KUALA LUMPUR, June 28 ― CelcomDigi shares surged by 5.19 per cent or 18 sen to RM3.65 on Bursa Malaysia as at 11.40am today.
Maybank Investment Bank (Maybank IB) Research said CelcomDigi’s risk-reward profile has turned more favourable following the over 15 per cent share price decline in the past three months as Malaysia’s second 5G network comes closer to fruition.
“We believe 5G capital expenditure (capex) risk is largely priced in and the stock could re-rate when merger synergies begin to manifest more meaningfully,” it said in a research note today.
Therefore, Maybank IB has upgraded CelcomDigi to a ‘buy’ call (from ‘hold’) with an unchanged target price of RM4.50.
Maybank Ib noted CelcomDigi had been hardest hit, losing about RM8 billion of equity value in the past three months with some progress being made in recent months towards the setting up of a second 5G network.
The firm expects merger synergies to manifest more significantly from the financial year 2025 (FY2025) onwards, resulting in more meaningful earnings growth.
It suggests management should provide some guidance on FY2025 synergies in the fourth quarter of 2024 (4Q 2024) results briefing in February 2025.
Maybank IB said there are several risk factors for the outlook such as competitive developments, such as price wars would adversely affect monetisation and thus profitability.
Besides, regulatory developments pertaining to spectrum fees, taxation, or product pricing also pose a risk to CelcomDigi’s earnings. ― Bernama
