Data demand signals good times for Time dotCom


  • Telcos
  • Wednesday, 16 Sep 2020

Kenanga research has a “trading buy’’ on the stock with a fair value of RM14 per share. Analysts consensus is at RM12.60.

PETALING JAYA: TIME Dotcom Bhd’s net earnings growth is expected to be 5% and 9% for this and next financial year (FY) respectively.

Kenanga Research in its report said the company has steady revenue with healthy margins. It has forecast revenue to be 10% and 9% for FY20/21 respectively.

The earnings are based on better data demand, though slightly off-set by the diminishing use of voice services for communication.“Time dotCom’s revenue stream is almost entirely recurring, from their provision of data (fibre internet, data centre space) and voice services), ’’ the house said.

It expected earnings before interest, tax, depreciation and amortisation (EBITDA) margins of about 45% (versus other operators at about 40%). This could be sustained by leaner fixed cost.

It expects dividend payouts to remain above 50% (more than the established 25%). Dividend yields could translate to 2.5%/2.7% for FY20/21.

“We anticipate little factors that could cause customers to deviate away from the Time dotCom brand, with its almost entirely recurring income mix to boast its sustainable business model, ’’ Kenanga added.

The house has a “trading buy’’ on the stock with a fair value of RM14 per share. Analysts consensus is at RM12.60.

Yesterday, the share price added 36 sen to close the day at RM12.20 a share.

Time dotCom is also the only large cap telco with a net cash position of RM420.3mil as at second quarter this year.

“While we do not anticipate the group to be a key participant in future nationwide 5G plans, it could still meaningfully contribute in fiberising our national network, ’’ it said.

The research house added that Time dotCom aimed to enter at least one million retail/household premises this year from 790,000 in FY19.However, this may have been deterred by the movement control order (MCO) with fibre broadband footprint mostly encompassing high rise buildings in the Klang Valley and Penang.

Time dotCom’s household packages are the most competitive in the market based on the respective speeds offered which we believe gives existing customers little incentive for migration, Kenanga said.

“This puts the group in a favourable position during this MCO period where homebound work arrangements are more prevalent and the need for home internet becomes more pressing, possibly nudging average revenue per user higher, ’’ it said.

On data centres, the house said the group holds strong presence and prospects are helped by the increase in dependency of cloud computing and data storage outsourcing becoming commonplace and cost efficient for corporations.

However, the segment could face little resistance for growth plus the lack of large-scale competition locally.

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