KUALA LUMPUR: CelcomDigi Bhd continues to demonstrate earnings resilience despite rising competition, according to Public Investment Bank Bhd (PublicInvest).
The research firm said the benefits of the company’s five-year merger synergies are starting to be reflected more meaningfully in both financial and service performance.
“We maintain our earnings forecasts and ‘Neutral’ rating, with an unchanged target price of RM4,” it said in a note.
CelcomDigi posted a net profit of RM439 million for the second quarter of financial year 2025, up 8.1 per cent from a year earlier, mainly driven by lower depreciation and amortisation charges, which fell 9.2 per cent year-on-year.
Excluding non-operating items, CelcomDigi’s core net profit stood at RM958.2 million, accounting for 52 per cent of both its and consensus full-year earnings estimates.
Major shareholder Telenor ASA has outlined plans to develop a sovereign and sustainable artificial intelligence (AI) factory in Malaysia. Envisioned as a data centre, the project aims to deliver local compute power and could also support CelcomDigi’s 20 million-strong customer base.
PublicInvest said demand for AI services is expected to expand across education, financial services, healthcare and data analytics, requiring greater compute power to perform end-to-end tasks in the future.
RHB Investment Bank Bhd (RHB Research) said CelcomDigi’s results were a slight miss, with core earnings before interest and taxes (Ebit) rising 9.2 per cent in the first half of 2025 (1H25).
The firm added that with information technology (IT) transformation costs and depreciation expected to climb in 2H25, Ebit growth is likely to normalise to guided levels.
RHB Research expects core earnings to grow at a solid 25 per cent compound annual growth rate in FY25–FY27, supported by stronger commercial execution and greater synergies from the completion of its IT stack upgrades.
On outlook, RHB Research said CelcomDigi has reaffirmed its FY25 guidance of low single-digit service revenue growth, low-to-mid single-digit Ebit growth, and capital expenditure intensity of 14–16 per cent.
“This implies slower Ebit growth in 2H25 due to higher depreciation from new network assets and integration costs, with IT transformation spending expected to peak in the final quarter of 2025.
RHB Research maintained a “Buy” call on CelcomDigi, with a new target price of RM4.20 from RM4.40 previously.
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