KUALA LUMPUR: Affin Hwang Capital has raised Digi.Com Bhd’s 2019-20 earnings per share forecasts by 1.0-2.0 per cent.
This is after the firm incorporated Digi.com’s 2018 financial statement and management’s 2019 guidance.
The telecommunications company (telco) reported a solid set of results for the year ended Dec 31 2018 with net profit growing 4.3 per cent to RM1.54 billion.
Affin Hwang said this was attained on the back of a higher EBITDA (earnings before interest, taxation, depreciation and amortisation) margin, attributable to good cost management and a positive lift from accounting changes.
“Last year, Digi.com’s dividend grew by 4.0 per cent year-on-year to 19.6 sen, translating to a yield of 4.3 per cent.
“Overall, the results were within market and our expectations,” said the analyst, which also kept its “hold” rating on the stock.
Affin Hwang said the adoption of MFRS 15 accounting standard had given Digi.com the largest lift, increasing its net profit by RM77 million.
The telco’s ongoing cost management initiatives via digitisation contributed to lower marketing, operations and maintenance costs.
Elsewhere, the telco’s fourth quarter’s service revenue was flat at RM1.44 billion, while higher revenue from the postpaid segment was up 3.2 per cent quarter-on-quarter to RM622 million was offset by a 2.4 per cent decline quarter-on-quarter in its prepaid revenue toRM815 million.
Digi.com’s postpaid subscribers added 2.7 per cent to 2.8 million in the fourth quarter while the number of its prepaid subscribers fell 2.4 per cent to 8.85 million.
Moving into 2019, the Digi.com management expects it to report a flat service revenue or RM5.9 billion but higher EBITDA (low single digit growth), driven by better cost management and operational efficiency across its business operations via ongoing digitisation initiatives.