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Thursday, July 21, 2011

KLCI Stock - DIGI / 6947 - 2011 Quarter 2

Company Info
Market Capital (Capital Size)23,200,600,000 (Very Large)
Par ValueRM 0.10

My Analysis
Forecast P/E now(29.84-1.72)/1.79 = 15.71 (Moderate)
Target Price28.64+1.72 = 30.36 (PE 16.0, EPS 1.79, DPS 1.72)
DecisionNot interested unless revenue and profit increase more
Revenue increased 2.6% and is continuous increasing since FY09Q2 and also is highest all the time(higher than preceding year corresponding quarter 10%), eps decreased 28.7% and is second consecutive quarter decreasing and also lower than preceding year corresponding quarter 28.8%, cash generated from operating is more than enough to cover all expenses, weaker liquidity ratio at weak level now, higher gearing rato at very high level now, as usual high payables turnover period
First Support Price29.5
Second Support Price28.5

Research House
UOB Target Price30.2 (2011-04-15)
ECM Target Price30.14 (2011-05-03)
HLG Target Price29.2 (2011-05-03)
HwangDBS Target Price30.4 (2011-05-03)
Maybank Target Price30 (2011-05-03)
MIDF Target Price30 (2011-05-03)
OSK Target Price29.2 (2011-05-03)
RHB Target Price30 (2011-05-03)
BNP Paribas Target Price30.7 (2011-05-04)
CIMB Target Price34 (2011-07-13)
AMMB Target Price27.35 (2011-07-15)

Accounting Ratio
Return on Equity90.85%
Dividend Yield5.56%
Profit Margin22.16%
Tax Rate27.35%
Asset Turnover1.1519
Net Asset Value Per Share1.6
Net Tangible Asset per share0.61
Price/Net Tangible Asset Per Share48.92
Cash Per Share1.31
Liquidity Current Ratio0.5012
Liquidity Quick Ratio0.4867
Liquidity Cash Ratio0.3406
Gearing Debt to Equity Ratio2.9583
Gearing Debt to Asset Ratio0.7474
Working capital per thousand Ringgit sale-26.2%
Days to sell the inventory5
Days to collect the receivables28
Days to pay the payables235

My notes based on 2011 quarter 2 report (number in '000):-
- Higher revenue than FY10Q2 mainly by strong data revenue momentum across all revenue streams, particularly from both mobile internet and broadband which grew by 131% year-on-year in tandem with the continued high take-up of device bundles. Higher handsets sales also contributed to the healthy revenue growth

- There was a decline in average revenue per user (“ARPU”) from RM53 in the previous financial period to RM50 in the current financial period, from the cumulative effect of newly-acquired subscribers with lower spending, margin pressure from increased competition and lower domestic interconnect revenue resulting from the downward revision in regulated mobile termination rate which took-effect from July 2010

- Lower pbt than FY10Q2 & FY11Q1 mainly due to accelerated depreciation totalling RM145.5 million with regard to future de-commissioning of existing telecommunications network assets, in anticipation of the on-going network modernisation as well as infrastructure sharing arrangement with Celcom. The effect of the accelerated depreciation was further compounded by a one-off premium of RM16.6 million payable to noteholders for the early-redemption of MTN I and II slated for completion in July 2011

- Estimate next 4Q eps after 2011 Q2 result announced = 0.4262*4*1.05 = 1.79, estimate PE on current price 28.84 = 15.71(DPS 1.72)
- Estimate next 4Q eps after 2011 Q1 result announced = 0.4262*4 = 1.7048, estimate highest/lowest PE = 16.6/15.31 (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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