KUALA LUMPUR: TIME Dotcom Bhd
's retail business is now sizable enough to cushion the slowing growth at both wholesale and enterprise, said Maybank Investment Bank Research.
"Both TM and TDC have alluded to incrementally more challenging operating conditions in the enterprise and wholesale segments (traditionally TDC’s bread and butter). TDC’s wholesale revenue (excluding IRU sales) failed to grow in 1H17, while enterprise saw growth taper (from high-teens to low-teens).
"Management’s decision to focus on retail high-rise a couple of years back appears a masterstroke (a reflection of management quality). However, it is only a matter of time
before TM becomes more aggressive in this space," it said.
The research firm said Time's retail revenue growth of 70% y-o-y in 2016 and 98% y-o-y in H1 2017 has been impressive despite coming from a low base.
"Our iteration of revenue using published growth rates (TDC does not disclose absolute revenue by customer segment) suggests that retail’s contribution to group revenue should surpass 10% in 2017 (still below 10% in 2016). We expect retail to contribute c.15% of group revenue in 2017, and c.20% in 2018," it said.
Maybank IB Research's earnings forecasts are tweaked +1% to 2% owing to slight adjustments to its revenue assumptions.
It has maintained its Hold call with an unchanged target price of RM8.90 derived from a DCF assuming 8.2% WACC and 2% long-term growth.
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