PETALING JAYA: Analysts are confident that CelcomDigi Bhd’s earnings will remain resilient going forward.

       According to Hong Leong Investment Bank (HLIB) Research, the telecommunication conglomerate’s underlying year-to-date (YTD) performance has remained solid.

       For its third quarter ended Sept 30, 2023, CelcomDigi posted a net profit of RM455.7mil, while its revenue was at RM3.1bil for the same quarter.

       In a statement, the group said its results were driven by higher service revenue and better cost discipline.

       HLIB Research noted, however, that revenue was down 1% compared to the same quarter a year before, mainly due to a drag from the postpaid (minus 1%) and devices (minus 13%) segments, which more than offset the gains in wholesale and others (4%) and home fibre (5%), while prepaid was flat.

       “However, core net profit gained 14%, thanks to lower depreciation and amortisation and the effective corporate tax rate of 20%,” the research house said.

       It noted that CelcomDigi’s YTD top and bottom line grew by 105% and 98%, respectively.

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       “In terms of product breakdown, growth was driven by home fibre (27%), followed by devices (17%) and prepaid (1%), which was more than sufficient to offset the declines in postpaid (minus 1%) and wholesale and others (minus 3%).

       “We maintain a ‘hold’ call with an unchanged target price (TP) of RM4.30.

       “We believe while waiting for more clarification on the 5G structure and its strategy ahead, dividend yield of 3.5% should sustain the share price in the near term,” it said.

       Meanwhile, TA Research has also placed a “hold” call on CelcomDigi with a TP of RM4.60, noting that the company’s integration has been on track and that it is expected to realise net present value synergies worth RM8bil.

       “As of end-October 2023, the group has completed the modernisation of 4,402 sites (78% on track) and phased out 1,633 sites (64% on track). This has led to improved customer experience as measured via download speeds, signal strength and data traffic,” TA Research said.

       Furthermore, the research house said CelcomDigi has continued to actively promote its 5G offerings to consumers and enterprises despite the number of 5G-device users remaining small.

       “Additionally, momentum within the enterprise space is observed via the partnership with DHL to launch Malaysia’s first 5G-powered artificial intelligence autonomous inventory management system.”

       Similarly, TA Research was positive about CelcomDigi’s prospects as the first nine months of 2023 showed its service revenue and earnings before interest, taxes, depreciation and amortisation growing on the back of its prepaid and home fibre segments’ subscriber acquisitions.

       This was on top of healthy data adoption, as well as higher contributions from the wholesale business.