BUSINESS

TM'S ROBUST TOPLINE TO EXTEND INTO 2023 - KENANGA RESEARCH

23/11/2022 12:01 PM

KUALA LUMPUR, Nov 23 (Bernama) -- Telekom Malaysia Bhd’s (TM) robust topline is expected to extend into 2023 as economic activities continue to normalise, said Kenanga Research. 

In a note, the research firm said TM’s Unifi revenue should still be sustainable through tapping into the mass market as its nationwide network expansion is complete and on further coverage of 4G. 

“The reopening of the economy is boosting its business-to-business (B2B) revenue as the corporate, small and medium enterprise (SME) and government sectors continue to upgrade their digitalisation.

“The 5G deployment is expected to further boost its sales ahead being the nation’s preferred network infrastructure provider,” it said. 

Kenanga said the proposed revision under the Mandatory Standard Access Pricing (MSAP) is expected to reduce wholesale prices in the financial year 2023 (FY23), but the effect would be mitigated by higher demand due to the 5G deployment and attractive bundling. 

The research house said TM had revised its FY22 topline growth guidance upwards to mid-to-high-single-digit from low-to-mid-single-digit, as well as its FY22 earnings before interest and taxes (EBIT) to more than RM2.36 billion from RM1.8 billion. 

As such, Kenanga Research has raised TM’s financial year 2022 forecast (FY22F) earnings by 24 per cent to RM12.42 billion, while FY23F earnings were raised by nine per cent to RM12.82 billion.

“We reiterate an ‘outperform’ call on TM with a target price (TP) of RM8.30, an increase of four per cent from RM7.95.

“We like TM on account of positive tailwinds on the digital space as economies reopen, the enhanced network coverage nationwide boosting internet demand from both the public and businesses, and competitive offering with the added 5G availability,” it added.

Meanwhile, MIDF Research said TM, as the preferred fibre service provider, would continue to pursue 4G and 5G fibre infrastructure deployment as well as promote collaboration with domestic service providers, which aligns with the government’s National Digital Network (Jendela) initiative. 

The research firm said the 5G fibre leasing services (worth RM2.0 billion over 10 years) for Digital Nasional Bhd’s (DNB) 5G infrastructure needs, is a testament to TM’s commitment to infrastructure sharing in enabling excellent wireless solutions and services.

As such, MIDF Research has maintained its “buy” recommendation on TM with a revised TP of RM7.10 from RM6.91. 

At 11.03 am, the telecommunications company’s share advanced four sen to RM5.49 with 72,000 shares traded.

-- BERNAMA


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