Digi’s 1Q results within expectations, analysts maintain neutral view
KUCHING: Digi.com Bhd’s (Digi) first quarter of the financial year 2022 (1QFY22) results were generally within expectations but analysts retain their ‘neutral’ view on the stock due to the ongoing discussions on its merger and 5G progress.
In a report, the research team at MIDF Amanah Investment Bank Bhd (MIDF Research) noted that Digi’s FY22 earnings were within consensus’ expectations.
It also reported a healthy 16.3 per cent normalised profit after tax (PAT) margin. The drop in 1Q22 bottom-line was mainly owing to the temporary tax rate increase from 24 to 33 per cent accounted for Cukai Makmur whereas, the topline reported at RM1,521.7 million or a decline of 1.8 per cent y-o-y or 3.9 per cent q-o-q.
The sequential decline was mainly due to normal seasonal patterns from high year-end device sales in 4Q21.
“Overall, the FY22 normalised earnings fall below our but met consensus expectations, accounting for 19.1 per cent and 20.9 per cent of full year FY22 earnings estimates respectively. The negative deviation is mainly due to softer than expected momentum in prepaid growth,” it said.
As earnings missed its expectation, it revised its earnings estimates for FY22/23F downward by 11.1 and 1.8 per cent.
“On a side note, the merger between Digi and Celcom is still progressing as planned. Subject to approval, the full completion of the transaction is expected to be completed on 2HFY22.
“Meanwhile, the implementation of 5G under Single Wholesale Network (SWN) is still under constructive dialogues,” it said.