MIDF Amanah Downgrades CelcomDigi To 'Neutral'

KUALA LUMPUR, Nov 19 (Bernama) -- MIDF Amanah Investment Bank Bhd has downgraded CelcomDigi Bhd to a “neutral” call with a lower target price of RM3.53 based on the telecommunications company’s third quarter of 2024 (3Q 2024) results. 

Yesterday, CelcomDigi reported a slightly lower net profit of RM436.98 million for 3Q 2024 compared to RM455.72 million in the previous corresponding quarter.

Revenue, however, increased to RM3.13 billion from RM3.10 billion recorded in 3Q 2024, driven by effective market execution and operational excellence.

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MIDF Amanah said CelcomDigi’s revenue outlook seems tepid as the improvements in the postpaid, home, and fibre segments barely offset the decline in prepaid and enterprise. 

“Moreover, we note that there was a higher cost of material and traffic expenses while not much reduction seen for the operating expenditure,” it said in a research note today.

Post-merger, MIDF Amanah said there was only a considerable decline in depreciation and amortisation in view of lower capex, which was viewed as inadequate.

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However, it said management alluded that a more positive impact on the cost structure can only be seen from 2026 onwards. 

Meanwhile, Maybank Investment Bank Bhd said CelcomDigi’s 3Q results were in line with their expectations as earnings trended up sequentially on further cost tapering. 

“No further updates were provided on the 5G situation. We believe 5G-capex risk is largely priced-in for CelcomDigi, and the stock could re-rate when merger synergies begin to manifest more meaningfully from the financial year 2025 onwards. 

The investment bank reiterated its “buy” call with an unchanged discounted cash flow-based target price of RM4.50. 

At 9.27 am, CelcomDigi’s share price was unchanged at RM3.37, and 50,400 shares had been traded.

-- BERNAMA