• TIME’s 1Q23 net profit of RM114.4mn was in line with ours and  consensus expectations, accounting 23.4% and 24.0% of full year estimates respectively. Net profit rose by 25.3% YoY fuelled by better performance by data and data centre revenue, across the Retail and  Wholesale segments. We project that TIME's data product will continue to grow, backed by positive outlook for embracing connectivity via the internet for daily usage (individual and business). Maintain our BUY call  with DCF-derived TP of RM6.65 (WACC: 6.4%; g: 1.0%).

• Within expectations. 1QFY23 net profit of RM114.4mn (QoQ: +9.9%, YoY:  +25.3%) was in line with ours and consensus expectations accounting  23.4% and 24.0% of full year forecast respectively.

• Dividend. The group declared a Special Dividend of 54.4 sen per ordinary  share (totalling RM1bn), as the group recently completed the strategic  partnership with DigitalBridge. The current dividend is equivalent to a DY  of 10.3% based on current market price. We estimate total FYE23 DPS of  60 sen, translating into a yield of 11.3%

• QoQ. TIME’s 1QFY23 revenue and net profit dropped by 13.4% QoQ due  to lower contribution from data and data centre segment. However,  TIME’s earnings improved by 9.9% QoQ due to lower advertising  expenses of RM3.0mn, lower professional fee of RM6.7mn and higher  share of profit from associates of RM1.3mn. Net margin was up by 6.6  ppts QoQ due to lower operating cost.

• YoY/ YTD. Top-line and bottom-line increased by 6.3% YoY and 25.3% YoY  respectively, attributed to an increase in recurring revenue due to higher recurring data and data centre revenue from Retail and Wholesale  customers. It is worth to note that data segment was up by 11.8% YoY,  data centre increased by 20.1% YoY and other improved by 25.4% YoY.

• Outlook. We assume that TIME's data product will continue to grow,  backed by positive outlook for embracing connectivity via the internet for  daily usage (individual and business). We remain upbeat on TIME’s  business prospects given its positive long term data business outlook.  Moving forwards, we expect data and data centres contribution to remain significant owing to TIME’s continuous effort to expand its data  centre business across Asia. Downside risk to our call includes stiff  competition from other service providers, in terms of network coverage  and varied services provided that could affect the TIME’s business  clusters.

• Forecast: Unchanged

• Our call. Maintain our BUY call with DCF-derived TP of RM6.65 (WACC:  6.4%; g:1.0%).

Source: BIMB Securities Research - 19 May 2023