PETALING JAYA: TIME Dotcom Bhd
continues to see steady earnings growth as it undertakes its balance sheet optimisation strategy.
The telecommunications company’s results for the first quarter ended March 31, 2026 (1Q26), were broadly in line with analysts’ expectations.
It posted a core net profit of RM125.4mil for the quarter, marking a rise of 7.6% year-on-year (y-o-y), driven by topline expansion and lower costs, Kenanga Research said.
Revenue for 1Q26 grew by 6% y-o-y, supported by its retail and wholesale segments.
Retail drove Time dotCom’s topline growth, with average revenue per user holding steady at RM117 for the fourth consecutive quarter and subscriber base expanding by 6% y-o-y, despite a competitive landscape.
However, quarter-on-quarter fibre broadband net additions in 1Q26 notably eased to 6,000, well under its 4Q24 peak of 12,000.
The group’s earnings before interest, taxes, depreciation, and amortisation (Ebitda) margin was lifted to 47.4%, compared to 43.6% in 1Q25, underpinned by higher revenue and lower costs.
Despite this, Kenanga Research highlighted that the margin surge mainly reflects deferred expenses, as the company held back spending early in the year while reviewing its cost structure.
“Looking ahead, margins are expected to normalise as spending resumes and costs potentially rise due to ongoing global supply chain disruptions,” it said.
While the 1Q26 bottom line was weighed down by lower contributions from associates Symphony and AIMS, the stronger Ebitda flow-through supported core net profit growth, more than offsetting higher depreciation, lower interest income, and higher tax expenses.
With AIMS’ upcoming artificial intelligence data centre in Cyberjaya still in its early stages, the research house warned that earnings could become volatile and potentially turn negative during the initial gestation phase.
The company also ramped up short-term borrowings to RM281.9mil in 1Q26 to optimise its balance sheet, bringing its net debt/Ebitda up to 0.1 times and closer to its target of one to 1.5 times over the next three to four years.
Kenanga Research has maintained its earnings forecasts, “outperform” call on Time dotCom, and target price of RM6.60.
Hong Leong Investment Bank (HLIB) Research said the stock’s meaningful re-rating in the last few months, after management indicated a more proactive capital management approach and balance sheet optimisation, suggests special dividends may be ahead.
However, it noted that any special dividend per share would likely be announced in August with its 2Q26 results, in line with management’s stated six-month cash review cycle.
HLIB Research maintained its “hold” rating on Time dotCom and target price of RM5.50, making no changes to its forecasts.
Similarly, BIMB Research left its earnings estimates for the company unchanged and retained its “hold” recommendation with a target price of RM5.60.
According to the research house, management had acknowledged that dividend growth is expected to moderate over time as its gearing increases.
“As such, we believe optimism surrounding outsized dividend payouts is likely to fade, which could weigh on near-term share price performance,” it said.
“Any further share price appreciation would mechanically compress dividend yields, reducing the stock’s income appeal.”
BIMB Research advised investors to sell into strength to lock in gains, as it sees the risk-reward profile as now less compelling following the recent re-rating.
