KUALA LUMPUR: ECM Libra Investment Research reiterated its hold recommendation on DIGI.COM BHD at RM22.68 with target price RM23.20 and said the company's 3MFY10 results were within expectations, as revenue and net profit both achieved 25% of its FY10 estimates.

Compared to consensus estimates, DiGi also met expectations as revenue and net profit were at 25% and 26% of FY10 estimates respectively, said the research house.

It said DiGi's 3MFY10 revenue rose as its subscriber base expanded, but net profit growth was marginal due to amortisation for 3G licence (RM19 million), which was non-existent in 1QFY09.

"EBITDA (earnings before interest, tax, depreciation and amortisation) margins rose two percentage points quarter-on-quarter (q-o-q) to 44.6% mainly due to higher revenue and cost control, it said.

The research house said subscriber (subs) growth weakened in 1QFY10 as DiGi added 227, 000 new subs (4QFY09: +327,000) q-o-q to 7.95 million.

DiGi added 192,000 prepaid subs to 6.68 million while postpaid subs increased 35,000 to 1.27 million.
From its total subs base, 1.5 million are mobile Internet users of which 77,000 are mobile broadband (dongle) users.

Overall ARPU and usage was stable q-o-q, as higher prepaid minutes of usage (MOU) offset lower postpaid MOU. Blended ARPU decreased to RM53 (4QFY09: RM54) while blended AMPU eased to 227 mins (4QFY09: 228 mins).

DiGi declared a first interim net dividend of 35 sen a share, which implies almost full payout from 1QFY10 earnings.

"Given DiGi's improving strong cash flow, we continue to assume DiGi will payout 130% of its earnings as dividends for FY10-12, implying FY10 dividend per share of RM1.84 or 8.1% yield," it said.