Downgrade to Sell. We reckon the market may be too sanguine on DiGi. Its
1Q12 results came in as expected but we detect early signs of weakness
that could become more serious threats in future quarters. Competition
is expected to ratchet up several notches as Maxis turns up the heat in
prepaid voice, a business that accounts for more than half of DiGi's
revenue. With the switch of focus to small screen devices, data could
also be vulnerable. 18 out of 30 analysts covering DiGi are sitting on
the fence, but we take a more concrete stand and recommend to SELL the
stock into strength as the market buys it up on the latest capital
payout. Our EV-derived TP is lowered to MYR3.60.
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Source: Maybank Research - 27 April 2012
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