Revenue has increased by 9% YoY to LKR9.6 bn in 4Q2009 fuelled by positive gains in the mobile market on the back drop of aggressive price competition.
Net loss (excluding one-off charges) has been converted to a net profit (excluding one-off charges) of LKR761 mn owing to the improvements in mobile telephony operations, which made a Post Tax Profit of LKR1.2 bn on normalised basis.
DIAL's better performance particularly in 4Q2009 has driven us to revise up our forecast 2010E net profit to LKR2,948 mn. We believe the company is heavily investing to modernise its network infrastructure, improve quality, strengthen marketing activities to successfully combat competition in the future.
Though having nearly bottomed out, and trading on 18.6X forecast 2010E net profit, we expect DIAL to recover from 1Q2010E onwards. Whilst being a large cap company in the Colombo bourse, DIAL would continue to be a telecom sector pick and an institutional play, whilst the share has been supported with strong broad investor participation coupled with healthy earnings growth potentials. Further with the strong economic rebound we believe a commendable amount of investments would flow in to the sector in terms of infrastructure developments which would further strengthen the future earnings, we maintain our recommendation at medium- long term. - BUY
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