November 29, 2010

TM - ECM keeps 'hold' call on TM

Stock Name: TM
Company Name: TELEKOM MALAYSIA BHD
Research House: ECMLIBRA



ECM Libra Investment Research is maintaining its "hold" call on Telekom Malaysia (TM) with an unchanged target price of RM3.54.

In its research note here today, it said TM's nine-month financial year 2010 core net profit of RM324.5 million, was in-line with its expectations but below consensus expectation.

The research house projected TM's Unifi subscribers growth at 20-30 per cent Compound Annual Growth Rate (CAGR)over the next two years.

"2011 will be a ramp-up year for Unifi, while 2012 will see significant revenue contribution from Unifi," it added.

ECM said, TM plans to stick to its dividend policy of paying RM700 million or 90 per cent of net profits, whichever is higher.

"Any changes in its dividend policy will only be considered after the announcement of its last quarter result," it added.

Meanwhile, AmResearch said it is maintaining a "buy" call on TM with a fair value of RM3.90.

The research house said, TM made RM446.6 million in the third quarter financial year 2010, against RM497 million of its full-year estimate.

"We were hoping that the second half 2010 would be able to register a better performance due to the festive season," it added.

It said, against the last quarter, there was an expected reduction in revenue from voice business, by 2.2 per cent, which may have been caused by the bundle packages.

"The implication of which is, as more subscribers upgrade to bundle packages, the contribution from voice business would decline in tandem," it added. -- Bernama

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