Analysts remain positive on TM outlook

KUALA LUMPUR: Analysts are still positive on Telekom Malaysia Bhd’s (TM) prospects despite its first-quarter (Q1) net profit falling 28.5 per cent year-onyear.

TM posted a lower net profit of RM230.43 million for the quarter ended March 30 on the back of reduced operating profit before finance cost and lower foreign exchange gain on its borrowings.

RHB Research said TM’s Q1 results were slightly ahead at 28 per cent of full-year consensus estimates, although it expected operating expenditure to increase in subsequent quarters due to new services.

The company expects TM’s core earnings to grow at a steady compound annual growth rate of three per cent between this year and next, supported by the continued growth of its Internet and data segment — which contribute 55 per cent to revenue.

RHB Research maintained its “buy” call on TM, with a higher target price of RM7.70 from RM7.50 previously.

MIDF Research said TM’s Q1 results came in within its own and consensus expectations, accounting for 25.5 and 27.1 per cent of this financial year’s earnings estimates, respectively.

It said as at Q1, while TM’s customer base remained relatively stagnant at 2.37 billion, the proportion of UniFi customers had increased to 41.2 per cent from 37.1 per cent in the same quarter a year ago.

It said the shift in customer composition had also lifted Q1 average revenue per user (Arpu) higher to RM201 per month from RM192 previously, with more than 80 per cent of UniFi customers now on broadband packages that offer at least 10 megabit per second download speed.

MIDF Research maintained its “buy” call on TM with higher target price of RM7.77 from RM7.42 previously.

“Despite the challenging market environment, we are comforted by the fact that UniFi’s customer base and Arpu continue to increase at a steady pace,” it said.

MIDF Research views the progressive growth in TM’s broadband customer base to be further driven by the High Speed Broadband (HSBB) Phase 2 and SubUrban Broadband (SUBB) projects.

“Coupled with generous capital expenditure undertaking, TM will be able to remain committed to its pledge of providing higherspeed broadband access more affordable to the masses,” it said.

PublicInvest Research said the results were in line with its estimates, at 27 per cent of the fullyear target.

“Our earnings forecasts remain unchanged,” it added.

PublicInvest maintained its “neutral” call on TM with a higher target price of RM6 from RM5.80 previously.

Maybank Investment Bank (IB) Research has different takes on TM’s results and outlook.

While the net profit was “a good start”, it said the group’s near-term earnings growth outlook remained subdued.

This is because webe’s earnings will possibly remain in the negative territory this year and next.

Maybank IB kept its “hold” call on TM with a slightly higher target price of RM6 from RM5.90 previously. Farah Adilla