Stock Name: TM
Company Name: TELEKOM MALAYSIA BHD
Affin Investment Bank downgraded Telekom Malaysia Bhd to 'reduce' from 'add' and cut its target price to RM5.16 from RM6.04, citing a slower-than-expected reduction in the telco's capital expenditure and slowing net adds for the Internet division going forward.
"All in, we see limited further near-term re-rating catalyst for the stock," the research house said in a note on Wednesday.
The slower-than-expected cut in capital expenditure means that there is limited catalyst for a hike in dividend. Also, Telekom Malaysia may not be able to pay a higher dividend due to its RM2 billion loan obligation due by year end, Affin said.
"Conversely, the latter factor (slowing net adds from Telekom Malaysia's internet division) depicts risk of slowing earnings momentum, and occurring even prior to competition from the Astro-Maxis collaboration," it said.
The voice segment, which contributed up to 37 per cent of Telekom Malaysia's revenue, is also unlikely to see any meaningful recovery, Affin said.
As of 10.58am, the shares were up 0.56 per cent at RM5.40. The benchmark stock index increased 0.69 per cent.-- Reuters
Company Name: TELEKOM MALAYSIA BHD
| Research House: AFFIN | Price Call: SELL | Target Price: 5.16 |
Affin Investment Bank downgraded Telekom Malaysia Bhd to 'reduce' from 'add' and cut its target price to RM5.16 from RM6.04, citing a slower-than-expected reduction in the telco's capital expenditure and slowing net adds for the Internet division going forward.
"All in, we see limited further near-term re-rating catalyst for the stock," the research house said in a note on Wednesday.
The slower-than-expected cut in capital expenditure means that there is limited catalyst for a hike in dividend. Also, Telekom Malaysia may not be able to pay a higher dividend due to its RM2 billion loan obligation due by year end, Affin said.
"Conversely, the latter factor (slowing net adds from Telekom Malaysia's internet division) depicts risk of slowing earnings momentum, and occurring even prior to competition from the Astro-Maxis collaboration," it said.
The voice segment, which contributed up to 37 per cent of Telekom Malaysia's revenue, is also unlikely to see any meaningful recovery, Affin said.
As of 10.58am, the shares were up 0.56 per cent at RM5.40. The benchmark stock index increased 0.69 per cent.-- Reuters
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