DIGI – Fundamental Analysis (22 Oct 2014)

DIGI Analysis:-

Excel – http://1drv.ms/1s3vQ9s

My View:-

– Fair values:
  – 5Y DCF:
    – Good Scenario: 6.17 (Fair value uncertainty: HIGH)
    – Base Scenario: 5.35 (Fair value uncertainty: VERY HIGH)
    – Bad Scenario: 4.62 (Fair value uncertainty: EXTREME)
    – Ugly Scenario: 3.97 (Fair value uncertainty: EXTREME)
  – Absolute EY%:
    – Trailing:
      – FY13 (EPS: 0.219) – Fair value 5.64 (Fair Value Uncertainty: VERY HIGH)
      – R4Q (EPS: 0.26) – Fair value 6.68 (Fair Value Uncertainty: MEDIUM)
    – Forward:
      – FY14 (EPS: 0.25) – Fair value 6.43 (Fair Value Uncertainty: MEDIUM)
      – FY15 (EPS: 0.264) – Fair value 6.79 (Fair Value Uncertainty: MEDIUM)
    – EPS applied to reach the current stock price (5.93): 0.231
  – Both models indicate that DIGI is slightly undervalued.
– The modernised network has improved the network quality and customer experience scorecard. This is evident with the 89% reduction in customer complaint.
– Data monetisation continue to be Digi’s trump card as shown in the strong data revenue growth.
– Operating margin also continues to improve as the company efficiently manages its expenses.
– Digi’s practise of paying out almost all of its earnings serve as another sweetener to the stock.
– I recently accumulated DIGI. I am willing to pay some premium for this stock due to its outstanding performance and defensiveness.

Latest Financial – Q3 2014 Financial Report (20 Oct 2014) http://www.bursamalaysia.com/market/listed-companies/company-announcements/1770149

At the time of writing, I owned shares of DIGI.


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