DiGi reported FY13 revenue of RM6.73bn (+5.9% YoY) and net profit of
RM1.71bn (+41.5% YoY). While the revenue was within our expectations,
its net profit was slightly above our expectations (making 103% of our
FY13 forecast) mainly due to lower-than-expected effective tax rate of
20.3% (FY12: 24.2%) but was within market consensus. The jump in net
profit was mainly due to lower depreciation expenses of RM878m (FY12:
RM1.33bn) with lower accelerated depreciation upon completion of its
network modernisation exercise. DiGi declared a fourth interim dividend
of 7.0sen which sums up to a total of 21.3sen for FY13.
Revenue growth driven by data and higher profit due to lower depreciation expense.
DiGi’s FY13 service revenue of RM6.13bn (+4.1% YoY) was driven by
strong growth in mobile Internet revenue of RM1.23bn (+47.5% YoY) but
partly offset by decline in SMS revenue to RM675m (-13.7% YoY), while
voice revenue remain resilient at RM4.03bn (-0.5% YoY). The jump in FY13
net profit was mainly driven by: (i) lower depreciation expenses (FY13
depreciation expense was RM452m lower than FY12’s - accounted for 82% of
the spike in pre-tax profit); and (ii) lower effective tax rate of
20.3% (FY12: 24.2%). Operationally, DiGi also performed credibly with
net add of 501k subscribers for 2013 while blended ARPU remained steady
at RM48.
Commendable 4Q13 results and operating numbers. For
4Q13, DiGi reported revenue of RM1.73bn (+6.4% YoY, +2.0% QoQ) and net
profit of RM548.5m (+22.2% QoQ, +123.4% YoY). Similar to the whole year
results, revenue was driven by internet data growth of 14.1% YoY with
increased usage and higher smartphone penetration, while net profit was
lifted by lower depreciation expense of RM121.8m (4Q12: RM360.8m) and
lower effective rate. Operationally, DiGi net added 168k subscriber with
blended ARPU remained flat at RM48. As at end-2013, DiGi’s 3G/HSPA+
coverage has reached over 80% population with improved quality
subsequent to completion of network modernisation in 3Q13. Management
plans to hit 85% population coverage by end-2014 to narrow the gap
between DiGi and its competitors, Celcom and Maxis.
Management guidance. For FY14, management is guiding
for revenue growth to be 4%-6% (estimated industry revenue growth of
4%), while EBITDA margin will be sustained at 2013 level of 45%.
Management believes that revenue growth will be fairly modest against
increasing market competition and capex to revenue ratio will be
slightly higher. DiGi is still evaluating the feasibility of setting up a
business trust.
Source: PublicInvest Research
