Headline PATAMI was severely hit by impairment on recoverable value of network assets amounting to c.RM1bn amidst continued pressure from the challenging market. Excluding this, 3Q18 core earnings advanced 31% yoy and 71% qoq to propel 9MFY18 core earnings ahead of ours and consensus estimates at 86% and 91% respectively. The improved performance was attributed to its cost optimisation under Performance Improvement Programme (PIP 2018).
Concurrently, it revised its dividend policy to distribute 40%-60% of its normalised PATAMI, replacing its minimum RM700m dividend commitment. We believe this would bring more sustainability to TM amidst increasing regulatory risk in its business.
We maintain our earnings forecast as we have yet to see full quarter impact on MSAP implementation as the enforcement was at the end of 3Q18. To recap, MSAP prices have been reduced by almost half.
We maintain our HOLD call with a lower DCF-derived TP of RM2.35 (from RM3.60). Our TP reduction was on the back of higher WACC which is raised to 9.0% (from 7.5%). This is mainly to reflect higher risk to its business outlook. Sell on strength.
Source: BIMB Securities Research - 27 Nov 2018
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TMCreated by kltrader | Aug 12, 2024
Created by kltrader | Aug 12, 2024
Created by kltrader | Aug 09, 2024
Created by kltrader | Aug 09, 2024