Company Coverage
CelcomDigi (CDB MK): Positive Risk Reward, Earnings Uplift From Synergistic Savings And Rational Price Competition
BUY (Maintained)
Current price:
Target price:
Upside:
RM2.98
RM4.05
+35.9%
Analyst
Highlights
- 2Q26 will reflect a higher quantum of synergistic savings from the merger exercise. We estimate at least RM150m opex and COGS savings in 2Q26 vs RM41m in 1Q26. This will drive earnings uplift progressively into the rest of 2026, as management expects total synergistic savings of RM465m for the full-year 2026. These savings will stabilise at RM700m-800m by 2028.
- We expect rational price competition in 2Q and 3Q26, following sector-wide price revision for postpaid and prepaid. Consequentially, customer churn in 2Q may be high, particularly in the prepaid segment, but we expect a positive uplift to quarterly earnings as a result of the price adjustment.
- We see positive risk-reward for the stock, which is trading at -1SD from its mean valuation given the foreign selldown in Jun 26. Maintain BUY with a DCF-based target price of RM4.05.
Analysis
- An efficient operator; RM465m in synergistic savings in 2026. We expect CelcomDigi Berhad (CelcomDigi) to continue reaping the benefits of merger synergies in 2Q26, to the tune of an estimated RM150m across opex and COGS savings. This is a flow-through from 1Q25’s RM41m opex savings and will result in earnings uplift for the rest of 2026. To recap, management projected synergistic cost savings of RM465m to be reflected in 2026. For 5M26, a total of RM163m savings have been reflected in P&L – or approximately 35% of total savings have been executed, with the balance to be recognised in the coming quarters. Management is confident CelcomDigi can deliver RM700m-800m in annual cost savings by 2028.
- Signals of rational price competition in the market. CelcomDigi drove rational price competition towards the end of 1Q26 and the other two players followed through. Collectively, all three players raised postpaid and prepaid prices by high single digits. We believe this may have a positive impact on 2Q26’s and 3Q26’s earnings. Naturally, we expect some churn as a result of the price hike, which may see some prepaid churn away from the three incumbent players to the MVNOs. Bundling and higher data allocation is a trend currently seen in 3Q26, while prices will remain elevated for the rest of the year.
Highlights
- 2Q26 will reflect a higher quantum of synergistic savings from the merger exercise. We estimate at least RM150m opex and COGS savings in 2Q26 vs RM41m in 1Q26. This will drive earnings uplift progressively into the rest of 2026, as management expects total synergistic savings of RM465m for the full-year 2026. These savings will stabilise at RM700m-800m by 2028.
- We expect rational price competition in 2Q and 3Q26, following sector-wide price revision for postpaid and prepaid. Consequentially, customer churn in 2Q may be high, particularly in the prepaid segment, but we expect a positive uplift to quarterly earnings as a result of the price adjustment.
- We see positive risk-reward for the stock, which is trading at -1SD from its mean valuation given the foreign selldown in Jun 26. Maintain BUY with a DCF-based target price of RM4.05.
Analysis
- An efficient operator; RM465m in synergistic savings in 2026. We expect CelcomDigi Berhad (CelcomDigi) to continue reaping the benefits of merger synergies in 2Q26, to the tune of an estimated RM150m across opex and COGS savings. This is a flow-through from 1Q25’s RM41m opex savings and will result in earnings uplift for the rest of 2026. To recap, management projected synergistic cost savings of RM465m to be reflected in 2026. For 5M26, a total of RM163m savings have been reflected in P&L – or approximately 35% of total savings have been executed, with the balance to be recognised in the coming quarters. Management is confident CelcomDigi can deliver RM700m-800m in annual cost savings by 2028.
- Signals of rational price competition in the market. CelcomDigi drove rational price competition towards the end of 1Q26 and the other two players followed through. Collectively, all three players raised postpaid and prepaid prices by high single digits. We believe this may have a positive impact on 2Q26’s and 3Q26’s earnings. Naturally, we expect some churn as a result of the price hike, which may see some prepaid churn away from the three incumbent players to the MVNOs. Bundling and higher data allocation is a trend currently seen in 3Q26, while prices will remain elevated for the rest of the year.
BUY (Maintained)
Current price:
Target price:
Upside:
RM2.98
RM4.05
+35.9%
Analyst
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