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DiGi.Com Bhd rose to a record in Kuala Lumpur trading after Malaysia’s third-largest mobile-phone operator proposed returning cash to shareholders and splitting its shares to attract more investors.
The stock surged as much as 7.9 per cent to RM33.58 and closed at RM32 at 5 p.m. local time. DiGi was today’s biggest gainer on the benchmark FTSE Bursa Malaysia KLCI Index, which dropped 0.1 per cent.
“We are positive on the capital-distribution exercise,” Jeffrey Tan, an analyst at OSK Holdings Bhd, wrote in a report today. “The exercise puts to rest doubts on the group’s ability to sustain its over-100-per cent dividend payout for 2011.” He raised his fair value for the stock to RM30.95 from RM30.30 and kept his “neutral” rating.
The Selangor-based company will return cash to shareholders including Norway’s Telenor ASA after receiving a RM509 million payment from a unit, it said in a statement yesterday. DiGi also said investors will receive 10 shares for each one they currently own in a proposed split to make the stock more affordable and boost liquidity.
The move, which prompted brokers including RHB Capital Bhd to upgrade the stock, reassured investors of continued payouts as the company depreciates more than RM1 billion of equipment and upgrades its network. The company, which reduced its second-quarter dividend to 30 sen from 35 sen a year earlier, said in April depreciation costs may hurt earnings for three years.
DiGi was raised to “outperform” from “trading buy,” RHB analyst Lim Tee Yang said in a report today.
ECM Libra Financial Group Bhd boosted its rating to “buy” from “hold.” The stock is an “attractive dividend and capital-management play” in the current “volatile” market environment, ECM analyst Foong Wai Mun said in a separate report today.
The stock was suspended yesterday for the announcement.
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