2QFY10 Results/Briefing Note
- Digi's reported 1H10 net profit of RM556.7m came in within our and consensus expectations.
- Management highlighted that the net debt:equity ratio in end-2Q10 was affected by timing differences and it would go back up in the subsequent quarters.
- Management continues to target revenue growth of “above industry”, with key revenue drivers being mobile internet and mobile broadband. In terms of margins, management believes EBITDA margin will remain stable, as management expects revenue growth, coupled with ongoing cost-saving measures, would help offset the impact of increased handset subsidies.
- While the new termination rate is expected to have a slight negative impact on its top line, Digi expects the reduction in revenue to be more than offset by the reduction in interconnect cost.
- No change in our DCF-derived fair value of RM25.70 and Outperform recomemndation on the stock.
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