Kenanga Research is maintaining an "outperform" rating on DiGi.com with a 31.3 per cent total return year-to-date
against an average 28.5 per cent for the telecommunications sector and 10 per cent in the FBMKLCI.

Kenanga in its research note today said despite the hefty year-to-date performance, the stock is still able to provide a 6.6 per cent capital upside, judging by its minimum annual dividend commitment and higher than historical average and FBMKLCI dividend yield.

"While we are keeping our financial year 2012 to 2014 earnings forecast unchanged, we have raised our targeted financial year 2013 Enterprise Value/Earnings Before Interest, Taxes, Depreciation and Amortisation (EV/EBITDA) to 12.9 times (+3SD) from 10.8 times (+2SD) previously.

"Hence our DiGi target price has been raised from RM4.68 to RM5.20 implying a dividend yield of 4.3 per cent for financial year 2013," it said.

It said the stock could have some yield compression going forward given that investors are still chasing for safe haven and defensive shelters in the current volatile market.

"The company's outlook remains intact in our view with potential for more strategic collaborations with Celcom in the future," it said.

It said the recent 4G network collaboration between Maxis and Redtone could also prompt both DiGi and Celcom to restrategise their 4G network plans.

However, the research house said the inflection point of DiGi's strong share price performance could be peaked should there be fewer concerns on the external risks and when its historical volatility trend lines start to converge.

"Based on our observation, the company share price has yet to reach its climax given that the historical volatilities of DiGi have yet to swing to the extreme end as it is still below the historical mean at this juncture.

"We believe the turning point for DiGi's share price could potentially emerge if the historical volatility trend lines of 13 days, 21 days, 34 days and 55 days start to converge and follow with a pike in volatility," it said. -- Bernama