KUALA LUMPUR: 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.

According to BERNAMA News Agency, while there was a slight increase in revenue to RM3.13 billion from RM3.10 billion recorded in 3Q 2024, this was primarily driven by effective market execution and operational excellence. However, MIDF Amanah noted that the revenue outlook appears tepid as improvements in the postpaid, home, and fibre segments barely offset declines in prepaid and enterprise segments.

The investment bank highlighted that CelcomDigi experienced higher costs related to materials and traffic expenses, with minimal reductions in operating expenditure. Post-merger, a significant decline was noted only in depreciation and amort
isation due to lower capital expenditure, which is seen as insufficient. Management has indicated that a more positive impact on the cost structure is expected from 2026 onwards.

Meanwhile, Maybank Investment Bank Bhd stated that CelcomDigi’s 3Q results were in line with expectations, as earnings increased sequentially due to further cost tapering. The bank did not provide further updates on the 5G situation but believes that the 5G-capex risk is largely accounted for. They anticipate that the stock could re-rate when merger synergies start to materialize more significantly from the financial year 2025 onwards. Maybank reiterated its ‘buy’ call with an unchanged discounted cash flow-based target price of RM4.50.

At 9.27 am, CelcomDigi’s share price remained unchanged at RM3.37, with 50,400 shares traded.