KLCI Stock - DIGI / 6947 - 2011 Quarter 1

Company Info

Market Capital (Capital Size)	22,407,550,000 (Very Large)
Par Value	RM 0.10

My Analysis

Forecast P/E now	(28.82-1.72)/1.7048 = 15.90 (Moderate)
Target Price	27.28+1.72 = 29.00 (PE 16.0, EPS 1.7048, DPS 1.72)
Decision	Not buy unless price below 28
Comment	Revenue increased 0.1% and is highest all the time(higher than preceding year corresponding quarter 10.9%), eps decreased 0.2% but higher than preceding year corresponding quarter 19.1%, cash generated from operating is more than enough to cover all expenses, stronger liquidity ratio but still at weak level now, higher gearing rato at very high level now, as usual very high payables turnover period, rising demand of mobile broadband and mobile internet access on handsets, network collaboration with Celcom
First Support Price	28.5
Second Support Price	27.0
Risk Rating	MODERATE

Research House

AMMB Target Price	27.35 (2011-04-04)
UOB Target Price	30.2 (2011-04-15)
CIMB Target Price	31.6 (2011-05-03)
ECM Target Price	30.14 (2011-05-03)
HLG Target Price	29.2 (2011-05-03)
HwangDBS Target Price	30.4 (2011-05-03)
Maybank Target Price	30 (2011-05-03)
MIDF Target Price	30 (2011-05-03)
OSK Target Price	29.2 (2011-05-03)
RHB Target Price	30 (2011-05-03)
BNP Paribas Target Price	30.7 (2011-05-04)

Accounting Ratio

Return on Equity	90.02%
Dividend Yield	5.93%
Profit Margin	31.26%
Tax Rate	25.89%
Asset Turnover	1.0793
Net Asset Value Per Share	1.73
Net Tangible Asset per share	0.69
Price/Net Tangible Asset Per Share	42.14
Cash Per Share	1.29
Liquidity Current Ratio	0.5941
Liquidity Quick Ratio	0.5766
Liquidity Cash Ratio	0.409
Gearing Debt to Equity Ratio	2.8246
Gearing Debt to Asset Ratio	0.7385
Working capital per thousand Ringgit sale	-17.9%
Days to sell the inventory	5
Days to collect the receivables	27
Days to pay the payables	252

My notes based on 2011 quarter 1 report (number in '000):-
- The higher revenue was mainly contributed by increased usage from the larger subscriber base of 8.8 million (2010: 7.9 million), and more importantly increased data revenue which grew 38% year-on-year to RM361.7 million, as well as revenue contribution from handset-bundled offerings

- Average revenue per user (“ARPU”) declined slightly to RM50 (2010: RM53); a result of new customers coming in at lower spend levels, competitive price pressure as well as reduced domestic interconnect revenue following the lower regulated mobile termination rate which took effect beginning July 2010

- The marginal decline in the PBT was mostly resulted from commencement of accelerated depreciation in relation to soon-to-be-decommissioned sites under the initial phases of the newly-signed NCA between DiGi Tel and Celcom during the current quarter

- Estimate next 4Q eps after 2011 Q1 result announced = 0.4262*4 = 1.7048, estimate PE on current price 28.82 = 15.9(DPS 1.72)
- Estimate next 4Q eps after 2010 Q4 result announced = 1.5151*1.1 = 1.6666, estimate highest/lowest PE = 17.42/14.85 (DPS 1.63)
- Estimate next 4Q eps after 2010 Q3 result announced = 1.4051*1.1 = 1.5456, estimate highest/lowest PE = 15.11/12.46 (DPS 1.74)
- Estimate next 4Q eps after 2010 Q2 result announced = 1.3254*1.1 = 1.4579(10% grow from 1.3254), estimate highest/lowest PE = 15.85/13.04 (DPS 1.99)
- Estimate next 4Q eps after 2010 Q1 result announced = 1.3254(3% grow from 1.2868), estimate highest/lowest PE = 16.27/15.01 (DPS 2.13)
- Estimate next 4Q eps after 2009 Q4 result announced = 0.317*4 = 1.268, estimate highest/lowest PE = 17.21/15.82 (DPS 1.78)
- Estimate next 4Q eps after 2009 Q3 result announced = 0.3139*4 = 1.2556, estimate highest/lowest PE = 16.27/15.47 (DPS 1.77)
- Estimate next 4Q eps after 2009 Q2 result announced = 0.3016*4 = 1.2064, estimate highest/lowest PE = 17.12/16.21 (DPS 1.75)
- Estimate next 4Q eps after 2009 Q1 result announced = 0.3543*4 = 1.4172, estimate highest/lowest PE = 15.51/14.1 (DPS 1.62)

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