DIGI – Fundamental Analysis (10 Feb 2015)

DIGI Analysis:-

Excel – http://1drv.ms/1y2vPWD

Notes – http://tinyurl.com/okbx9vn

My View:-

  • Valuation:
    • 5Y DCF:
      • Good Scenario: 6.74 (Fair value uncertainty: HIGH)
      • Base Scenario: 5.83 (Fair value uncertainty: VERY HIGH)
      • Bad Scenario: 5.02 (Fair value uncertainty: EXTREME)
      • Ugly Scenario: 4.31 (Fair value uncertainty: EXTREME)
      • At current price (6.46), based on RDCF, assumption of FCFF growth rate in the next 5 years is 9.8%.
    • Absolute EY%:
      • Trailing:
        • FY14 (EPS: 0.261) – Fair value 5.91 (Fair Value Uncertainty: VERY HIGH)
        • R4Q (EPS: 0.261) – Fair value 5.91 (Fair Value Uncertainty: VERY HIGH)
      • Forward:
        • FY15 (EPS: 0.271) – Fair value 6.13 (Fair Value Uncertainty: VERY HIGH)
        • FY16 (EPS: 0.283) – Fair value 6.41 (Fair Value Uncertainty: HIGH)
      • EPS applied to reach the current stock price (6.46): 0.286
  • The full scale modernised network has improved the network quality and customer experience scorecard.
  • On this backdrop, data monetisation continues to be Digi’s trump card as shown in the strong data revenue growth.
  • I accumulated small lots of DIGI last week. I am willing to pay some premium for this stock due to its outstanding performance and defensiveness.
  • Potential upside is limited in the immediate term. As of now, valuation of DIGI is not attractive.
  • On the other hand, if you looking for 4% dividend yield and very stable stock, you can consider DIGI.

Latest Financial – Q4 2014 Financial Report (9 Feb 2015) http://www.bursamalaysia.com/market/listed-companies/company-announcements/1871277

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


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