PETALING JAYA: TIME Dotcom Bhd
is expected to deliver a commendable compounded annual growth rate for its earnings of 9% over the next three years driven by network expansion and cost discipline.
In addition, annual capital expenditure (capex) of RM400mil to RM500mil will support the telecommunications provider’s network expansion plans, prioritising single-dwelling units in both brownfield and greenfield developments, said UOB Kay Hian Research (UOBKH Research) in a report.
The research house said the stock offers “lush” dividends, with a net dividend yield of 6.5% and strong earnings visibility.
It has a “buy” call on the counter with a RM6 target price.
“We expect the group to deliver commendable margins over the next three years, mirroring last year’s profit margin of 28%. With an estimated 15% to 17% market share of household coverage, the aim is to add another 200,000 to 250,000 home passes annually.
“This will be supported by a gradual increase in network footprint – both in greenfield and brownfield areas,” the research house said.
UOBKH Research said it expected the group to ramp up its capex intensity in single-dwelling units or landed properties, prioritising regions with existing networks such as the Klang Valley, Johor Baru and Penang.
For greenfield expansion, surveys have indicated that consumers are unfamiliar with Time’s products or services, it said, adding that this may lead to potentially lower take-up rate at the initial stage.
“As such, Time aims to penetrate these markets through a dual approach – direct sales and more cost-effective indirect sales via partnerships with mobile network operators.”
On the recent Myanmar earthquake and its impact on the group, UOBKH Research noted that while the group has no direct exposure to Myanmar, its operations in
Thailand were marginally impacted by the natural disaster.
Time’s operations only suffered minor disruptions with little to no connectivity issues reported.
“We do not anticipate any material financial impact to be recognised in the current quarter,” the research house said.
UOBKH Research house said at its target price, Time’s stock trades at 11.7 times enterprise value over earnings before interest, taxes, depreciation and amortisation for this year, slightly below its 12-month forward mean of 12.1 times.
