Celcom Digi Berhad

Review

• CDB’s IHFY25 core profit of RM874.0mn came in below ours but within consensus expectations, accounting for 42.5% and 47.3% of full-year forecasts, respectively. The variance was largely attributed to higher-than-expected taxes.
• A second interim dividend of 3.8sen/share was declared, the highest since the merger in 2022, bringing the YTD dividend to 7.5sen/share. (IHFY24: 7.0sen/share)
• YoY, IHFY25’s service revenue fell 0.7% to RM5,346mn, mainly due to lower contributions from the prepaid segment, following a strategic decision to reduce reliance on the one-time rotational SIM business. Meanwhile, the postpaid segment rose 3.6% to RM2,147mn, driven mainly by subscriber growth (+75k QoQ, +328k YoY) with higher-value plans, along with resilient roaming and value-added services.
• On the other hand, the group recorded robust growth in home fibre, with revenue rising 48.1% YoY to RM117.0mn. The increase is mainly driven by strong subscriber growth (+31k QoQ, +95k YoY), supported by higher uptake of CelcomDigi One™ plans. However, we believe part of the subscriber growth was fuelled by aggressive promotions, as reflected in ARPU dilution for fibre (-2.1% QoQ and -8.7% YoY to RM94).
• EBIT jumped 16.5% to RM1,432mn, driven by lower depreciation and amortisation following the full decommissioning of impaired network and right-of-use assets. Nevertheless, the group recorded a 2.7% decline in core profit to RM874.0mn, attributable to the absence of the green tax incentive that had lowered tax expenses in the prior year.
• QoQ, 2QFY25 service revenue jumped 1.5% to RM2,693mn, mainly due to continuous growth in postpaid and fibre segments. Meanwhile, core profit rose 0.9% to RM439mn thanks to lower operating cost. The group’s total subscriber base declined to 20,375k from 20,656k (-281k QoQ), largely due to lower prepaid subscribers.

(12-Mth) Share Price relative to the FBMKLCI

Brazil 5511 2395 9000 Europe 44 20 7330 7600 Germm 49 69 9204 1210 Hong Kong 851 746151 HKT GMT-8:00 ba704-168 18-Aug-2025 17:47:14

Source: Bloomberg

Impact

• Following the weaker-than-expected results, FY25 earnings forecasts were revised down by 6.7% after incorporating higher tax expenses.

Outlook

• Management’s guidance for FY25 was largely unchanged, with service revenue and EBIT to grow by a low single digit. Meanwhile, the CAPEX-to-total revenue ratio should be between 14% and 16%. The postpaid and fibre segments will remain the group’s key focus areas.
• Management will continue its efforts to unlock synergies from the merger, aiming to deliver annual cost savings of around RM700.0 to RM800.0mn post-2027.

Valuation & Recommendation

• We maintain our Buy recommendation on CDB with an unchanged TP of RM4.50 based on 11.0x CY26F EV/EBITDA.

Table 1: Earnings Summary

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Table 2: 2QFY25 Results Analysis (RMmn)

Sector Recommendation Guideline

• OVERWEIGHT: The total return of the sector, as per our coverage universe, exceeds 12%.
• NEUTRAL: The total return of the sector, as per our coverage universe, is within the range of 7% to 12%.
• UNDERWEIGHT: The total return of the sector, as per our coverage universe, is lower than 7%.

Stock Recommendation Guideline

• BUY : Total return of the stock exceeds 12%.
• HOLD : Total return of the stock is within the range of 7% to 12%.
• SELL : Total return of the stock is lower than 7%.
• Not Rated: The company is not under coverage. The report is for information only.

Total Return of the stock includes expected share price appreciation, adjustment for ESG rating and gross dividend. Gross dividend is excluded from total return if dividend discount model valuation is used to avoid double counting.

Total Return of the sector is market capitalisation weighted average of total return of the stocks in the sector.

ESG Scoring & Guideline

• ★★★★★ (≥80%): Displayed market leading capabilities in integrating ESG factors in all aspects of operations, management and future directions. +5% premium to target price
• ★★★★ (60-79%): Above adequate integration of ESG factors into most aspects of operations, management and future directions. +3% premium to target price
• ★★★ (40-59%): Adequate integration of ESG factors into operations, management and future directions. No changes to target price
• ★★ (20-39%): Have some integration of ESG factors in operations and management but are insufficient. -3% discount to target price
• ★ (<20%): Minimal or no integration of ESG factors in operations and management. -5% discount to target price

Disclaimer

The information in this report has been obtained from sources believed to be reliable. Its accuracy and/ or completeness is not guaranteed and opinions are subject to change without notice. This report is for information only and not to be construed as a solicitation for contracts. We accept no liability for any direct or indirect loss arising from the use of this document. We, our associates, directors, employees may have an interest in the securities and/or companies mentioned herein.

As of Tuesday, August 19, 2025, the analyst, Chan Mun Chun, who prepared this report, has interest in the following securities covered in this report:

(a) nil

Kaladher Govindan – Head of Research

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