• Overview. TIME dotCom (TDC) revenue and normalised PATAMI increased by 7.6% and 2.8% YoY, thanks to recurring revenue contributed by its business products (Data: +10.9%, Data Centre: +11.8%) and all core customers groups. On QoQ basis, TDC’s normalised PATAMI declined by 5% to RM92mn however mainly due to higher depreciation & amortisation, finance cost, income tax, lower share profits from associates, coupled with higher exceptional items.

• Key highlights. TDC’s data and data centres revenue recorded double-digit growth to RM286mn (+10.9% YoY) and RM73mn (+11.8% YoY) primarily due to higher recurring revenue. Thus, we anticipate a steady data and data centres contribution in the near future owing to robust demand from retail and enterprise and enterprise segments.

• Against estimates: Inline. The results for 1H22 were within our estimates and consensus, accounting 43.4% and 45.2% of full year estimates - premised on normalised PATAMI of RM188mn. The difference between reported PATAMI and normalised PATAMI are the PPE written off, gain on disposal of PPE, forex gain/loss and dividend income.

• Dividend. The board declared a special interim dividend of 16.34 sen (2Q21: Nil), payable on 27 September 2022. This translates into a DY of 3.6% based on the current price.

• Outlook. We remain optimistic on TDC's business prospects for Data and Data Centre, which are supported by the full reopening of the economy and the growing adoption of the digital economy. The outlook on Data product segment remains robust thanks to rapid digitalization and transformation efforts under JENDELA and 12th MP, as this will contribute to TDC’s retailers and enterprises customer base. The outlook on Data Centre also is intact backed by opportunities from local and regional markets. The government’s resolve to boost the digital economy is expected to drive TDC’s digitalization-related services.

• Our call. Maintain a BUY call with a DCF-derived TP of RM 6.65 (WACC: 6.4%; g:1.0%).

Source: BIMB Securities Research - 30 Aug 2022