Stock Name: TM
Company Name: TELEKOM MALAYSIA BHD
Telekom Malaysia Bhd
(Sept 27, RM3.99)
Upgraded to buy at RM3.98 with revised target price of RM5 (from RM3.90): Malaysia should experience similar demand trend as seen in other highly penetrated markets such as South Korea and Singapore, given Malaysia's still low fixed broadband penetration of 28%. The rollout of fibre-based high-speed broadband (HSBB) network will hasten the growth of fixed broadband over the next few years, and TM will benefit as the largest provider. As at Sept 20, TM has about 159,000 Unifi subscribers. This translates into about 20,000 net add (seasonally adjusted) a month since end-2Q11,versus 2Q11's 15,000 and 1Q11's 10,000.
Average revenue per unit (ARPU) should remain healthy as TM has not cut monthly fees for Unifi packages.
We raised FY12F-13F earnings by 13% to 19% on 4% revenue growth, prompted by better-than-expected achievements at Unifi. We raised Unifi subscriber numbers by 86% to 89% for FY12F-13F, and estimate Unifi's ARPUs at RM181-RM185. With larger contribution from Unifi, Ebitda margin should improve to 34%-35% (versus 33% before) for FY12F-13F, as revenue expands with a larger subscriber base. HSBB is likely to turn around next year when subscriber numbers exceed about 200,000.
TM's valuation seems expensive against its peers', but it dominates the high-entry barrier fixed broadband market. TM offers resilient earnings and stable dividend yields, and strong potential growth from Unifi. The stock has been relatively resilient (+0.5%), since the broader market correction in the last two months. There could also be a special dividend of 13.1 sen per share if TM returns the RM468 million proceeds from the recent sale of Axiata stake. ' HwangDBS Vickers Research, Sept 27
This article appeared in The Edge Financial Daily, September 28, 2011.
Company Name: TELEKOM MALAYSIA BHD
| Research House: HWANGDBS | Price Call: BUY | Target Price: 5.00 |
Telekom Malaysia Bhd
(Sept 27, RM3.99)
Upgraded to buy at RM3.98 with revised target price of RM5 (from RM3.90): Malaysia should experience similar demand trend as seen in other highly penetrated markets such as South Korea and Singapore, given Malaysia's still low fixed broadband penetration of 28%. The rollout of fibre-based high-speed broadband (HSBB) network will hasten the growth of fixed broadband over the next few years, and TM will benefit as the largest provider. As at Sept 20, TM has about 159,000 Unifi subscribers. This translates into about 20,000 net add (seasonally adjusted) a month since end-2Q11,versus 2Q11's 15,000 and 1Q11's 10,000.
Average revenue per unit (ARPU) should remain healthy as TM has not cut monthly fees for Unifi packages.
We raised FY12F-13F earnings by 13% to 19% on 4% revenue growth, prompted by better-than-expected achievements at Unifi. We raised Unifi subscriber numbers by 86% to 89% for FY12F-13F, and estimate Unifi's ARPUs at RM181-RM185. With larger contribution from Unifi, Ebitda margin should improve to 34%-35% (versus 33% before) for FY12F-13F, as revenue expands with a larger subscriber base. HSBB is likely to turn around next year when subscriber numbers exceed about 200,000.
TM's valuation seems expensive against its peers', but it dominates the high-entry barrier fixed broadband market. TM offers resilient earnings and stable dividend yields, and strong potential growth from Unifi. The stock has been relatively resilient (+0.5%), since the broader market correction in the last two months. There could also be a special dividend of 13.1 sen per share if TM returns the RM468 million proceeds from the recent sale of Axiata stake. ' HwangDBS Vickers Research, Sept 27
This article appeared in The Edge Financial Daily, September 28, 2011.
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