Renewed optimism on Time dotCom’s capacity expansion

PETALING JAYA: TIME Dotcom Bhd’s capacity expansion has caught the eye of some research firms such as RHB Research.

RHB Research said it is more positive on the stock following a recent visit to the group’s Cyberjaya data centre, AIMS@CJ.

“Our renewed optimism is supported by its timely capacity expansion to meet structural demand, with data centres being a core economic imperative, and the higher premiums accorded for infrastructure assets in the new normal,” the research said in a note to clients yesterday.

RHB Research also continues to see robust growth for the group’s retail broadband segment, which will help fuel its 11% financial years 2023-2025 (FY23-FY25) earnings on a compounded annual growth rate.

AIMS@CJ is the extension to Time dotCom’s fully tenanted flagship data centre site in downtown Kuala Lumpur, dubbed as Menara AIMS@KL1.

According to RHB Research, with a tier-three certification, the data centre appeals to a slightly different clientele base where the central location is not a key prerequisite.

The first phase was commissioned in the third quarter of 2021 with capacity taken up in less than 12 months, which was ahead of RHB’s expectations.

“Construction work for phase two should be completed by year-end, with capacity pre-sold for the first two floors. AIMS is also retrofitting the new KL2 site (previously Bangunan KWSP), located opposite Menara AIMS to meet overflow demand with a single floor being operational.”

Given the heightened news flow on new data centre investments in recent months, there are concerns that the local data centre market may eventually see a supply glut.

Johor’s Sedenak Technology Park and Cyberjaya are the two hotspots for newbuilds in this space.

However, it said the management of Time dotCom sees “the risks as manageable” with the strong structural drivers at play.

Apart form robust demand for cloud, managed solutions and disaster recovery services, Singapore’s tightened conditions for data centres (DC) have contributed positively to the inventory overflows to Malaysia.

Notable investments by hyperscalers will also benefit co-location data centre providers, with pre-committed take-ups of capacity, said RHB Research.

“We lift FY24-FY25 forecast core earnings by 3% to 7% after factoring in incrementally stronger growth for the broadband segment and DC share of profits.

“Note that the stock’s foreign shareholding level has crept up from under 9% a year ago to circa 13% at end-June,” added the research firm.

RHB Research has upgraded the stock from a “neutral” to a “buy” and raised the higher target price to RM6 from RM5.80 previously.