

26.1

22.2

22.3

22.8

P/E (x)

29.1

30.2

21.4

17.9

21.1

21.0

20.5

DPS (sen)

17.5

26.3

21.3

26.0

22.0

22.1

22.6

3.7%

5.6%

4.6%

5.6%

4.7%

4.7%

4.8%

EBITDA margin

46.4%

46.0%

45.2%

45.1%

43.9%

41.3%

41.3%

PBT margin

26.2%

25.0%

31.8%

37.7%

33.4%

32.4%

32.4%

Net profit margin


(Source: Company, JF Apex)

22.0%

19.0%

25.3%

28.9%

24.9%

24.3%

24.3%

Dividend yield

25 Apr 2016

JF APEX SECURITIES

Results Review DiGi.Com Bhd

JF APEX SECURITIES BERHAD CONTACT LIST


JF APEX SECURITIES BHD

DEALING TEAM

RESEARCH TEAM

Head Office:
6th Floor, Menara Apex
Off Jalan Semenyih
Bukit Mewah
43000 Kajang
Selangor Darul Ehsan
Malaysia

Head Office:
Kong Ming Ming (ext 3237)
Shirley Chang (ext 3211)
Norisam Bojo (ext 3233)

Head Office:
Lee Chung Cheng (ext 758)
Lee Cherng Wee (ext 759)
Low Zy Jing (ext 754)
Nazhatul Shaza Shukor (ext 755)
Norsyafina Mohamad Zubir (ext
752)

General Line: (603) 8736 1118


Facsimile: (603) 8737 4532
PJ Office:
15th Floor, Menara Choy Fook On
No. 1B, Jalan Yong Shook Lin
46050 Petaling Jaya
Selangor Darul Ehsan
Malaysia

Institutional Dealing Team:


Lim Teck Seng
Sanusi Bin Mansor (ext 740)
Fathul Rahman Buyong (ext 741)
Ahmad Mansor (ext 744)
Zairul Azman (ext 746)
PJ Office:
Mervyn Wong (ext 363)
Azfar Bin Abdul Aziz (Ext 822)
Tan Heng Cheong (Ext 111)

General Line: (603) 7620 1118


Facsimile: (603) 7620 6388
JF APEX SECURITIES - RESEARCH RECOMMENDATION FRAMEWORK
STOCK RECOMMENDATIONS
BUY

: The stocks total returns* are expected to exceed 10% within the next 12 months.

HOLD

: The stocks total returns* are expected to be within +10% to 10% within the next 12 months.

SELL

: The stocks total returns* are expected to be below -10% within the next 12 months.

TRADING BUY

: The stocks total returns* are expected to exceed 10% within the next 3 months.

TRADING SELL : The stocks total returns* are expected to be below -10% within the next 3 months.
SECTOR RECOMMENDATIONS
OVERWEIGHT

: The industry as defined by the analyst is expected to exceed 10% within the next 12 months.

MARKETWEIGHT : The industry as defined by the analyst is expected to be within +10% to 10% within the next 12 months.
UNDERWEIGHT

: The industry as defined by the analyst, is expected to be below -10% within the next 12 months.

*capital gain + dividend yield

JF APEX SECURITIES BERHAD DISCLAIMER


Disclaimer: The report is for internal and private circulation only and shall not be reproduced either in part or otherwise without the prior written
consent of JF Apex Securities Berhad. The opinions and information contained herein are based on available data believed to be reliable. It is
not to be construed as an offer, invitation or solicitation to buy or sell the securities covered by this report.
Opinions, estimates and projections in this report constitute the current judgment of the author. They do not necessarily reflect the opinion of JF
Apex Securities Berhad and are subject to change without notice. JF Apex Securities Berhad has no obligation to update, modify or amend this
report or to otherwise notify a reader thereof in the event that any matter stated herein, or any opinion, projection, forecast or estimate set forth
herein, changes or subsequently becomes inaccurate.
JF Apex Securities Berhad does not warrant the accuracy of anything stated herein in any manner whatsoever and no reliance upon such
statement by anyone shall give rise to any claim whatsoever against JF Apex Securities Berhad. JF Apex Securities Berhad may from time to
time have an interest in the company mentioned by this report. This report may not be reproduced, copied or circulated without the prior written
approval of JF Apex Securities Berhad.

Published & Printed By:

JF Apex Securities Berhad (47680-X)

(A Participating Organisation of Bursa Malaysia Securities Berhad)