KUALA LUMPUR (Jan 23): MIDF Amanah Investment Bank Bhd Research has maintained its “Neutral” call on Digi.Com Bhd at RM4.51 with a lower target price of RM4.30, from RM4.93 previously.

In a note today, MIDF Research said Digi announced a dividend of 4.4 sen per share, bringing total dividend for FY19 to 18.2 sen, a decline of 7.1% year-on-year (y-o-y) from 19.6 sen per share in FY18.         

However, the research house noted that the announced dividend is still within its expectation, which constitutes 96.3% of its full-year FY19 dividend estimate of 19.6 sen.

The group’s 4Q19 normalised earnings amounted to RM338.2 million (-10.6% y-o-y). The normalised earnings were primarily impacted by a combination of higher depreciation and amortisation (+48.4% y-o-y) and higher finance cost (+82.4% y-o-y).

“Meanwhile, 4Q19 revenue remained resilient at RM1.68 billion (+0.2% y-o-y), mainly supported by higher data revenue (+6.1% y-o-y),” the research house said.

MIDF Amanah noted that Digi’s cumulative FY19 normalised earnings — which came in lower at RM1416.2 million — were still within its and consensus expectations.

According to the research house, the growth in postpaid revenue remains solid while prepaid revenue contracted at a relatively faster pace.

According to MIDF Research, 4Q19 postpaid revenue grew by 9.6% y-o-y to RM731 million mainly due to healthy customer demand for Digi’s Phone Freedom 365 and postpaid family plans.

Meanwhile, 4Q19 prepaid revenue declined by 9.7% y-o-y to RM736 million on the back of reduction in voice revenue as there is less reliance in traditional voice.

It stated that Digi’s 4Q19 investment amounted to RM205 million, leading to FY19 capital expenditure of RM753 million.

“The investments were prioritised to optimise the 4G network quality with enhanced capacity through fibre network expansion to 9,610km and re-farming of spectrum portfolio,” the research house said.

At 9.13am, Digi shares remained unchanged at RM4.51, valuing the group at RM35.07 billion.