KUCHING: Contribution from Digi.Com Bhd’s (Digi) postpaid segment has been projected to match that of prepaid by its second half of 2019 (2H19).
The research arm of MIDF Amanah Investment Bank Bhd (MIDF Research) anticipated higher contribution from the pre-to-post conversion and business-to-business (B2B) to lead to better earnings visibility in comparison to prepaid.
“As at the second quarter of 2019 (2Q19), the proportion of postpaid and prepaid has improved further 48 per cent from 41.7 per cent a year ago.
“Given the steady postpaid performance, we expect the contribution from postpaid to match that of prepaid by 2H19,” MIDF Research said in a note yesterday.
Meanwhile, the research arm expected contribution from prepaid to disappoint in 2H19 in view of the challenging market.
“This could potentially undermine the growth stemming from postpaid.”
Nonetheless, MIDF Research expected the discipline in cost management shown by the group to partially uphold the group’s earning resiliency.
On another note, given the healthy share price performance recorded in 1H19, the research arm expected dividend yield to came in below four per cent at this juncture.
The research arm of Kenanga Investment Bank Bhd (Kenanga Research) opined that Digi remains a more compelling option in the telco space owing to the group’s market leader position and highly efficient cost management, while
commanding the highest dividend yield of 3.5 per cent-3.6 per cent for financial year 2019-2020 (FY19-FY20).
“However, trading valuations could be overly bullish at this moment, spearheaded by the planned merger between Telenor Asia and the Axiata group.
“Currently, the terms of the deal have yet to be finalised, pending a due diligence,” Kenanga Research noted.